Qatar’s bid to enhance its reputation as an international investment destination gathered significant momentum during the country’s preparations for the 2022 FIFA World Cup. The changes made to investment-related legislation in recent years are expected to lead to Qatar continuing its upward trajectory in terms of its ability to attract international investment now that the tournament is in the past. Meanwhile, Qatar’s natural gas reserves – the country was the world’s largest exporter of liquefied natural gas (LNG) in 2022 – enable it to overperform in international trade relative to its population, which was 3.1m as of January 2024. Qatar’s free zones and its modern logistics infrastructure offer some of the world’s most competitive incentives for prospective investors.
Structure & Oversight
In July 2019 the Investment Promotion Agency (Invest Qatar) launched with a remit to oversee investment activity within the country. In addition to its work promoting Qatar to the international business community, the agency acts in a facilitatory capacity, offering end-to-end guidance and support to entrepreneurs and investors, beginning at the exploratory stages of the investment process, and continuing through to business setup and expansion. Operating under the Invest Qatar brand, Invest Qatar provides a digital portal of the same name through which administrative procedures can be fulfilled. Other key goals for the agency include ensuring the message it delivers to potential investors is in line with the government’s overarching economic direction; proactively identifying investors capable of driving economic development; lobbying for upgrades to national investment policies; providing actionable data for both the Qatari government and interested investors; and conducting research into enhancing the country’s investment environment.
The Ministry of Commerce and Industry (MoCI) oversees all commercial and industrial activities, while devising and implementing initiatives through which it can provide efficient public services to the local business community. The MoCI regulates trade professions and the markets within its jurisdiction, while handling business licensing and registration requests, subsequently issuing the required licences and permits.
With digitalisation being a key goal for the ministry, it provides a digital portal through which licensing processes for all economic activities can be carried out, increasing efficiency and transparency for investors. Similarly, the MoCI launched a centralised industrial single-window services platform in November 2022 to enhance administrative steps for investors, providing e-services to support businesses through each stage of establishment and operation. Other ministries and government authorities, such as the Ministry of Labour, have launched digital platforms in recent years.
The Qatar Investment Authority (QIA), the country’s sovereign wealth fund, is highly influential in driving its economic development and investment strategies, with the remit of investing Qatar’s financial reserves to secure its long-term stability, and safeguard prosperity and opportunity for future generations. In doing so, the QIA invests in both national and regional development efforts through individual investment and partnerships, with a strong focus on the development of advanced technologies and human capital.
Customs
Established in February 2014 by Amiri decree, the General Authority of Customs (GAC) is another key entity in Qatar’s trade and investment activities, and is responsible for monitoring all import and export goods passing through Qatar by air, land and sea. The authority conducts its activities in line with relevant laws, primarily Law No. 40 of 2002 promulgating the Customs law, of which it is also the chief regulator. Various excise and luxury taxes are imposed on specific products entering Qatar, with tobacco products, special-purpose goods (e.g., alcohol and pork items) and energy drinks among those subjected to a 100% levy. While the GCC member states signed a value-added tax (VAT) common framework in May 2017, Qatar has yet to implement a VAT law. Under the authority’s 2018-22 strategy – the second of its kind – the GAC worked to make the flow of goods coming in and out of the country more efficient, while also developing a multi-dimensional approach to improving the local business environment.
Trade & Investment Zones
The Qatar Financial Centre Regulatory Authority (QFCRA) and the Qatar Free Zones Authority (QFZ) are both crucial to the country’s economic development plans. The Qatar Financial Centre (QFC), an onshore financial services zone, is governed by its own set of regulations, with the QFCRA established in tandem with the zone to enforce them, in addition to authorising and supervising the firms based within the zone. Since its launch, the QFC has been central to Qatar’s drive to attract foreign investment, as the incentives offered by the QFCRA support its member companies’ ability to forge international partnerships (see Economy chapter).
Qatar currently contains two free zones: Ras Bufontas and Umm Alhoul. The former is adjacent to Hamad International Airport, while the latter is the designated maritime free zone, directly connected to the country’s primary deepsea port, Hamad Port. The two free zones offer investors integrated advanced digital capabilities and infrastructure, such as six-way telecommunications duct banks and 5G capabilities. Ras Bufontas’ proximity to Qatar’s primary aviation centre ensures timely imports and exports of high-value, time-sensitive goods, while Umm Alhoul’s location near Hamad Port offers regional and international traders access to Qatar’s lucrative hydrocarbons, chemicals and heavy machinery markets. Furthermore, Qatar’s abundant natural gas reserves allow the QFZ to offer investors some of the world’s most competitive energy prices, starting at $0.035 per KWh. Other business incentives that are offered by the free zones include 20-year corporate tax exemptions, zero income tax, zero Customs duties on imported goods and, as is now the case in the broader Qatar economy, 100% foreign business ownership. Meanwhile, the Qatar International Court and Dispute Resolution Centre operates in line with international best practices, providing a judicial system for international investors to settle any business disputes, as well as mediation services for individuals and entities, and arbitration proceedings.
As with the QFCRA, the QFZ works to forge and strengthen international partnerships to support Qatar’s progress towards its economic development goals. In addition to its various GCC-wide economic and free trade agreements, in recent years Qatar has signed bilateral trade pacts with China, France, India and South Korea. The QFZ’s website details 28 bilateral agreements on Customs cooperation, 67 double tax and investment protection agreements, and 14 multilateral and economic agreements. Some recent business agreements include an October 2023 memorandum of understanding (MoU) with South Korean technology company Samsung C&T that will see the entities collaborate on the development and integration of advanced, sustainable technologies across QFZ facilities and the broader economy. In December 2023 Ahmad Al Sayed, chairman of the QFZ, told local media that the authority’s investment portfolio included more than 450 licensed companies.
Sustainability has been central to economic expansion plans since the launch of the Qatar National Vision 2030, with transport infrastructure, in particular, built to internationally observed green specifications. In May 2023 a partnership with US-based Google Cloud led to the pair announcing Qatar’s free zones as encompassing the first cloud region in the GCC and North Africa. The move is designed to facilitate business growth for operators inside the zones due to the opportunities the technology presents them for innovation, collaboration, and the integration of advanced technology into business and production processes.
Logistics Infrastructure
Qatar’s investment zones are built to capitalise on its modern logistics infrastructure. In addition to Hamad International Airport and Hamad Port, the country has extensive logistics infrastructure, with the market expected to expand at a compound annual growth rate of 7% between 2019 and 2024. Key international distributors operating in Qatar include Germany’s DHL, which has a strong presence throughout the GCC, and US-based UPS. In addition, the country occupies an advantageous location, offering a gateway to the GCC. The countries within a 3000-km radius account for a combined GDP of roughly $6trn and a total population of 2bn people.
Legislation
Qatar has made strides in enhancing its business environment in recent years, which is crucial given its strategic aim of stimulating broad-based private sector growth to facilitate economic diversification and expansion. Two new laws enacted in recent years have been integral to those developments.
First, the law on foreign direct investment enacted in January 2019 opened most sectors and economic activities to 100% foreign ownership. In April 2021 the Council of Ministers approved a measure that raised the foreign ownership limit for most companies listed on the Qatar Stock Exchange from 49% to 100%. Second, the entry into force of Law No. 12 of 2020 regulating public-private partnerships brought further opportunities for private investors, particularly in relation to infrastructure development. With various partnership models on offer under the 2020 law, private operators have tended to show greater interest in the high-usage and high-return projects made available under the legislation.
Meanwhile, a 2020 report by global consultancy PwC stated that Qatar offers one of the least demanding taxation systems in the world (see Economy chapter), bolstering its reputation as an accommodating place to do business. Notably, alterations have been made to income tax regulations, focusing primarily on clarifying what constitutes a permanent establishment and the structure of taxation that is imposed on such entities.
In January 2023, 16 more locations were added to the nine in which foreign nationals can purchase property in Qatar. Stimulating higher activity in the country’s real estate market is a central goal of the government’s diversification drive, so presenting a broader array of opportunities for the non-Qatari population is essential in achieving that goal. In addition, in 2022 the Cabinet approved a draft Amiri resolution detailing the establishment of the Real Estate Regulatory Authority to regulate and promote activity within the sector. In April 2023 an Amiri decree was passed establishing the authority, the aim of which is to create a more transparent and profitable real estate business environment in Qatar. In January 2024 Sheikh Tamim bin Hamad Al Thani issued a decision to officially appoint Khalid Ahmed Saleh Ahmed Al Obaidli as chairman of the Real Estate Regulatory Authority.
Trade Volumes & Partners
Qatar’s hydrocarbons resources give it a healthy trade balance, particularly in times of high prices. In 2021 the country ran a trade surplus of QR161bn ($44.2bn), with total imports and exports of goods and services amounting to QR607bn ($166.6bn). The following year saw an increase in Qatar’s trade surplus, in line with increases in global hydrocarbons prices that stemmed in large part from the international geopolitical disruptions resulting from the start of the conflict in Ukraine and disruptions to global trade routes following the Covid-19 pandemic. In 2022 exports were valued at nearly QR589bn ($161.7bn), with goods accounting for QR477bn ($130.9bn) of that and services making up the remainder. Meanwhile, in 2022 imports amounted to QR271bn ($74.4bn), with a much more even split between goods and services of QR122bn ($33.5bn) and QR149bn ($40.9bn), respectively. The trade surplus that year was QR317bn ($87bn).
Although Qatar carried a healthy trade balance into 2023, there were notable contractions in its surplus during the first three quarters of the year due to a moderation in hydrocarbons prices following their 2022 peak. Indeed, the country’s positive trade balance of QR68.5bn ($18.8bn) for the first quarter of 2023 was down compared to QR74.6bn ($20.5bn) during the corresponding period of 2022. There was a similar narrative in the second quarter of 2023, with a surplus of QR57.6bn ($15.8bn) representing a decrease from QR98.6bn ($27.1bn) during the second quarter of 2022, followed by a positive balance of QR60.9bn ($16.7bn) in the third quarter of 2023, compared to QR102.1bn ($28bn) in the third quarter of the previous year. Qatar closed out 2023 with a fourth-quarter merchandise trade balance surplus of QR54.5bn ($14.9bn), compared to QR79.6bn ($21.8bn) in the corresponding period of 2022. Total exports amounted to QR84.8bn ($23.3bn) and imports to QR30.4bn ($8.3bn) for the quarter. The 2023 trade surplus was more than QR241bn ($66.1bn), with exports accounting for QR356bn ($97.8bn) and imports more than QR114bn ($31.3bn).
During the fourth quarter of 2023, Qatar’s top-three trade partners by region were Asia, the EU and the GCC. Asia accounted for 74.4% of the country’s exports and 37.2% of its imports, while the EU accounted for 13.2% of exports and 28.4% of imports. GCC countries comprised 8.2% of exports and 10% of imports.
Investment
Since its inception, Invest Qatar has attracted an array of high-profile investors – including US-based Amazon Web Services, Plug and Play and SpaceX – to do business in Qatar, while also forging partnerships with international entities similar to itself, including Business France, Invest India, Kazakh Invest, New Zealand Trade and Enterprise, and the UK Department for International Trade. In 2021 Qatar attracted nearly $1.1bn in foreign direct investment (FDI), while 2022 saw an increase of 2500% in FDI primarily due to oil and gas projects, coinciding with developments in non-hydrocarbons sectors, which ran parallel to the FIFA World Cup. This catalysed a $29.8bn spread across 135 projects, creating nearly 14,000 new jobs. Major investment deals with Spanish renewables firm Iberdrola and US tech company Microsoft are anticipated to significantly advance Qatar’s digital transition.
During the second quarter of 2022 Qatar accounted for 71% of all FDI entering the Middle East. Such growth saw Qatar top the 2023 FDI Standout Watchlist, which is compiled by the Financial Times’ investment research department, fDi Intelligence, by gathering macroeconomic and FDI data from international financial organisations, including the IMF, and compounding those figures into an investment momentum score. Qatar topped the list with a score of 87.64, followed by India and Morocco. The country’s Third National Development Strategy 2024-30 (NDS-3) aims to increase FDI to $100bn by 2030 and offer more than $75bn in sustainable investment opportunities by the same year.
The US was Qatar’s largest FDI source market in 2022, accounting for 43.6% of total such investment for the year and more than double the amount sourced from second-placed UK, which comprised 21.7% of total such investment. Italy and France were the third- and fourth-largest source markets at 21.2% and 11.8%, respectively. In terms of the sectoral dispersal of FDI in 2022, 44 of the total 135 projects launched were in the business services sector and 37 focused on software and IT. The financial services industry accounted for 16 projects; coal, oil and gas for seven; and industrial equipment for four. The remaining 27 projects were spread across other sectors. Full-year FDI figures for 2023 had not been released as of March 2024, and the challenge for Qatar is to maintain the momentum in FDI inflows now that the 2022 FIFA World Cup is in the past.
Dynamics & Obstacles
Government policy gives suppliers who utilise local content preferential treatment in regard to bidding for government contracts, while bidding on tenders of QR5m ($1.4m) or less is reserved for local small and medium-sized enterprises. Although local commercial registration is not a pre-requisite for participation in those tenders exceeding QR5m ($1.4m), certain exceptions do exist. Meanwhile, some sectors, such as banking and insurance, as well as the establishment of commercial agencies, are excluded from the provisions of the 2019 law that regulates the amount of non-Qatari capital that can be invested in domestic economic activities, with foreign business ownership restricted in such cases to 49%.
In addition, while there are no enforced localisation quotas in place in Qatar as seen in other GCC countries, foreign investors applying for 100% ownership of a company are required to submit a workforce localisation strategy. One of the stated goals of NDS-3 is to increase the share of Qataris working in the private sector to 20% of the workforce. Furthermore, a number of international investors have experienced bottlenecks in which certain administrative processes have not been updated in accordance with recent reforms. That said, the launches of digital services and portals that have been undertaken by various government ministries and authorities demonstrate forward movement in the government’s bid to streamline investment procedures and remove discrepancies.
Outlook
While there are some disparities between the pace of regulatory reforms and changes in service provision, Qatar remains committed to ongoing efforts to streamline business establishment and expansion procedures. Legislative amendments in recent years reflect the government’s responsiveness to the recommendations of the international business community. Although the 2022 FIFA World Cup has ended, the period of rapid economic development resulting from the preparatory stages did much to enhance Qatar’s reputation as a secure investment destination.
Trade volumes are likely to continue to rise in the coming years due to the production expansion works taking place on the country’s North Field gas reserve and the government’s drive to diversify industry. While the national trade balance is expected to remain highly sensitive to any fluctuations in global hydrocarbons prices, the boost that the aforementioned expansion work is anticipated to provide Qatar’s LNG exports and downstream industries – and the potential for investment that this could generate in turn – should have a far-reaching impact on the country’s economy.
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