Although Qatar continues to enjoys a healthy trade surplus, benefitting from its position as a critical energy supplier to a number of countries worldwide, export revenues in 2015 were dramatically affected by falling oil and gas prices, while the state’s import bill continues to rise as a result of major infrastructure construction and rapid population growth. Declining export revenues have also seen foreign direct investment (FDI) outflows drop as two major state-owned corporations underwent significant restructuring in 2015.

These challenges have been a boon to non-energy growth and diversification. Domestically, FDI showed a sharp turnaround in 2014 as ongoing liberalisation, including the establishment of new special economic zones and improved access to financing, further bolstered non-energy growth, particularly in the small and medium-sized enterprise (SME) segment. The Qatar Stock Exchange (QSE) has also benefitted from several emerging market upgrades on major global indices, which should help offset losses recorded in 2015 and keep domestic markets on a growth path in 2016.

Ongoing Liberalisation

Although its economy had undergone extensive liberalisation since the early 2000s, the process has been more gradual in Qatar than in some of its GCC neighbours, as the state seeks to foster local businesses and build up the domestic manufacturing and industrial sectors. Steady, state-centric development and economic diversification are key priorities of the country’s economic development plan, Qatar National Vision 2030 (QNV 2030), and this has been reflected in many recent legal reforms and business promotion initiatives launched in the state.

Under Qatar’s Investment Law No. 13 of 2000 maximum investment limits are set at 49% of a company’s capital. The law does, however, allow for 100% ownership in certain situations and with prior government approval in sectors including agriculture, industry, health care, education, tourism, energy and mining. In 2009 the state’s chief investment oversight bodies – including the Council of Ministers, Ministry of Economy and Commerce (MEC), Ministry of Foreign Affairs, Qatar Chamber of Commerce and Industry, and the MEC’s Business Development and Investment Promotion Department – collaborated to further relax foreign investment rules, with new regulations allowing 100% foreign ownership in service industries such as business consultancy, ICT, culture and sports entertainment. Other sectors, including public transportation, utilities, steel, cement, and fuel distribution and marketing, remain completely closed to foreign investment.

Today there are several opportunities for international companies looking to establish Qatari operations. One option is the Qatar Science and Technology Park (QSTP), the only free-trade zone in the country, which offers incentives for entities physically located in the park, including corporate income tax and Customs duties exemptions. In addition, the Qatar Financial Centre (QFC) has its own tax regulations and rules that apply to activities undertaken by entities established in the QFC, explained in greater detail below.

Financial Investment

Foreign investment in the banking, insurance and real estate sectors has been permitted since 2004, while the QFC allows major financial institutions and other multinational corporations to establish offices with 100% foreign ownership. All profits may be remitted outside of Qatar, although the QFC does not consider itself an offshore centre, free zone or property development company. Every QFC-registered company pays 10% corporate tax on locally sourced profits, one of the lowest corporate tax rates in the world. By the start of 2016 a total of 188 companies were licensed to operate in the centre – 66 in regulated financial services, 83 in professional and business services, and 39 in investment and management services, up from 165 firms in total in 2013.

Capital Markets 

The liberalisation process was also extended to the QSE, which was originally known as the Doha Securities Market before being rebranded in 2009. In August 2014 Sheikh Tamim bin Hamad Al Thani, the emir of Qatar, introduced reforms permitting up to 49% foreign ownership of Qatar-listed companies. As of July 2015 foreign ownership of QSE shares stood at around 7.5%, according to data from the bourse, much of which is held by GCC nationals and local expatriates. Further amendments were rolled out in March 2015 when the Qatar Central Securities Depository announced it would treat all GCC citizens as Qatari citizens in terms of share and company ownership limits. The QSE also benefitted from the upgrade to emerging market status on the MSCI in mid-2014. The exchange’s total market capitalisation stood at $193bn in August of the same year, making it the second-largest bourse in the GCC.

In keeping with regional trends, however, the QSE faced a challenging 2015 as a result of oil and geopolitical volatility, falling 15.1% to close the year at 10,429.4 points, while the market capitalisation of its 44 listed firms dropped to $146.83bn as of mid-May 2016. Nonetheless, its mid-term growth prospects are promising. In September 2015 global index provider FTSE Russell announced plans to upgrade the QSE from its frontier index to the secondary emerging markets index. The upgrade, the first phase of which will take effect in September 2016, prompted emerging and frontier markets investment bank Arqaam Capital to report that it expects to see an additional $1bn in passive inflows as a result, painting a promising picture for capital markets growth in the state.

Foreign Trade

Diversifying its export base has become a particularly critical priority for Qatar since mid-2014, when global oil prices began falling from a high of $115 per barrel in mid-June to less than $40 by late December 2015 and just under $50 in mid-May 2016. The drop in oil prices has had a significant impact on export revenues and the state’s trade balance. Despite rising by 78% and 17% in 2011 and 2012, respectively, Qatar’s total trade surplus shrank by 1.2% in 2013 and fell a further 9% in 2014 to QR350.4bn ($96.1bn), as a result of a decline in the value of exports and a rise in imports. As of the end of 2015 the state’s foreign trade surplus stood at QR162.6bn ($44.6bn). The surplus continued to fall into early 2016, registering $1.7bn in March 2016 and $1.3bn the following month, down from $4.2bn and $2.7bn in the respective periods one year earlier.

Exports fell 21.7% year-on-year (y-o-y) in December 2014 to hit QR33.8bn ($9.3bn) and dropped again in 2015, with the Ministry of Development Planning and Statistics (MDPS) reporting the total value of exports by the end of the fourth quarter of 2015, including re-exports, at QR281.4bn ($77.2bn), down 39% y-o-y from QR461.2bn ($126.6bn) in the same period of 2014. The MDPS reported that this was almost entirely attributable to lower exports of mineral fuels, lubricants and related materials, which in the fourth quarter of 2015 fell by QR36bn ($9.9bn) y-o-y, followed by a QR800m ($219.5m) decline in manufacturing exports. Exports remained subdued in early 2016 and were down 33% y-o-y as of March.


Imports have simultaneously risen as a result of rapid population growth, with Qatar’s population increasing by 8.8% in 2015 to reach 2.42m by the end of December of that year, according to the MDPS, as well as surging demand for materials and machinery needed to deliver the state’s $200bn infrastructure programme. Imports jumped 13% in 2014 to hit QR110.81bn ($30.4bn), dominated by machinery and transport equipment imports (QR51.98bn, $14.3bn) and manufactured goods (QR18.16bn, $5bn). Import growth continued in 2015, expanding by 3.2% y-o-y in the fourth quarter in 2015 to reach QR31.7bn ($8.7bn). Growth in the final quarter of 2015 was driven by a QR1.5bn ($411.6m) jump in miscellaneous manufactured articles. The total import bill for 2015 was QR118.7bn ($32.6bn), compared to QR281.4bn ($77.2bn) in exports. Imports continued to rise into early 2016 and were up 4.7% y-o-y as of March.

Main Trading Partner

According to the MDPS, Asia remained Qatar’s largest trading bloc as of the end of 2015, accounting for 72.8% of all Qatari exports and 32% of total imports. Within Asia, Japan was Qatar’s largest single export market, accounting for QR12.1bn ($3.3bn) of export revenues in the fourth quarter, followed by South Korea at QR9.9bn ($2.7bn) and India with QR7.9bn ($2.2bn). China was Qatar’s largest single source of imports at QR3.6bn ($987.8m), followed by Japan at QR2.3bn ($631.1m) and India at QR1.2bn ($329.3m).

Trade with China is poised to expand significantly in the coming years, following a landmark deal to launch renminbi clearing services for the first time in the Middle East through the Industrial and Commercial Bank of China, which opened in the QFC in April 2015. According to MDPS data, Qatar’s foreign merchandise trade balance with Asia stood at QR35.5bn ($9.7bn) in the fourth quarter of 2015.

The EU was Qatar’s second-largest trade bloc in the fourth quarter of 2015, comprising 12.9% of its exports and 32.4% of its imports. The UK was Qatar’s biggest EU export destination, accounting for QR3.3bn ($905.5m) in export revenues, followed by Italy with QR1.3bn ($356.7m) and Belgium at QR1bn ($274.4m). In terms of imports, Germany led the EU with QR3.1bn ($850.6m), followed by the UK at QR2bn ($548.8m) and Italy with QR1.3bn ($356.7m). The GCC was Qatar’s third-largest trading bloc in the fourth quarter of 2015, according to the MDPS, contributing some 7.4% of Qatar’s imports and 14.7% of its exports. The UAE was Qatar’s largest export and import market in the Gulf, accounting for QR3.2bn ($878.1m) in exports and QR2.7bn ($740.9m) in imports.

International Investment

Although its trade surplus is in decline, Qatar’s international investment portfolio has nonetheless expanded enormously since 2004, when FDI outflows totalled $437.9m. They hit an all-time high of $10.1bn in 2011, before dropping to $1.84bn in 2012 and rebounding to $8.02bn in 2013, according to the UN Conference on Trade and Development’s ( UNCTAD). Falling oil and gas prices, as well as rising public spending on major infrastructure projects, kept outflows on a downwards trend in 2014, according to UNCTAD, with FDI outflows from Qatar falling by 15.9% to $6.7bn. Notable deals during the year included Qatar National Bank’s (QNB) September 2014 purchase of a 23.5% stake in pan-African lender EcoBank Transnational, a $283m deal which made QNB its largest shareholder.

International investment through a host of state-owned enterprises continued in 2015. For example, in November state carrier Qatar Airways said it was keen to take a $2bn stake in India’s low-cost carrier IndiGo after shares began trading following the airline’s October 2015 initial public offering, and then reaffirmed this sentiment to Dubai-based daily Gulf Business in March 2016.

Furthermore, the country’s main sovereign wealth fund, the Qatar Investment Authority (QIA), purchased new real estate assets in London, Paris and Tokyo. However, QIA and state-owned oil and gas company Qatar Petroleum (QP), which now acts as the government’s energy investment arm, both moved to sell stakes in major assets and investments in 2015, as a result of ongoing restructuring at both companies (see analysis). In October 2015, for example, QIA sold a $425m stake in French construction giant Vinci, leaving it with 3.9% of the company, and in the same month QP announced its withdrawal from the planned $3.77bn Long Son petrochemicals project in Vietnam.


UNCTAD reported that Qatar received $1.04bn in FDI in 2014, a significant improvement over 2013, when the country lost $840.4m in FDI as a result of disinvestment, and its highest level of incoming FDI since 2010. Foreign investment in the manufacturing sector has also been robust. In April 2015 the Ministry of Energy and Industry reported that total industrial investments in Qatar had risen to $82.5bn, a 21.3% increase over the $68bn reported in June 2014. Of this, local investments in joint industrial projects comprised 35.4% of the total, followed by joint foreign industrial ventures at 20% and joint Gulf factories with 2%.

Despite this positive turnaround, FDI has yet to return to its 2009 high of $8.12bn and remains challenged by issues including lack of available and skilled labour, lengthy approval processes, and Qatar’s relatively high cost of living and building (see Real Estate & Construction chapters). Weaker levels of FDI are also part of a broader regional trend. According to UNCTAD, FDI inflows to West Asia fell by 3.7% in 2014 to $43bn, led by Turkey ($12.1bn), the UAE ($10.1bn) and Saudi Arabia ($8bn). According to UNCTAD, this was the sixth consecutive year FDI in the region fell. Although UNCTAD had not published 2015 figures at the time of press, Qatar’s inflows are likely to be affected by the January 2015 cancellation of the $6.4bn petrochemicals project Al Karaana complex. Shell held a 20% stake in the venture (see Energy chapter).

Doing Business Better

The state dropped three places on the World Bank’s 2016 Doing Business index, coming in at 68th out of 189 countries surveyed. However, Qatar still performed strongly in several categories. The country remained in first place overall in the paying taxes category, maintained eighth place in dealing with construction permits and rose three spaces in the trading across borders category. However, in this latter category it still ranked 119th due to high import and export costs and long wait times (see Transport chapter), and the country also fell one spot in the enforcing contracts category to 112th place and five spots in the getting credit category to 133rd place.

Despite these challenges, Qatar’s FDI outlook remains positive. Over-reliance on hydrocarbons exports, which comprised 81% of the total export base in the fourth quarter of 2015, according to the MDPS, has prompted the government to intensify its efforts to attract new FDI in non-energy sectors. This has led to the launch of several critical initiatives aimed at improving the investment climate and encouraging new entrants in key sectors, particularly manufacturing, industry, tourism, health care, education and agriculture. The recent creation of a network of special economic zones, as well as the flagship Qatar Business Incubation Centre (QBIC), has also dramatically improved prospects for small businesses.

Free Zones

Qatar’s first dedicated free zone, QSTP, was established in 2005 and formally launched in 2009, offering incentives including foreign investor tax and Customs duties exemptions, and relaxed Qatarisation quotas. The 45,000-sq-metre park has a number of tenants working in the fields of energy, health sciences, environment and IT, including Shell, Cicso, GE, Microsoft, Rolls-Royce and Tata.

QSTP has also played an active role in fostering entrepreneurship through start-up training programmes, including its technology, innovation and entrepreneurship, corporate research, innovation management, intellectual property and academic research programmes. Financial support for new businesses is provided through initiatives such as its Proof of Concept Fund, which is allocated to Qatar-based researchers that are developing innovative and commercially viable concepts, and the $30m New Enterprise Fund, which offers start-up capital to registered tenants.

At present, QSTP has 34 tenants in multi-occupancy buildings, representing an 83% occupancy rate spread over the park’s Innovation, Tech 1 and Tech 2 buildings. A Tech 4 building is currently under construction and is due to be completed by January 2017. This new addition will have capacity for 12 companies across a total of 6000 sq metres, including multiple spaces of 500 sq metres. Space in the park has also been allocated for a Tech 3 building, but planning has not started as of yet.


Recognising the success of free zones in attracting the best human capital and improving FDI inflows, the government of Qatar has been busy in developing new special economic zones, (SEZs), as well as a flagship business incubation centre that has already had a significant impact on the local start-up landscape. In 2011 the state launched Manateq, which was created to provide the necessary infrastructure, services and policies required to support SME growth. Manateq is also responsible for developing three planned SEZs offering the same benefits and exemptions as the QTSP: Ras Bufontas, located near Hamad International Airport; Um Alhoul, located near the new Hamad Port; and Al Karaana, located between Doha and Abu Samra. These zones are expected to significantly bolster the state’s domestic private sector, particularly its SMEs.

The 4.1-sq-km Ras Bufontas project will be dedicated to communications, IT, energy, logistics, construction and transportation companies, and saw its foundation stone laid in November 2014. In July 2015 a joint venture between Qatar’s UrbaCon Trading and Contracting and Spain’s Sacyr was awarded a QR1.69bn ($463.7m) contract to develop the zone. Next, Al Karaana will span a sizeable 38.43 sq km and target building materials, machinery and fabrication, and warehousing, with the first phase of construction expected to be finished by November 2019. Finally, Um Alhoul will offer 33.52 sq km of space for light industrial activity, including petrochemicals, building materials, maritime metals, logistics and goods processing. Work started in March 2015, with the first phase of development expected to wrap up in the first quarter of 2018.


In 2014 Qatar Development Bank (QDB) partnered with the Social Development Centre to launch the Middle East’s largest business incubator, QBIC. The mixed-use incubation facility aims to promote local enterprises and align new businesses with Qatar’s requirements for major development projects, including the 2022 FIFA World Cup and the broader QNV 2030 infrastructure development programme. It offers training, mentorship, networking and investment opportunities, as well as legal advice and two years of rent-free office space. The QBIC has a mandate to develop QR100m ($27.4m) worth of new companies.

“We are well on our way to achieving the centre’s mission of developing the next QR100m ($27.4m) companies in Qatar. We have received some 1200 applications and incubated 52 start-ups since our launch in 2014. We have invested QR1.9m ($521,000) in our successful applicants, which have in turn generated nearly QR6m ($1.65m) in revenue,” Aysha Al Mudahka, CEO of QBIC told OBG. “This is a reflection of the opportunities that exist for start-ups to generate tangible economic value.”

Private Sector Financing 

In addition to offering support for start-ups and entrepreneurs at QBIC, QDB is also active in improving access to finance for a growing segment of private sector businesses, with a particular emphasis on SMEs. QDB’s Al Dhameen programme, for example, assists start-ups and existing companies with obtaining funds for establishment and expansion within the agriculture, fisheries, livestock, non-oil mining, wholesale retail trade, financial, insurance and real estate sectors. Although Al Dhameen does not offer direct financing, it does issues guarantees to 14 partner banks for 85% of the project’s total finance value up to a maximum of QR15m ($4.1m). Eligible projects include any Qatari SME or any joint venture with a foreign investor, provided annual turnover does not exceed QR30m ($8.2m). Loans for manufacturing projects are set at eight years, with a two-year grace period, and five years for services projects, with a one-year grace period.

Loan Growth 

The project has already yielded positive results, with direct loans disbursed by QDB in 2015 reaching QR1.01bn ($277m), a 34% increase on 2014. In terms of indirect loans, QDB disbursed QR292m ($80.1m) in 2015, representing a 99% rise y-o-y. From 1998 to 2015, QDB granted QR4.85bn ($1.33bn) in loans and advances to over 385 customers. In terms of performance, in 2015 QDB issued credit guarantees with a combined value of QR243m ($66.7m) to 100 SMEs, and Qatari SMEs signed exporting contracts worth over QR285m ($78.2m) in total in the same year. Furthermore, QDB has issued export credit insurance guarantees to 156 Qatari SMEs, with an overall value of approximately QR55m ($15.1m).


Despite facing a challenging 2015, and with growth prospects in 2016 dampened by expectations for sustained low oil prices, Qatar’s trade and investment is likely to remain stable in 2016. State initiatives to improve access to credit and foster entrepreneurship and SMEs are already benefitting businesses, and despite the cancellation of a major petrochemicals project in early 2015 (see Energy chapter), FDI inflows are likely to remain steady in the coming years as the Qatari government continues to support the development of SEZs, and as demand for materials, food and manufactured goods continues to increase.