The Report: Qatar 2017
2017 proved a turbulent year for Qatar, dominated by the diplomatic rift that emerged between the country and several other regional states in June 2017. However, Qatar has adapted quickly, with many in the local business community confident about the future.
Since gaining independence in 1971 Qatar has quickly risen to prominence both regionally and internationally to become an economic, political and cultural powerhouse in the Middle East. With a relatively small local population and substantial revenues generated from having the third-largest proven natural gas reserves globally, Qatar has one of the world’s highest GDPs per capita: at current prices it stood at $64,400 in 2017. Prior to 2010 the country was mostly known internationally for its vast gas reserves and for being the home of the media network Al Jazeera. However, this changed when Qatar won the contest to host the 2022 FIFA World Cup in December of that year. Now, it has become well known in the international arena for many reasons, from its extensive international investments and ample spending on substantial infrastructure projects, to the diplomatic rift with the GCC, which began in June 2017.
This chapter contains a viewpoint from Sheikh Tamim bin Hamad Al Thani, Emir of Qatar; and an interview with Sheikh Abdullah bin Nasser bin Khalifa Al Thani, Prime Minister and Minister of Interior.Explore chapter
Following a challenging 2016, when the price of Brent Crude dipped briefly below $30 per barrel and governments across the GCC were compelled to significantly adjust their fiscal plans, 2017 has brought the region some respite – both to current accounts and the wider economy. Qatar remained better insulated from the effects of oil price volatility than most countries in the Gulf, owing chiefly to the unintended countercyclical effects of its infrastructure investment boom. Nonetheless, a return of oil prices to above $50 per barrel will certainly reduce strain on the economy, which was beginning to experience tightening in liquidity. Stronger energy prices will provide the government with a positive platform for the launch of its new six-year strategic plan, which will aim to further deliver on the economic diversification mandated by Qatar National Vision 2030.
This chapter contains an interview with Sheikh Ahmed bin Jassim bin Mohammed Al Thani, Minister of Economy and Commerce, and Vice-Chairperson, Qatar Investment Authority; and Abdulaziz bin Nasser Al Khalifa, CEO, Qatar Development Bank.Explore chapter
Trade & Investment
As a major hydrocarbons-exporting economy, Qatar owes both its prosperity and much of its continued growth to international trade. Indeed, in any given year the combined value of imports and exports can exceed three-quarters of the country’s GDP. As a result, and despite recent efforts towards economic diversification, the economy remains exposed to swings in the price of oil, with 2016 having proved especially challenging in this regard. Another test came in June 2017 when several of its regional neighbours imposed a blockade on Qatar, which saw the disruption of certain trade flows. The government is committed to opening the domestic economy to further inward investment and is also seeking to encourage the private sector to step in where possible to deliver new infrastructure, with new legal instruments being prepared to improve the framework for public-private partnerships.
This chapter contains an interview with Fahad Rashid Al Kaabi, CEO, Manateq; and Yousuf Mohamed Al Jaida, CEO and Board Member, Qatar Financial Centre Authority.Explore chapter
Tightening liquidity conditions and a squeeze on profit growth proved to be the hallmarks for Qatar’s banking sector in 2016, as financial institutions across the Gulf were forced to respond to the effects of weak oil prices on the local economy. Despite tougher operating conditions, however, the sector remains resilient, with strong underlying fundamentals marked by high capital adequacy ratios and one of the world’s highest savings rates. Even though the diplomatic fallout within the GCC had ramifications for the sector in 2017, the authorities are implementing mitigation strategies. Looking ahead, Qatar’s lenders are considering overseas expansion and domestic consolidation as strategies to drive future growth.
This chapter contains an interview with Sheikh Abdulla bin Saoud Al Thani, Governor, Qatar Central Bank; Ali Ahmed Al Kuwari, CEO, Qatar National Bank; Abdul Hakeem Mostafawi, CEO, HSBC Qatar; and Sheikh Faisal bin Abdulaziz bin Jassem Al Thani, Chairman and Managing Director, Ahli Bank.Explore chapter
Following a somewhat muted year for trading in 2016, additional listings and new products helped to boost activity on the Qatar Stock Exchange (QSE) in 2017. Recent and forthcoming measures, including covered short selling, exchange-traded funds and corporate bonds are expected to lift liquidity and further deepen the market, while family-owned firms entering the exchange offer the potential to greatly expand the QSE’s sectoral penetration within the broader economy. Challenges remain, however, with improving market coverage by brokers, researchers and ratings agencies a priority.Explore chapter
Islamic Financial Services
It was more challenging operating environment for the Islamic financial services (IFS) sector in 2016, as the continuing effects of low oil prices fed into the domestic economy, leading to a sizeable decline in government deposits and a tightening of liquid¬ity. Nonetheless, asset growth continued, and as oil prices began to pick up towards the end of the year and into 2017, liquidity conditions improved. How¬ever, with the sharia-compliant market beginning to mature and the cost of borrowing remaining high, there is evidence of key players within IFS looking to domestic consolidation and overseas expansion as part of their future strategies for growth.
This chapter contains an interview with Bassel Gamal, Group CEO, Qatar Islamic Bank.Explore chapter
For several years the insurance sector has undergone major regulatory changes, as the industry positions itself in alignment with international best practices. The sector has been expanding considerably in recent years, often with double-digit growth. Furthermore, penetration rates are still relatively low, meaning there is plenty of room for new products, services and customers. However, recent economic slowdowns have made the business environment more competitive, causing companies to put a greater focus on lowering costs. At the same time, the maturation of a number of large construction projects has prompted a redeployment of resources by many companies towards operational and liability coverage, which is likely to continue throughout 2018. An expected expansion in health care lines should help offset this, alongside the construction and property segments, which continue to grow in the run-up to the 2022 FIFA World Cup.Explore chapter
In 2016 Qatar retained its title as the world’s largest exporter of liquefied natural gas. For many years the state has also been a global player in the crude oil and petroleum product markets. It is a key energy provider for many of the world’s leading economies, lying at the heart of a hydrocarbons logistics chain that stretches from Japan to the UK. However, these are challenging times for the oil and gas sector internationally, and Qatar has not been exempt from these recent global trends. Falling prices, and a scaling down of exploration and production, have affected the state’s main oil and gas companies, alongside their multinational allies. Oil and gas service companies, too, have felt the impact, as have a range of related research and development facilities, and energy financers and insurers. Despite these trends, Qatar remains one of the world’s strongest hydrocarbons players, with the vast capacity of the North Field natural gas facility likely to secure its major role in global energy markets for many years to come.
This chapter contains an interview with Mohammed bin Saleh Al Sada, Minister of Energy and Industry.Explore chapter
Driven by large energy-intensive developments and a rapidly growing population, demand for electricity and water has surged in Qatar over the past decade. Peak power demand on the country’s networks has more than doubled since 2006, while water consumption has also increased in tandem with the country’s development. Base case assumptions issued by government regulators and procurement agencies forecast strong demand growth over the next several years in both water and power as the country gears up to host the 2022 FIFA World Cup. Power generation and desalination capacity has continued to grow since 2007. With considerable capacity coming on-line in 2018 and the Qatar Power Transmission System Expansion project entering its 13th phase, supplies of power and water are well positioned to meet growing demand.
This chapter contains an interview with Essa bin Hilal Al Kuwari, President, Qatar General Electricity and Water Corporation (Kahramaa).Explore chapter
Central to Qatar National Vision 2030, the country’s long-term development plan, is creating a competitive and diversified economy. The industrial sector plays a key role in this, broadening the scope of private sector activity, encouraging the shift to higher value-added activities and creating jobs in an increasingly knowledge and innovation-based economy. Recent times have seen the impact of the shift away from hydrocarbons dependency, despite the large share of Qatar’s GDP still contributed by its oil and gas sectors. Now though, with some industrial projects having been scaled down or put on hold due to lower oil and gas revenues in recent years, the sector has to demonstrate its resilience. Enhancing efficiency and cutting costs are thus major priorities, with leaner and more agile competitive industries the likely result. Furthermore, while the ongoing economic blockade of Qatar, which began in June 2017, presents a challenge, government entities and the private sector have pushed for initiatives to expand industries and establish new projects to boost local products and achieve self-sufficiency.Explore chapter
Guided by the state’s long-term economic development plan, Qatar National Vision 2030, and driven by preparations for the 2022 FIFA World Cup, Qatar is investing heavily in infrastructure programmes focused on its non-oil and gas sectors. More than $500m a week is being spent across all capital projects in the country in preparation for the upcoming games, with investments of up to $13bn in infrastructure projects having taken place in 2017, covering airport and port projects, as well as road upgrades.
This chapter contains an interview with Jassim bin Saif Ahmed Al Sulaiti, Minister of Transport and Communications; and Abdulla bin Abdulaziz bin Turki Al Subaie, Managing Director and CEO, Qatar Rail.Explore chapter
A quick look at the Doha skyline reveals just how much activity there is in Qatar’s construction sector currently. Activity in the capital is just one aspect of the work being done, however, with highways, housing estates and hypermarkets now also being built around the country. A huge amount of investment is going into Qatar’s infrastructure, along with its real estate, providing some of the largest contracts of recent decades for construction companies. Despite this flurry of activity, there are still challenges as the sector faces an economic slowdown. Falling oil and gas revenues have affected government spending, with many of the mega-projects currently under construction seeing reprioritisation, while new contracts have become scarcer. The blockade imposed on Qatar in June 2017 by some of its regional neighbours has also had notable effects on the economy. Nonetheless, Qatar remains a global centre for the industry as it gears up for 2022 FIFA World Cup. Indeed, sector players now expect a flurry of smaller contracts in the second half of 2018 and beyond, as the country’s plans for the tournament are realised and major projects are speeding up to meet pre-2022 deadlines This chapter contains an interview with Saad bin Ahmad Al Muhannadi, President, Public Works Authority (Ashghal); and Eisa Al Hammadi, CEO, Qatar Primary Materials Company (QPMC).Explore chapter
The built environment of Qatar has seen some spectacular changes in recent years, with rapid growth and a range of iconic towers, malls, gated communities, hotels and luxury villas coming onto the market. Swift expansion has transformed the skyline and propelled the country into the top ranks of the global real estate market. However, the fast-paced build-up of various segments is beginning to show signs of outstripping demand, and the sector may face some challenges in the short to medium term as the rest of Qatar’s economy plays catch-up with robust real estate expansion. Opportunities remain, however, as the need to fill out the housing, hotel and retail portfolios with more mid-range options persists, while a pipeline of major infrastructure projects reaching completion in the run-up to hosting the 2022 FIFA World Cup should see a revaluing of a great number of Doha’s neighbourhoods. At the same time, a shift to higher-quality, lower-cost developments is also being brought on by current market conditions, as tenants demand more for their money. This chapter contains an interview with Nabeel Mohammed Al Buenain, Group CEO, Qatari Diar.Explore chapter
Telecoms & IT
Qatar boasts a well-developed telecoms market, with high levels of internet use and smartphone ownership among the populace, as well as fast mobile and fibre-based internet connection speeds. The larger of the country’s two main telecoms operators has also emerged as a major force in the regional and international mobile telecoms market. The IT sector is less developed in some respects, with industry observers noting comparatively low penetration rates, particularly in the small and medium-sized enterprise segment. However, some fields, such as e-governance, are highly advanced, and a shift towards the use of the cloud and software-as-a-service is under way in the corporate sector. There are also efforts to develop the start-up scene, and Qatar is emerging as an important centre for computing-fo¬cused research, with several applied research projects already having been successfully commercialised. This chapter contains an interview with Ahmad Mohamed Al Kuwari, CEO, MEEZA.Explore chapter
Tourism & Culture
Qatar’s tourism sector is gearing up for expansion in anticipation of a major influx of tourists for the six-week 2022 FIFA World Cup, with the event expected to attract close to 1m visitors. In the build-up to the tournament, investment is being channelled into the development of tourism-related infrastructure to accommodate visitor traffic, and provide avenues of entertainment and sightseeing. In 2016, following the slump in global oil prices, the government identified tourism as one of several priority sectors to be expanded in pursuit of diversification, and a high-level taskforce was created to drive its growth. The strategy revision process began in April 2017, and the economic blockade led by Saudi Arabia and several other Arab nations imposed in June 2017 gave it new impetus and momentum. This chapter contains an interview with Hassan Al Ibrahim, Acting Chairman, Qatar Tourism Authority; and Sohair Wastawy, Executive Director of Qatar National Library.Explore chapter
Education & Research
Home to an array of local and international schools and curricula, as well as a burgeoning university scene, Qatar hosts numerous branches of foreign tertiary education institutions, many of which are in partnership with Qatar Foundation. Although the fall in international oil prices has affected the sector, leading to cuts in university funding, university enrolment has risen strongly in recent years. The country is rapidly developing its university-based research capabilities, in addition to fields like vocational and technical education. This chapter contains an interview with Hamad Al Ibrahim, Executive Vice-President, Qatar Foundation Research and Development, and Chairman, Qatar Science & Technology Park; and a roundtable discussion with Hassan Al Derham, President, Qatar University, and Ahmad Hasnah, President, Hamad bin Khalifa University.Explore chapter
Since taking its first steps towards establishing a primary health care system and standardised health care services in 1954, Qatar has invested heavily in cultivating a highly developed standard of care for the 2.4m nationals and expatriates who call the country home. Like every country in the region, the state faces economic challenges connected to the drop in international oil and gas prices; however, the Qatari government remains committed to health care development as a fundamental objective of Qatar National Vision 2030. To meet the country’s rising demand for health care in a period of constrained government spending, the private sector is increasingly being engaged to share the financial burden and offset government expenditure. This chapter contains an interview with Hanan Mohamed Al Kuwari, Minister of Public Health.Explore chapter
As part of its strategy to promote diversified economic development, Qatar has worked hard to establish itself as a regional centre for sports. Over the past 20 years a surge of investment in infrastructure has paid off as international associations have come to recognise the country’s potential in the athletics arena. Undoubtedly, the biggest success in this regard was in 2010, when Qatar was awarded the right to host the 2022 FIFA World Cup. Despite the diplomatic tensions in the Gulf and the three-year drop in global energy prices, long-term developments associated with the 2022 World Cup plans have not been directly impacted, and authorities have insisted that spending remains unaffected. The country’s authorities are firmly focused on achieving long-term social development goals in line with Qatar National Vision 2030. Meanwhile, businesses and investment groups have entered into numerous partnerships with international athletics entities, further underlining the country’s commitment to develop into an international centre for sports, and encouraging its citizens to engage in active and healthy lifestyles.Explore chapter
Qatar is a major player in the Middle Eastern and international media industries, thanks in large part to its status as the home of news channel Al Jazeera, which, since its inception two decades ago, has developed into a global network, covering events in the Middle East and worldwide in multiple languages. The country is also an important regional advertising market, particularly in regard to newspaper spend, and is emerging as a notable supporter of international cinema.Explore chapter
Qatar’s organised retail sector benefits from the country’s high levels of wealth and is currently going through a period of rapid expansion, with gross leasable area nearly doubling in 2017 alone thanks to a strong pipeline of mall openings. In April 2017 two of the largest of these, Mall of Qatar and Doha Festival City, opened their doors. However, the openings come at a time of lower oil and gas prices and regional disruption due to the ongoing economic blockade, imposed in June 2017 by several Arab nations, along with a population that has seen a levelling out in terms of growth. This should generate greater competition for shoppers, potentially giving rise to a clearer demarcation between premium and second-tier facilities in the coming years as more retail area comes on-line.Explore chapter
This chapter contains an overview of the tax framework in which local and foreign investors operate in Qatar, including a summary of the general rules governing nationals and non-residents, the system requirements for locals and foreign entities, and an analysis of value-added tax, which is to be introduced at a standard rate.
This chapter contains a viewpoint from Wadih AbouNasr, Country Senior Partner, PwC Qatar.Explore chapter
This chapter contains an overview of the legal framework in which local and foreign investors operate in Qatar, including a summary of the rules and requirements for foreign investors, a rundown of the new changes to the labour law, and a look at the modifications to the arbitration process that are taking shape.
This chapter contains a viewpoint from Mubarak Bin Abdulla Al Sulaiti, Chairman, Al Sulaiti Law Firm.Explore chapter
The guide contains listings of some of the leading hotels and resorts in Qatar and contacts for important government offices and services. It also contains useful tips and information for first-time or regular and business and leisure visitors alike.Explore chapter
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