The Report: Qatar 2012
With one of the world’s most commanding positions in the global energy industry and a growing role in regional diplomacy, Qatar has seen many returns on the political and economic investments it has made in the past two decades. As Qatar’s government works to diversify the economy by investing in sectors such as tourism and finance, for now growth will continue to depend largely on the exploitation of oil and gas. Real GDP growth is expected to fall from the 14.1% seen in 2011 to 6% from 2012 onwards, however, as a moratorium is imposed on new hydrocarbons investments. In the meantime, other important non-hydrocarbons sectors, such as banking, construction and real estate, are seeing continued expansion.
Country Profile
This chapter includes information about Qatar’s history, geography, language, culture and population. It also provides an overview of the country’s natural resources and education system.
Explore chapterPolitics
Political stability is ushering in a promising era of economic and human development, enabling the government to develop initiatives and diplomatic activities to shape a more knowledgeable and prosperous Qatar. In foreign policy, the Arab Spring has presented the state with the opportunity to implement its overseas goals, with the Emir emphasising long-term stability brought about by continuous reforms. While domestic challenges remain – including the need to boost private sector employment among nationals – the government is taking steps to provide incentives for workers to pursue these jobs. This chapter includes a viewpoint with Sheikh Hamad bin Khalifa Al Thani, Emir of Qatar. It also features interviews with Sheikh Hamad bin Jassem bin Jabr Al Thani, PM and Minister of Foreign Affairs; and Teo Chee Hean, Deputy Prime Minister of Singapore.
Explore chapterEconomy
High oil and natural gas prices, combined with a 20-year strategic investment programme, have catapulted Qatar into the ranks of the highest per-capita income economies in the world. Yet the country continues to demonstrate an ability to leverage its significant natural resources to drive growth and is well placed to meet the goals and vision for economic diversification outlined by the National Vision 2030. The state has used its vast oil and gas revenues to create a strong foundation upon which other sectors can expand. The non-hydrocarbons economy is estimated to grow by between 9% and 10% until 2016. Moreover, winning the right to host the 2022 FIFA World Cup means that infrastructure expansion will likely support economic growth over the next 10 years to the tournament. This chapter includes interviews with Yousef Hussain Kamal, Minister of Economy and Finance; Sheikh Jassim bin Abdulaziz Al Thani, Minister of Business & Trade; and Saleh Al Nabit, Secretary-General, General Secretariat for Development and Planning (GSDP).
Explore chapterBanking
Banking in Qatar has long been a robust business. The sector weathered the international credit crunch well and has since achieved double-digit asset growth, and leading players are establishing strong overseas positions as they grow out of a highly competitive local market. According to the Qatar Central Bank (QCB), in April 2012 the sector’s total assets stood at QR727.2bn ($199.7bn), up from QR587.6bn ($161.4bn) a year earlier, equivalent to 23.8% growth. Moreover, strong government backing means secure capital adequacy ratios are sometimes triple the Basel II requirements. The sector’s huge potential and focus on development projects provide the promise of continued business; indeed, most banks are bullish that assets, profits, loans and deposits will keep growing in 2013. The chapter includes interviews with Sheikh Abdullah Saud Al Thani, Governor of QC); Sheikh Bandar bin Mohamed bin Saud Al Thani, CEO of Qatar Credit Bureau (Qatar CB); Abdul Hakeem Mostafawi, CEO of HSBC; and Sheikh Faisal bin Abdulaziz bin Jassem Al Thani, Chairman of Ahli Bank.
Explore chapterCapital Markets
With Qatar’s exchange the best performing in the GCC region for the last two years, the capital markets look set for further development. In comparison to the GCC exchange averages, the Qatar Exchange (QE) scored higher both in terms of price to earnings and price to book value in 2011. In addition, in April 2011, the QE became the first in the region to offer a full delivery-versus-payment (DvP) system, an important step for bringing Qatar in line with international best practices in the arena of settlement services. Going forward, as the country looks to get its new infrastructure development programme under way, the capital markets may play an increasingly vital role in financing these projects. This chapter includes an interview with Emad Mansour, CEO of Qatar First Investment Bank (QFIB). It also includes a viewpoint with Adel Abdulaziz Khashabi, Head of QNB Financial Services.
Explore chapterIslamic Financial Services
With strong banking and financial services segments, combined with an expanding insurance sector and global demand for Islamic bonds, sharia-compliant finance in Qatar is expected to see continued growth in 2013. Indeed, the sharia-compliant segment has recently shown some of the best growth figures in a country where expansion is generally high. In particular, takaful (Islamic insurance) and re-takaful has proved increasingly important to the market, and selling through Islamic banks’ channels remains a significant distribution mechanism for insurance. While insurance penetration is low at present, Qatar’s Islamic insurance sector is expected to expand in the future. This chapter includes an analysis on sukuks, sharia-compliant bonds.
Explore chapterInsurance
A string of global natural disasters in 2011 did have an impact on some of Qatar’s local insurers that have overseas exposure, with the sector overall seeing a general slowdown. Cumulative net profits for the five Qatar Exchange-listed insurers rose 5.17% in 2011, a decline in profit growth from 2010. Yet while penetration rates for insurance products are low, at 0.89%, more than 85% of Qataris are in the 15- to 64-year-old demographic, and there is optimism that growth from this base can be high. Another reason to expect growth is that there are few compulsory insurance rules in Qatar. Third-party motor liability and professional liability for engineers are the only two categories currently obligatory. Given these factors, the sector is expected to remain competitive, within an increasingly regulated market.
Explore chapterEnergy
Having gone from being a minor actor on the world energy stage to a pivotal player in less than a decade as part of an expansive strategy, Qatar has tapped its vast gas reserves by engaging international oil companies and building a comprehensive infrastructure network. This approach has allowed Qatar to become the largest liquefied natural gas (LNG) exporter in the world. The state has also pushed its crude oil production levels upwards: production stood at 742,000 bpd in January 2012, up from 732,000 bpd a year earlier. However, the government is also looking to the long-term future of energy security, as there is a strong opportunity cost associated with solar energy providing savings on natural gas usage in the domestic market. This development is an indicator of the growing confidence and maturity of the sector. This chapter includes interviews with Mohammed bin Saleh Al Sada, Minister of Energy and Industry; Christophe de Margerie, CEO of TOTAL; and Wael Sawan, Executive Vice-President and Chairman of Qatar Shell and Managing Director of Pearl GTL.
Explore chapterTransport
The country’s successful bid to host the FIFA 2022 World Cup has lent a renewed urgency for substantial investments in transport infrastructure. The budget, released in May 2012, directs $11bn to the new airport, $5.5bn to a deep-water seaport, $1bn to a transport corridor in Doha and $20bn to roads, part of $95bn in public investment up to 2016. Beyond 2022, the upcoming Doha metro – set for completion in 2026 – will install 358 km of underground rail lines. Although challenges could arise, particularly in managing increasing cargo volumes while new infrastructure is still under construction, the government has been working to coordinate among the several relevant agencies to ensure that the currently available resources are allocated as efficiently as possible. This chapter includes an interview with Abdul Aziz Mohammed Al Noaimi, Chairman, Civil Aviation Authority.
Explore chapterReal Estate
While the real estate sector has experienced a lull in recent years, property prices have remained stable over the past 12 months – a significant improvement on three years ago when prices were in freefall. The sector has recovered from the global economic crisis, and government plans to expand the non-hydrocarbons sector bode well for the market. In addition, new luxury real estate developments are expected to come on-line throughout 2012, indicating there is still sufficient demand for high-value property. Furthermore, bank credit to the sector grew 91.5% from October 2010 through October 2011. The sharp increase and still relatively low penetration levels imply that the majority of credit is going to the commercial segment, and that there is room for expansion in the sector as a whole. This chapter includes interviews with Abdulla Abdulaziz Turki Al Subaie, Group CEO, Barwa Real Estate Company.
Explore chapterConstruction
With the construction industry expecting several changes in both the short and long term, contractors and developers are anticipating a steady increase in projects in late 2012 and into 2013. While the past two years have been difficult for the sector, with excessive competition driving down prices and limiting the availability of work, underlying growth factors remain strong. Although the excitement surrounding the 2022 World Cup has brought few tangible benefits to contractors yet, the capital is expected to see a number of expansion projects that should catalyse other developments. This chapter examines how sustainable building practices are at the centre of the government’s National Development Strategy 2011-16, with environmental production a key priority. The chapter also includes an interview with Ebrahim Al Sulaiti, CEO of United Development Company.
Explore chapterTelecoms & IT
The telecoms market is still relatively young in terms of market-driven competition. The market entered a new phase in 2009, when Vodafone Qatar began to operate as the second telecoms provider, bringing an end to Qatar Telecom’s (Qtel) monopoly. The resulting competition has sparked more innovation and brought higher-quality service. Indeed, mobile penetration rates now stand at 142%. Landline network has grown too: between 2002 and 2011 the number of landline telephone subscriptions jumped from 176,519 to 308,655. More recently, this has been useful in propelling the use of broadband internet. However, a new $550m public fibre network initiative is set to provide more than 95% of the state’s population with connection speeds up to 100 megabits per second by 2015. This chapter includes interviews with Hessa Al Jaber, Secretary-General of the Supreme Council of Information and Communication Technology (ictQATAR); Sheikh Saud bin Nasser Al Thani, CEO, Qatar Telecom; and Rashid Al Naimi, Chairman of the Board of Directors, Meeza.
Explore chapterIndustry
Exploiting its competitive advantage in energy and, to a lesser extent, labour and land, Qatar’s industrial base has continued to show impressive growth throughout 2011 and into 2012. The oil and gas sector, buoyed by high hydrocarbons prices, has reclaimed its place as the mainstay of the economy, accounting for 51.7% of nominal GDP in 2010 and 57.7% in 2011. The petrochemicals sector continues to have a significant competitive advantage over its counterparts thanks to the state’s vast reserves of available gas. At the same time, the non-hydrocarbons sector continues to flourish. In 2010, manufacturing expanded by 22.4%, making it the fastest-growing non-hydrocarbons sector that year. Going forward, the National Development Strategy 2011-16 identifies enterprise creation, research and development, and science and technology as the key components to diversify the industrial base.
Explore chapterCulture & Tourism
As an ancient pearl fishing centre, Qatar was once part of an historic trade network stretching across the Indian Ocean and connecting the merchants of Arabia and East Africa to South Asia. The modern state continues to show a commitment to building on its cosmopolitan history to attract travellers to its shores and expand its dynamic tourism offerings. The five pillars targeted for development to promote sector growth are: MICE, culture, education, sports and leisure. Certainly, challenges remain; one issue currently being addressed is infrastructure congestion. However, development of niche tourism segments complements long-term diversification plans by expanding the knowledge-based areas of the tourism economy.
Explore chapterMedia
As Qatar’s economy has grown, so has demand for information, driving tremendous progress in the media industry and related sectors. The popularity and reach of the media has also had an impact on the advertising and communications industry, which has seen double-digit growth over the past five years. In a bid to expand the media sector, Qatar is now planning to establish a dedicated media and communications free zone called Qatar Media City outside Doha. Going forward, the country’s winning bid to host the 2022 FIFA World Cup is set to lend a huge boost to sports coverage. This chapter includes an interview with Haya Al Nassr, Director of Communication Directorate, Qatar Foundation.
Explore chapterEducation
To diversify the economy and move away from a reliance on its hydrocarbons wealth, the government has invested heavily in reforming the education sector. Indeed, more than QR19bn ($5.21bn) of the 2011/12 national budget has been allocated to education, a 12% increase compared to the previous year. Along with providing adequate funding, the government has made significant progress in reforming the sector, overhauling the regulatory and oversight bodies, restructuring the primary education system and developing competitive research institutions. The government is also seeking to expand the role of the private sector in delivering education. Through these efforts, Qatar seeks to develop a knowledge-based economy and a role as a centre for research and academic excellence. This chapter includes an interview with Sheikha Abdulla Al Misnad, President, Qatar University.
Explore chapterHealth
Promoting development by nurturing a healthy population is enshrined in Qatar’s constitution and is a cornerstone of the government’s long-term development strategy. The state’s population has increased rapidly over the last decade, but so too has expenditure on health care services, climbing from $339 per capita in 2000 to $1560 per capita by 2010. Investments in health care are expected to help diversify the economy away from oil and gas, and the government is actively supporting private sector participation. While Qatar faces the challenge of sourcing skilled professionals to fill new posts, the government is trying to address these gaps through several initiatives aimed at encouraging more students to take up medical professions, particularly nursing. This chapter includes interviews with Dr Hanan Al Kuwari, Managing Director, Hamad Medical Corporation.
Explore chapterRetail
Recent years have been tough going for the global retail sector, and the Gulf region is no exception to this trend. As unemployment has risen, bank credit has dried up and consumer confidence has withered. In Qatar, however, things look somewhat brighter. Although growth in the sector has slowed, the state has recently seen expansion of both retail brands and shopping outlets. In addition to the food, hypermarket and general trading sectors seeing growth, several large international brands such as Ikea, Marks & Spencer and Intersport are entering the market. Overall, retail space expanded by 18.4% to 509,000 sq metres in 2010 and is expected to grow by 34.4% in 2012, an indication of robust demand. This chapter includes an interview with Bader Abdullah Al Darwish, Chairman and Managing Director, Darwish Holding.
Explore chapterAccountancy & Tax
In conjunction with The Advisors RSM, this chapter outlines the new rules and regulations for foreign firms operating in Qatar. It also looks at key sections of Law No. 21, a new tax code that came into effect in January 2010, as well as the executive regulations released in support of the law. This chapter includes an interview with Jaber Al Hedfa, Partner, The Advisors RSM.
Explore chapterLegal Framework
With assistance from Clyde & Co, this chapter looks at how Qatar’s emphasis on its infrastructure has yielded several interesting legal developments, including a new focus on occupational health, safety and environment (HSE), and a risk-centric consideration of the way in which business is conducted in the construction sector. This chapter also explains the options for foreign business operations and outlines recently passed laws and regulatory changes in Qatar. It also includes a viewpoint with David Salt, Partner at Clyde & Co, on standardising safety regulations.
Explore chapterThe Guide
This section includes an article focusing on Qatar’s strong equestrian tradition. In recent years, leaders have been making moves to reintroduce the state’s equestrian past. This has involved investing in facilities at home, as well as building up Qatar’s profile in racing circuits abroad. The chapter also includes a listing of leading hotels and resorts, as well as useful telephone numbers and facts for visitors, including information about language, weather, visas, currency and more.
Explore chapterTable of Contents
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