Qatar’s manufacturing industry is of central importance to the government’s economic diversification drive, with high-value production lines receiving substantial public and private investment in recent years. The country appears to have worked the 2017-21 economic and diplomatic blockade put in place by a number of GCC countries to its advantage, with the new trade partnerships forged during that period contributing to the robust expansion of its manufacturing and exports. The next stage of industrial development for Qatar sees the country at a relatively advanced stage of Industry 4.0 implementation, while the adoption of circular economy methods is also expected to contribute to the evolution of Qatari manufacturing.
Strategy
Qatar National Vision 2030 (QNV) is the government’s overarching socio-economic development blueprint. QNV goals focus on economic diversification as the country attempts to lower its dependency on hydrocarbons. Qatar also implemented its Second National Development Strategy 2018-22 (NDS-2), a medium-term roadmap designed to guide progress towards the realisation of QNV with a strong focus on the diversification of local manufacturing. The Third National Development Strategy (NDS-3), which launched in January 2024 and runs until 2030, identifies the potential to boost manufacturing growth focused on chemicals and low-carbon metals (see analysis).
With a view to reaching the ambitious milestones set by both QNV and the NDS-3, Qatar is in the process of expanding hydrocarbons production – channelling resulting revenue into the diversification drive, boosting job creation and enhancing the quality of life on offer for the country’s citizens and residents. The NDS-3 prioritises the adoption of Industry 4.0 practices and circular economy principles across all manufacturing sub-sectors, with the broader goal of generating a compound annual growth rate (CAGR) of 3.4% in the real GDP of the manufacturing sector through 2030, and 1.9% CAGR in labour productivity in the sector.
Sectors targeted to drive economic diversification have received tailored development strategies. The government’s goals for the manufacturing sector involve enhancing synergies between public and private stakeholders, drawing investment into the development of business zones and industrial clusters, boosting entrepreneurship and expanding the country’s base of manufacturing-related small and medium-sized enterprises (SMEs). In doing so, industrial authorities aim to drive up export volumes and receipts, as well as enhance national innovation capacities and industrial human capital. Production lines targeted for expansion include additives, plastics, pharmaceuticals, aluminium and polymers – with the government aiming for these segments to account for more than 50% of manufacturing GDP by 2030. Other specific targets for the manufacturing sector by the end of the decade include working to attract $27.5bn of additional private investment, expanding the manufacturing workforce by 77,000 and facilitating the establishment of 400 new private manufacturing companies.
Progress
Qatar has made significant strides towards the goals of its medium-term strategies. Indeed, 380 manufacturing facilities were established in the country during the period 2015-19. Meanwhile, the sector contributed $21.7bn to GDP in 2022, and that same year Qatar, through the Ministry of Commerce and Industry (MoCI) and the Qatar Development Bank (QDB), became one of 14 countries to have partnered with the World Economic Forum (WEF) to launch an advanced manufacturing facility. Meanwhile, the country’s industrial technologies segment is undergoing significant growth, receiving greater international investment.
A number of reforms to investment legislation in recent years have enhanced Qatar’s reputation as an attractive investment destination. This is further bolstered by the country’s readily available hydrocarbon supplies, allowing it to offer competitive energy prices to international industrial operators and innovators.
Structure & Oversight
The MoCI is the government body responsible for regulating Qatar’s manufacturing sector, and for aligning industrial direction with the goals of QNV and the NDS. Beyond policy and strategy implementation, the MoCI’s broad remit positions it as the primary authority in business registration and licensing processes and approvals. Additionally, the ministry regulates trade professions and provides vital business services to commercial operators. Notably, international investors wishing to establish an enterprise in the country according to the provisions of the Law No.1 of 2019 on Regulating the Investment of Non-Qatari Capital in Economic Activity, which opened most economic sectors and activities in the country to 100% foreign business ownership, are required to receive prior approval from the MoCI.
Qatar Chamber of Commerce and Industry (Qatar Chamber), established in 1963, is another key entity for manufacturers – issuing certificates of origin for goods bound for export and re-export through Qatar’s logistics ports. Qatar Chamber also operates in an advisory role regarding the development of the multiple components of commercial and industrial activities, while also carrying out various promotional duties to market Qatar to the international business community.
Meanwhile, Qatar’s free zones are instrumental to the success of the government’s economic and industrial diversification efforts, making the work carried out by the Qatar Free Zones Authority (QFZ) crucial to industrial development. Similarly, given the importance of attracting international investment to the government’s development agenda, and the manufacturing sector’s fundamental role in that drive, the Investment Promotion Agency (Invest Qatar) is another key entity for the attention of international investors – with the completion of most administrative investment procedures possible through its centralised digital portal, invest.qa (see Trade & Investment chapter).
Hydrocarbons Production
In October 2021 Qatar Petroleum, established in 1974, was rebranded as Qatar Energy (QE) to better reflect the company’s future strategic direction – which sees it align with the global transition away from hydrocarbons and towards a cleaner, more sustainable energy mix. QE’s various operations make it integral to the country’s upstream, midstream and downstream industrial activities. Among its current major development projects are the North Field expansion project, which is set for completion in 2027. This should considerably increase Qatar’s production of liquefied natural gas (LNG) and feed various other development and redevelopment initiatives.
One of these initiatives is an upcoming petrochemicals complex, which, once complete, will house the largest ethane cracker in the Middle East – with a nameplate annual capacity of 2.1m tonnes. The two high-density polyethylene derivative units set to be installed in the complex will carry a combined annual capacity of 1.7m tonnes per year, raising the country’s polyethylene production capacity by around 82%. January 2023 brought the announcement that the $6bn contract for the complex had been signed with US firm Chevron Phillips Chemical, with the plant expected to commence production in 2026.
Meanwhile, Industries Qatar (IQ) was established in 2003 as a joint stock company and is a 51% subsidiary of QE. IQ is a holding company for Qatar’s major downstream and manufacturing operators, specialising in petrochemicals, fertilisers and steel. The list of firms operating under the IQ umbrella comprises Qatar Petrochemical Company, Qatar Fuel Additives Company, Qatar Fertiliser Company and Qatar Steel. Since its inception the group has invested around QR26bn ($7.1bn) in the country’s downstream industries.
Industrial Cities
The new petrochemicals plant is under construction in the 295-sq-km Ras Laffan Industrial City, which is one of three industrial zones owned by QE and is situated 80 km north of Doha. The zone is the base for Qatar’s primary hydrocarbons operations, and the zone’s port, Ras Laffan Port, is the largest LNG export facility in the world. The strategic positioning of a major petrochemicals plant in close proximity to such substantial feedstock and logistics infrastructure is expected to provide a major boost to Qatar’s manufacturing output and export receipts.
Mesaieed Industrial City covers an expanse of 104 sq km and is located around 50 km south of Doha, housing extensive gas processing and refining facilities, as well as being the primary petrochemicals production centre and the base of Qatar’s metals industries. Mesaieed Port, which is among the largest petrochemicals export facilities in the Middle East, also receives imports of essential construction materials. Meanwhile, Dukhan Concession Area spans 767 sq km, lies around 85 km west of Doha and is at the core of QE’s onshore hydrocarbons drilling, production and processing activities.
Size & Performance
Qatar has undergone a series of economic shocks in recent years, in light of an economic and diplomatic blockade imposed against the country by Saudi Arabia, Bahrain, Egypt and the UAE between 2017 and 2021. During that time, the Covid-19 pandemic severely impacted global economic activity and caused long-lasting disruption to international supply chains, as has Russia’s ongoing invasion of Ukraine since it began in February 2022. This series of headwinds saw multi-sector slowdown in Qatar, although in 2018 – the year following the beginning of the blockade – the manufacturing sector expanded by 6.7%, before undergoing consecutive contractions during 2019 and 2020 of 1.7% and 6.7%, respectively. The sector has rebounded since the worst effects of the pandemic subsided, growing by 3.9% in 2021 and 2.1% in 2022, when the sector ended the year with a GDP of QR53.5bn ($14.7bn). Although the sector registered a quarter-on-quarter contraction of 3.7% during the first three months of 2023, the same period returned positive year-on-year movement of 10.9% measured against the first quarter of 2022.
Sustainability
The decarbonisation of emissions is a key pillar of the circular economy approach. Alongside renewable energy production, carbon capture, utilisation and storage technologies are thus a core focus for Qatar’s industrial players. A comprehensive circular economy requires a robust supporting policy framework and behavioural changes at every level of society. The alterations required for the manufacturing industry to translate this vision into reality are sizeable. A May 2023 study conducted by GCC member countries found that the implementation of circular economy principles could save the region $138bn by 2030.
Indeed, economy-wide sustainability is central to QNV. In light of Qatar’s relatively small population, vast sovereign reserves and advanced digital infrastructure, the country has an opportunity to provide a blueprint for a successful circular economy that other countries may follow – and Qatar’s prominence in global energy production perhaps gives it a responsibility to do so. The country’s approach to circular economy development involves data collection and utilisation to inform policy formulation, as well as an economy-wide approach to circular economy facilitation, the creation of robust regulatory frameworks to enable progress, education and awareness campaigns targeting consumers and citizens, and the integration of circular economy policy and strategy into foreign direct investment strategy.
The final of those five pillars sees Qatar targeting investment in circular-economy-related innovation, such as relevant technology and sustainable materials. A significant development, designed to promote advanced-technology adoption and innovative industrial practices, was announced at the second edition of the Qatar Economic Forum, which was held in Doha in June 2022. It saw US-based green technologies and biodegradable absorbents manufacturer Green Boom sign an agreement to establish a manufacturing plant and regional distribution centre in Qatar to serve the MENA region and India, creating 100 jobs in the country.
Invest Qatar stated in January 2023 that Qatar housed nine waste management firms built on circular economy principles. By 2030 the agency anticipates the national circular economy to yield $17bn, creating 19,000 new jobs. Invest Qatar highlighted opportunities for global investors in recycling, waste-to-energy technology and materials recovery. An earlier NDS outlined a target for materials repurposed by Qatari manufacturers to provide 20% of construction materials in the country. Around 5% of waste in Qatar comes from its metals industries, with steel contributing 70% of that figure and 30% resulting from aluminium producers.
Key Developments
The WEF’s advanced manufacturing facility presents a standout opportunity for investors and local manufacturers in the country. Through a network of similar facilities around the world, the WEF is working to instil the cross-continental synergies that are required among international manufacturers in order to boost industrial sustainability and strengthen global supply chains. Fostering closer economic and diplomatic ties between the nine countries containing such facilities, which are spread across four continents, is expected to stimulate stronger investment flows between participating countries.
Global economic and geopolitical shocks in recent years have highlighted the need for heightened agility throughout international commercial ecosystems, while the ever-increasing focus on environmental sustainability necessitates deeper cooperation from the international industrial community. While it is important to address region-specific challenges, a collaborative approach to issues such as circular-economy implementation, workforce upskilling, decarbonisation, end-to-end performance optimisation and the digital transition can yield a far-reaching positive impact for global industry and the broader population.
When Qatar launched its advanced manufacturing facility in May 2022, Factory One – which was established by QDB in 2021 as a performance and workforce optimisation facility for both corporate entities and SMEs – was incorporated into the facility as its first official operator. As the country’s first model factory, a term applied to facilities powered almost entirely by advanced technologies, Factory One encapsulates the Industry 4.0 ethos – with training and upskilling programmes designed to enable the advancement of national and regional industrial capabilities.
Small Businesses
The work of these entities is contributing to the development of Qatar’s SME and start-up ecosystem, which is being primed to drive the country’s further industrial growth and broader economic expansion. Additional initiatives include QDB’s operation of the Jahiz facility, which seeks to support manufacturing entrepreneurs and start-ups in driving the production of Qatari-origin goods. In addition, training programmes and workshops are a core component of the initiative, while 47 operation-ready premises and attached office space are available for SMEs that meet QDB’s criteria.
The broad array of offerings for start-up development in Qatar resulted in the country being named among the top-15 in “The Global Start-up Ecosystem Report 2023”, compiled by US-based, start-up analytics agency, Startup Genome. Against this backdrop, the combined value of existing start-ups and exit sales in Qatar rose by 133% between the second half of 2018 and the corresponding period of 2022, with the country’s advanced digital infrastructure, strategic focus on innovation, improving business climate and readily available funding proving increasingly attractive to manufacturing entrepreneurs and start-ups.
Targeted Expansion
The government’s focus on sustainability and the technologies of the future has stimulated notable inward investment in targeted manufacturing lines. For example, in 2022 US-based Inventus Power, which specialises in the development and manufacturing of advanced battery technology, launched its new production facility in the Ras Bufontas free zone – one of the two zones overseen by the QFZ. The fully integrated factory will enable the company to extend its global reach, and is intended to serve Europe, the Middle East and Africa across commercial, industrial, medical and military segments. Meanwhile, in April 2023 Philippines-based electronics manufacturer and service provider, Pythos Technology Philippines, stated its intention to establish a production headquarters in Qatar as a possible gateway to Africa and Europe.
The country’s electric vehicle (EV) industry is primed to undergo a significant expansion, with solid foundations set in place in recent years and Qatari consumers showing significant appetite for EVs. Major international manufacturers, such as Gaussin and Yutong, have established partnerships with Qatari entities to test EVs in the country. The government’s aim to electrify the entire national bus fleet and ensure that 25% of all private vehicles are electric by 2030 should incentivise further inward investment. In addition, the June 2023 launch of Qatar-based smart transport company Ecotranzit brought the announcement of Qatar’s first home-grown EV brand, VIM, with a range of models set to be produced in the country.
As the country prioritises economic diversification and actively fosters the promotion of the manufacturing sector, alongside the expansion of new industrial subsectors, this may necessitate increased investment in electricity transmission infrastructure to keep pace with escalating demand. Qatar stands out as an appealing market for investment in such infrastructure, fuelled by its growing population and relative insulation from regional political unrest.
Outlook
The technological processes within Qatar’s advanced manufacturing facility, and other such developments, will be of prime benefit to the value chains targeted for growth. In addition, recent regulatory reforms, the continual adaptation of investment law, Qatar’s advanced industrial infrastructure and its strategically advantageous geographical location are helping to position the country as an attractive place to establish a manufacturing presence. Meanwhile, the government’s willingness to place funding into the development of manufacturing start-ups and SMEs sees the sector becoming more accessible to a broader section of the population, further augmenting it as a primary cog in Qatar’s socio-economic development.
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