It has been more than 10 years since the launch of Qatar National Vision 2030 (QNV 2030), the document in which the government formally revealed its determination to diversify the nation’s economy. Recognising that a reliance on its abundant natural resources for national income left the country vulnerable to the dynamic fluctuations of world energy prices, the “development of a competitive and diversified economy capable of meeting the needs of, and securing a high standard of living” for all its people was a central pillar of the nation’s long-term strategic plan. The means by which this outcome was to be brought about were similar to those deployed by other major hydrocarbons-producing nations in the region. Revenue from oil and gas assets was to be converted into improved infrastructure, efficient public services, the creation of a skilled and productive labour force, and the support of entrepreneurship and innovation capabilities. In turn, these achievements would provide a broader platform for the diversification of the country’s economy as well as its emergence as a regional centre for both knowledge and high-value industrial and service activities.
The QNV 2030, however, was more a statement of intent than a roadmap to economic diversification. The real blueprint of Qatar’s ambition to broaden its economy came a little later, with the publication of the Economic Diversification and Private Sector Development (EDPSD) strategy. This framework hinges on two strategic focus areas: productivity and competitiveness, and private sector-led growth. The EDPSD established for the first time a set of criteria by which government planners could select viable sectors for development, cognisant of the limited size of the domestic economy and workforce. The priority sectors established by this process were manufacturing, financial services, professional and scientific activities, and ICT. The tourism and logistics sectors were also earmarked for development, as they were viewed as necessary catalysts for the priority sectors. A broad array of sector-specific and cross-sector initiatives were then envisaged, the development of which have formed part of Qatar’s medium-term strategic plans, the first National Development Strategy 2011-16 (NDS-1) and the second National Development Strategy 2018-22 (NDS-2). These five-year plans sit under the QNV 2030 in the strategic hierarchy, and enable government planners to react to shifting economic circumstances, fine-tune existing initiatives and recalibrate the government’s reform efforts as needed.
More than a decade after the publication of the QNV 2030, it is possible to assess Qatar’s progress towards economic diversification. On paper, the results are impressive: in 2017 the oil and gas industry accounted for 48.2% of GDP, according to the Qatar Central Bank, down from 60.1% in 2011. Qatar’s efforts to diversify its economy are also visible on the ground, particularly developments linked to the two enabling sectors of tourism and logistics, defined as such by the EDPSD. Hamad International Airport is 12-times the size of Doha International Airport, which it replaced in April 2014. While early planning for the giant development preceded QNV 2030, the 22-sq-km facility is a vital component of Qatar’s diversification plan, establishing the peninsula as a cargo, business and leisure travel hub.
A decade ago just 5m people passed through the old airport each year; the figure is now closer to 25m. This number will rise again as further phases of the airport are developed. The new Passenger Terminal Expansion Project will increase the airport’s annual capacity from 35m to 65m passengers.
Hamad Port, meanwhile, became operational in 2016 and was officially opened the following year. A 4-km basin, 700 metres wide and 17 metres deep, enables it to receive the world’s biggest ships. It is expected to become fully operational in 2020, and with the completion of all construction phases it will have an annual capacity of 7.5m twenty-foot equivalent units. This makes Hamad Port larger than globally significant facilities at Long Beach in the US, Yingkou in China and Colombo in Sri Lanka, and on a par with Kehin in Japan and Laem Chabang in Thailand. Qatar’s new airport and port facilities have been crucial in the government’s managing of the economic blockade, allowing it to secure new air and sea transport routes and revitalise the import of basic commodities.
Another new development is the Doha Metro, which at the close of 2018 was undergoing a phase of testing. Qataris have already become accustomed to the sight of its elevated sections and the outline of the Msheireb station, which will act as a hub for the network, and will soon have access to one of the fastest driverless urban transit systems in the world. The first phase of the project, originally scheduled for completion in 2020, involves three lines and 37 stations. Future phases will add a further 60 stations and another line, to bring the approximate extension of the system to 300km.
The country’s diversification drive runs deeper than the nation’s massive infrastructure projects, however. The NDS-1 placed great emphasis on the diversification goals established by the EDPSD, proposing a range of interventions aimed at strengthening the business environment and boosting private sector involvement in the economy. It also established 13 targets to measure the progress of these efforts between 2011 and 2016.
With the launch of the NDS-2 the Planning and Statistics Authority (PSA) gave its verdict on the government’s attempts to reach the goals set by the previous plan. The picture that emerged was broadly positive, with some reservations. Significant progress was made towards the targets relating to entrepreneurship, particularly in terms of the widening of Qatar Development Bank’s mandate and its merger with Enterprise Qatar. The establishment of the Qatar Science and Technology Park and the scaling up of the Qatar Finance and Business Academy were also important institutional advances during this period.
On the legislative front, the development of a public-private partnership (PPP) framework is also held up by the PSA as an important advance in diversification efforts. The government is banking on the long-awaited law to drive development across sectors beyond the power and water industries, which have accounted for the bulk of PPP activity in the region. Encouragingly, a number of notable PPP-based projects have already been initiated in the education, health and tourism sectors, and in late 2018 four major warehousing parks were unveiled that had been developed following the PPP model.
Elsewhere, however, the NDS-1 targets proved to be more elusive. In particular, progress toward achieving the targets related to increasing the national capacity for discovery and innovation was “uneven and varied”, according to the PSA. The ministry accordingly called for an increase in efforts to foster invention and innovation, in order to facilitate Qatar’s transition to a knowledge-based economy. The foreign direct investment facilitation targets established by NDS-1, meanwhile, are still a work in progress, with the government mulling over a number of initiatives and policy proposals that are intended to make the country a more attractive proposition to foreign investors (see Trade & Investment chapter).
In addition, the government’s efforts to boost Qatar’s ranking in the World Bank’s influential doing business index are yet to be fully realised. In 2019 Qatar ranks 83rd of 190 countries in the index, a decline from its 2011 ranking of 39th out of 183 countries. The World Bank identifies three developments which have made doing business in the country more challenging over the past seven years: a 2011 decision which added a procedure to register for taxes and obtain a company seal; changes to the construction permit process in 2012; and weakening in the position of minority investors resulting from regulatory changes in 2017. Better progress has been made in areas such as paying taxes (where Qatar is placed second globally), registering property (20th) and dealing with construction permits (20th).
The country has recently reaffirmed its intention to improve its doing business rankings, with the Ministry of Commerce and Industry taking the lead in this endeavour in July 2017 by establishing a dedicated committee to prepare a plan of action. This effort is an encouraging sign of the government’s willingness to expand external assessment. Further responsiveness will also be required of the government with regard to the ongoing consequences of the recent political developments. Hamad Port and its integrated logistics zone, for example, were originally meant to help connect Qatar to railway networks in neighbouring Gulf countries, a goal that may have to be postponed as the nation’s diplomatic rift with fellow GCC states enters its second year.