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 stop or rerouteing 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 (PPPs). Indeed, there are significant opportunities for private sector collaboration given that upwards of $200bn worth of infrastructure projects were under way as of September 2016, and the rate of spending on projects for the 2022 FIFA World Cup was $500m per week in February 2017, according to Ali Shareef Al Emadi, the minister of finance.

In Figures 

Largely due to high oil prices, Qatar enjoyed a positive trade balance equivalent to 57% of GDP as recently as 2012. However, with the price of oil falling to as low as $30 per barrel in recent years, Qatar’s trade balance has shifted: in 2015 the full-year balance accounted for nearly 30% of GDP, while provisional data for 2016 shows the positive trade balance dipping to QR92.2bn ($25.3bn), or 17% of GDP. The trade balance did, however, increase to 21% of GDP in the first half of 2017, totalling QR61.2bn ($16.8bn).

The sharp contraction in 2016 was prompted by the significant reduction in the value of Qatari exports, which fell by 26% that year, according to the Ministry of Development Planning and Statistics (MDPS). When compared to the recent peak in export values of QR480bn ($131.9bn) in 2013, the decline is even sharper, at 57% over the space of three years. The first three months of 2017 saw a 4.2% rise in exports over the fourth quarter of 2016, but the gain scaled back 3% in the second quarter.

On the other side of the equation, Qatar’s imports have been increasing at a relatively stable and sustainable rate, rising from QR91.8bn ($25.2bn) in 2012 to QR116.2bn ($31.9bn) in 2016 – a compound annual growth rate of around 7% – and registering QR55.4bn ($15.2bn) in the first half of 2017. This is largely due to the government’s policy of expatriating the majority of bumper-year hydrocarbons earnings outside of the domestic economy and into long-term investments managed by the Qatar Investment Authority (QIA).

Capital Flows

While official figures are not released concerning the size of assets managed by the QIA, their scale can be determined by the significant increase in investment revenues declared by the government in its annual budget. In FY 2011/12 revenue from investment totalled QR25.8bn ($7bn), while in the short span to FY 2014/15 it had risen to QR111.8bn ($30.7bn), the last fiscal year for which the figure was reported separately.

Statistics from the Qatar Central Bank (QCB) show that 2016 witnessed capital returning to the country to fund domestic needs as export revenues decreased. The capital and financial account recorded a net inflow of QR13.8bn ($3.8bn) for the year, and with it, a negative current account balance of QR30.3bn ($8.3bn). After low export values shifted Qatar to a net debtor in 2016, the first half of 2017 saw the country return to being a global lender. Net outflows of QR36.9bn ($10.1bn) were posted in the first six months of the year, as well as a positive balance of QR4.5bn ($1.2bn) in the current account.

The changing direction of capital flows has had an impact on the QCB’s international reserves, which fell from QR135.2bn ($37.1bn) at the end of 2015 to QR115.1bn ($31.6bn) at end-2016 and QR90.1bn ($24.7bn) in June 2017. International reserves continued to decline after the blockade was imposed in mid-2017, with the balance settling at QR60.2bn ($16.5bn) in September 2017.

Foreign Investment

In 2016 the MDPS obtained data on foreign direct investment (FDI) through a survey of approximately 150 “significant enterprises” that were thought to account for an estimated 90% of foreign investments. Preliminary data for the reference year 2015 was published at the end of 2016 and finalised in a press release in May 2017. According to the survey, inward stocks of both FDI and foreign portfolio investment declined in 2015. FDI fell by QR11.2bn ($3.1bn) to QR133bn ($36.5bn), while portfolio investment fell by QR16bn ($4.4bn) to record an annual total of QR71.9bn ($19.7bn).

At the same time, stocks of outward foreign investment increased. Outward FDI flows amounted to QR8.9bn ($2.4bn) in 2015, bringing total stocks to QR130.8bn ($35.9bn). Outward portfolio flows also increased, rising by QR3.3bn ($906,000), with overall stocks totalling QR35.4bn ($9.7bn). The data does not, however, include international financial transactions made by individuals or the government, meaning that the final figures do not correspond with the QCB’s balance of payments statement.

The data reveals that 90% of inward FDI in Qatar was accounted for by investments in the oil and gas sector, including downstream manufacturing activities and services such as transportation and marketing. In total, more than 60 countries contributed to Qatar’s inward FDI stocks in 2015; however, these were highly concentrated into four market groups. The EU, the US, other American countries and Asia (not including the GCC) accounted for 93% of all stocks.

Data released by the UN Conference on Trade and Development (UNCTAD) paints a slightly different picture. According to UNCTAD, Qatar’s inward FDI continued to increase in 2015, with additional flows of $1.1bn bringing total stocks to $33.2bn, equivalent to 20.1% of GDP. UNCTAD’s figures show that inward FDI increased by a further $774m in 2016.

The statistics from UNCTAD also demonstrate the extent to which FDI inflows to Qatar have declined in importance relative to overall investment in the economy since the global financial crisis of 2008. The 2005-07 annual average of inward FDI was equivalent to 13.7% of Qatar’s gross fixed capital formation, while the figure for 2016 was just 0.8%. This is indicative of two things: first, that the absolute level of investment in the economy has increased significantly, owing principally to activities for hosting the 2022 FIFA World Cup; and second, that this new investment has – up to this point – been mostly in the form of government-funded public infrastructure programmes. Recent investments in the oil and gas sector have, by contrast, slowed since the government’s 2005 moratorium on further development of the giant natural gas North Field, which was lifted in April 2017.

Trade Partners

According to the QCB, Japan was Qatar’s top export market from 2012 to 2016, receiving 30% of total exports during the period. Japan was followed by four other Asian economies: South Korea (21%), India (13%), China (8%) and Singapore (6%). In sixth place was GCC neighbour the UAE, which received 5% of Qatar’s exports during those years.

The pattern reflects the demand for Qatar’s main export commodity, liquefied natural gas (LNG), which is principally sold through long-term contracts indexed to oil prices. According to the US Energy Information Administration, despite a recent shift to shorter term contracts and spot market sales, 90% of Qatar’s LNG production through to 2021 is already committed to such supply purchase arrangements, and the majority of these are with Asian economies.

The US is generally the largest market from which Qatar sources its products, comprising 12% of total imports during 2012-16, followed by China (10%), the UAE (8%), Germany (7.5%) and Japan (7%).

This more geographically diverse source of imports reflects Qatar’s current demand for consumer goods and heavy industrial equipment, specifically in the transport segment. Indeed, the top categories for imports are aircraft parts (for the expansion of Qatar Airways), automobiles and radio transmission equipment, according to the World Bank.


Qatar is well integrated in the global trade network and is a signatory to a number of bilateral and multilateral treaties. As a GCC member, since 2003 Qatar has been working towards the establishment of a Customs union with a common external tariff of 5%. While the union was formally inaugurated on January 1, 2015, intra-bloc trade had already quadrupled since 2003, surpassing $100bn in 2014.

Through its membership of the GCC, Qatar is a co-signatory to seven bilateral agreements. These include free trade agreements with the European Free Trade Association, signed in 2009, Singapore (2008) and Lebanon (2004), as well as framework agreements with India and the US. In addition, Qatar has been a member of the Greater Arab Free Trade Area – which covers goods from 16 nations – since it came into effect in January 1998.

Individually, Qatar has been a member of the World Trade Organisation (WTO) since 1996, and the General Agreement on Tariffs and Trade since 1994. It has signed a total of 53 bilateral investment treaties, with 23 of these having come into force. Qatar has agreements with Egypt, France, Germany, Italy, Russia and Turkey, among others, while it also signed a trade and investment framework agreement with the US in 2004. Additionally, the country adheres to 22 regional or multilateral investment-related instruments, including the fifth protocol of the General Agreement on Trade in Services (GATS) and the 2011 UN Guiding Principles on Business and Human Rights.

New Deals

 In relation to specific investments and new trade ties, Qatar continues to strengthen its links with a number of Asian partners. In February 2017 the first session of a new joint intergovernmental economic and technical commission on trade between Qatar and Azerbaijan was held in Baku, following the signing of eight agreements between the two countries in March 2016. Further meetings held with counterparts from Indonesia and Kazakhstan in September and December of 2016, respectively, also aimed at boosting bilateral ties. Further, a prior agreement with China to establish a clearing house at the Qatar Financial Centre (QFC) has already yielded substantial results, with the Industrial and Commercial Bank of China clearing transactions totalling RMB419bn ($62.9bn) between its inauguration in June 2015 and November 2016, according to local media.

Perhaps the most significant of Qatar’s trade ties are the country’s growing links with Turkey. In December 2016 a total of 14 trade agreements were signed between the two countries in Trabzon, following Qatar’s acquisition of Turkish entities Finansbank and media company Digiturk. Qatar, which currently has $20bn worth of FDI in the Turkish economy, is looking to grow its interests with a further $12bn power plant investment in southern Turkey. For its part, Turkey is keen to expand on the $2.5bn in infrastructure contracts already signed in Qatar, as well as securing additional LNG imports.

In general terms, Qatar was the region’s most active member for outbound mergers and acquisitions (M&A) in 2016. According to Thomson Reuters, Qatar’s overseas acquisitions accounted for 33% of outbound M&A activity in the Middle East for the year, followed by Saudi Arabia with 28% and the UAE with 20%. Despite Qatar’s prominence, the Middle East’s overall outbound M&A fell by 24% to $14.7bn, while the overall value of M&A activity with any Middle Eastern involvement fell by 16% to $46.9bn. The decline was largely driven by the fall in global oil prices, which has resulted in budget deficits across the region and a generally more conservative investment outlook in hydrocarbons-rich countries.


Qatar ranked 83rd out of 190 economies in the World Bank’s “Doing Business 2018” report, falling from 74th position in 2016. While Qatar ranked relatively high in certain areas, including paying taxes (joint first position), dealing with construction permits (19th) and registering property (26th), its overall ranking was let down by its performance in the fields of resolving insolvency (116th), enforcing contracts (123rd), getting credit (133rd) and protecting minority investors (177th).

In recent changes to Qatar’s business environment, perhaps the most significant positive point relates to the abolition of the minimum paid-in capital requirement for limited liability companies (LLCs). Alongside continuing improvements to the single-window system at the Ministry of Economy and Commerce (MEC), this saw Qatar’s ranking in the category of starting a business improve by 21 places in 2017, rising from 112th to 91st. With Qatar beginning to issue consumer credit reports to banks, financial institutions and borrowers, this category saw an additional improvement of two places in the 2018 report.

The second positive change concerned the reduced time for border compliance, stemming from 2016 reforms to the number of days of free storage at Doha Port, which led to a reduction in the time required for port handling. In the absence of further improvements, however, Qatar’s ranking for trading across borders slipped four places to 128th in 2017. The category rebounded to 90th in the 2018 report, due to the September 2017 inauguration of Hamad Port to more easily facilitate import and export activity.

The final change highlighted by the World Bank concerned the deterioration in protections for minority investors. According to the 2017 report, minority protections were weakened by “decreasing the rights of shareholders in major decisions, by diminishing ownership and control structures, by reducing requirements for approval of related-party transactions and their disclosure to the board of directors, and by limiting the liability of interested directors and board of directors in the event of prejudicial related-party transactions”. The changes resulted in Qatar falling 47 places in the related category, from 136th to 183rd. However, protecting minority investors rose slightly in the 2018 edition, to rank 177th.

Legal Framework

Foreign investment in Qatar is currently regulated by Law No. 13 of 2000, which restricts foreign ownership in an enterprise to 49%, although within certain sectors ownership may be increased to 100% following government approval. Foreign investors have certain rights under the law, including the unrestricted transfer of funds and assurances against expropriation.

Over the years this legal framework has been gradually liberalised. Law No. 1 of 2010 allowed for up to 100% foreign ownership in a number of sectors, including agriculture, industry, health, education, tourism, energy and mining, and ICT, upon approval of the MEC. Furthermore, the Commercial Registration Law (No. 20 of 2014) standardised and streamlined the process for registering new companies, while the Commercial Companies Law (No. 11 of 2015) removed the need for a minimum share of capital in LLCs.

In addition, the Commercial Companies Law reformed the types of company structure that are permitted, removing private establishments and single-person companies from the list of sanctioned business entities. Now, seven models are offered: LLCs; private shareholding companies; public shareholding companies; joint ventures; limited partnerships; equity partnerships; and general partnerships.

Many of the foreign ownership regulations are flexible, however. The profit-sharing ratio of a partnership may be structured up to a maximum arrangement of 98:2, for example, and the foreign partner may also maintain the right to appoint the general manager. Indeed, the greatest challenge of the prevailing model from the perspective of foreign ownership concerns not entry to the market, but rather exit, as until recently there was no way for non-residents to easily dispose of shares in a manner compliant with capital gains disclosure requirements.

Further reform to the legal environment governing foreign investment is currently being prepared. A draft law on foreign investment, which is to replace Law No. 13 of 2000, secured Cabinet approval in late 2016. Local media reported that the new law would enable non-Qataris to invest up to 100% of project capital in all sectors of the national economy, provided such companies have a Qatari services agent. The law will also allow for up to 49% foreign ownership of companies listed on the Qatar Stock Exchange. A law to regulate PPPs is also at the draft stage, and is expected to be approved in early 2018 (see analysis).


The new legal framework aligns with Qatar’s strategic plan to develop the national economy. The Qatar National Vision 2030 (QNV 2030) was launched in 2008, focusing the country’s future around four pillars: human, social, economic and environmental development. To deliver the QNV 2030 objectives, various government ministries and public bodies, coordinated by the MDPS, launched the National Development Strategy (NDS) in 2011.

The first NDS spanned 2011-16 and included 14 sector strategies, with diversification mainly targeting non-tradeable sectors such as construction. The new NDS for the 2017-22 period is currently being developed and, according to local media at the end of November 2017, will be released soon. The second instalment is expected to focus on incentivising the private sector with the aim of implementing policies, rules and regulations to support the growth of a knowledge economy, and further improve aspects of the business environment.

Targeted Sectors

As well as horizontal reforms to the business environment, the new strategy will also feature a renewed focus on a number of vertical sectors specifically targeted for diversification. Given Qatar’s broader economic circumstances, six sectors have been identified as having considerable future growth potential: manufacturing, particularly in high-value competitive tradeable goods, pharmaceuticals and downstream petrochemicals; financial services; professional and scientific activities; tourism; logistics; and information and communication.

While specific policies to target these sectors are yet to be announced, the government is reportedly considering the development of an in-country value (ICV) scheme in light of emerging best practice within the region and among other hydrocarbons-intensive economies. ICV, which is currently being implemented in Oman, involves policies targeted toward the identification and domestic retention of high value-added economic activities, typically through time-limited protection measures. Such a scheme is likely to be delivered through the auspices of the Qatar Development Bank (QDB), which already has a robust framework for supporting small and medium-sized enterprise (SME) development.

Free Zones

Another important tool for channelling growth to specific sectors is the establishment of special economic zones (SEZs). Qatar’s first targeted SEZs – Qatar Science and Technology Park (QSTP) and the QFC – were established in 2005. Both offer incentives aimed at attracting foreign investment to the country. In the case of QSTP, these include tax and Customs duties exemptions for non-local investors, as well as relaxed Qatarisation quotas for a firm’s workforce. At the QFC, which is an onshore jurisdiction, incentives include a 10% corporate tax on locally sourced profits, 100% repatriation of profits to the home country, no restrictions on the type of currency used for trading, and an independent legal and arbitration framework based on English common law. Both SEZs allow for 100% foreign ownership.

By the end of 2016 the QFC had registered nearly 350 firms operating in a variety of fields, including business and professional services, regulated financial services, and investment and management structures. QSTP currently has 45 tenants in its free zone, including GE, Cisco, Microsoft and Siemens. A separate specialised incubator for SMEs, Qatar Business Incubation Centre (QBIC), was established in 2014 by the QDB in partnership with the Social Development Centre. QBIC offers incentives such as two years of rent-free office space and a variety of training opportunities. As of 2016 it had received a total of 1200 applications and incubated 52 start-ups.

Following the success of QFC and QSTP, in 2011 the government announced the establishment of Manateq, a state-owned company charged with developing additional SEZs. Manateq’s SEZs offer the same benefits and exemptions as QFC and QSTP, including 100% foreign ownership, and it currently has plans to develop three new economic zones: Ras Bufontas, located near Doha’s Hamad International Airport; Um Alhoul, near the new Hamad Port; and Al Karaana, located between Doha and Abu Samra.

Each zone will be dedicated to specific activities. Ras Bufontas will host communications, IT, energy, logistics, construction and transportation firms. The 4.1-sq-km site is currently the most developed, with work having started in 2014. Applications from investors, which include Qatar Airways, were received as early as 2016, and the zone is expected to open in the fourth quarter of 2018. Um Alhoul, a 33.5-sq-km development, will focus on light industry, including petrochemicals, logistics and goods processing. The zone will open in stages, with the first due to be completed by the end of 2018. The 38.4-sq-km Al Karaana zone is still in the planning stage, and will target building materials, machinery and fabrication, and warehousing, with an intended completion date of 2020. It was also announced in June 2016 that Qatar Petroleum would cede control of 200 projects in the industrial city of Mesaieed to Manateq.


While the country’s trade balance has rebounded to 20.6% of GDP in the first half of 2017, Qatar is unlikely to see a return to the bumper surpluses of recent years, as oil prices are likely to remain significantly below the $100-per-barrel mark over the long term. In the shorter term, the country may post lower trade values in the second half of 2017 as it adjusts to the regional blockade, but the new Hamad Port is expected to mitigate any disruptions.

Macroeconomic conditions favour a shift towards greater investment from the private sector in the delivery of major infrastructure projects, and the government has indicated that it will seek such partnerships going forward. Similarly, reforms to foreign ownership laws will further see the gradual opening of the economy to investment in areas targeted for diversification, particularly in high value-added, tradeable sectors named by authorities. In addition, rolling out new SEZ facilities will add even more incentives to the overall policy mix to secure new investor inflows.