Interview: Sheikh Abdullah bin Nasser bin Khalifa Al Thani
How do you assess progress to date in terms of promoting local private sector participation?
SHEIKH ABDULLAH BIN NASSER BIN KHALIFA AL THANI: Overall, we are pleased with private sector participation, but it is obviously a work in progress. It should come as no surprise that developments in the global economy have affected the climate for investment in Qatar, just as they have investment in the region and, indeed, international markets in general. Oil prices have declined significantly in the past year and this has had consequences for all sectors of our economy.
But it is certainly not as bad as it could be. In recent years we have taken some bold steps to diversify our economy and we have accelerated our transition from a carbon-based economy to a knowledge-based economy. We started doing this before oil prices began their decline, which has helped us to mitigate the impact of reduced energy revenues. I think the majority of investors believe that Qatar was ahead of the curve, and I think this has helped us maintain a positive investment climate in Qatar.
The fast pace of Qatar’s economic development over the last 10 years and the associated demographic shifts have fuelled a rising number of small and medium-sized enterprises (SMEs). Promoting the private sector, in particular SMEs, is key to Qatar’s economic diversification strategy. Currently they comprise almost 97% of Qatari companies. Nevertheless, our strategy is not only to see the number of SMEs continue to rise but, even more critically, to see their contribution to economic growth, to employment, to investment and to other positive forces rise.
To achieve this goal, the government has taken several direct and indirect measures to propagate SMEs in the country. A new commercial company law has been introduced and came into effect in August 2015. The new law entails more efficient legal rules and procedures for the licensing of new businesses. While it targets all types of businesses, SMEs are expected to benefit the most, as the cost and time savings associated with this new law will matter the most to small-scale businesses. Equally importantly, the special economic zones area, Manateq, is set to expand in the near future, and this will be in parallel with the development of logistics areas, providing considerable opportunities for SMEs. These areas will act not only as incubators for new SMEs, but also as potential markets for existing SMEs through the creations of backwards and forwards channels.
What measures are being pursued to reduce competition from government entities and allow foreign and local private investment to expand?
SHEIKH ABDULLAH: The emir, Sheikh Tamim bin Hamad Al Thani, sent a powerful signal to the government in the remarks he delivered to Qatar’s advisory council in November 2015. “High energy prices have brought immense benefits to our country and our people,” he said, “but no one denies the accompanying negative phenomena.”
Among those phenomena has been an economic climate that is less competitive and less efficient than it would be without the cushion of abundant natural resources. Sheikh Tamim told the government not to miss the opportunity presented by declining oil revenues to restructure our economy and make it more efficient. The steps we have taken in recent months have been in direct response to the emir’s remarks.
Qatar has taken considerable legislative measures to strengthen the foreign investment framework. These fall under two main pillars: the first is widening the gate for foreign investors, while the other focuses on simplifying procedures and enhancing the efficiency of setting up businesses.
On the first front, Qatar has expanded the market for foreign investors by allowing them to have full ownership of businesses within certain sectors. We believe that special economic zones and the public-private partnership framework, among other initiatives, will enlarge the scope of foreign investors’ involvement in Qatar’s economy.
In regard to the second pillar, the state of Qatar is committed to the continued strengthening of the business environment and to simplifying procedures, including those related to business set-up. As mentioned earlier, a new commercial company law has been in effect since August 2015, which facilitates the setting up of commercial companies. We consistently apply an accommodating approach in this area.
Are you satisfied with the state’s efforts to address issues regarding the availability of land, warehousing and logistics to the private sector?
SHEIKH ABDULLAH: Actually, the problem is not a lack of land. There is land available for expansion, and we are working to connect businesses and investors with real estate companies to foster business development. But it is true that warehouse facilities have not kept pace with private sector growth, and this is a challenge we are focusing on today. For example, the Logistics Committee at the Ministry of Economy and Commerce has put together an implementation plan to develop low-cost warehouses based on a market study of demand for storage facilities.
With regard to logistics, Qatar has made enormous progress in recent years in creating the kind of infrastructure that will meet the needs of the global business community for decades to come. Our geographical position on the peninsula dictates that, along with sea and air links, road and rail are priorities for our economic development.
With that in mind, our international airport is state of the art, and we will soon be opening a new port facility that will set the standard for maritime shipping throughout the Gulf region. These are major investments that are expected to prove to be catalysts to significant expansion in the private sector.
The emir recently highlighted the need to reduce dependency on the state and increase efficiency in public bodies. How will this be put into effect?
SHEIKH ABDULLAH: In the emir’s November 2015 speech, he told Qatar’s advisory council: “A citizen has the right to benefit from the wealth of his country. But he must ask himself from time to time, ‘What did I give to my country and my community? What are the best ways to be useful? And what can I do to contribute to the national wealth of my country so that future generations can also benefit?’” Sheikh Tamim asked his fellow Qataris to see the constraints imposed by the current economy as an opportunity to make our economy more efficient and more competitive. Moreover, he challenged us to use this moment to re-evaluate what it means to be a Qatari citizen.
The government has responded to the emir’s challenge with a number of programmes designed to contribute to the national wealth of our country, including several initiatives to support local entrepreneurs and the establishment of SMEs. The logistics zones project located in the south of Qatar is one of the most important ventures. The project, which encompasses 1583 plots spanning 6.33m sq km of land, will help to reduce operational costs for investors and improve productivity by providing industry-aligned infrastructure and facilities for multipurpose use.
The government is also seeking to empower Qatari youth to contribute to sustainable economic development. In 2015 the Ministry of Economy and Commerce launched the Youth Economic Empowerment Forum, which provides a platform for young entrepreneurs and innovators to connect with investors to secure financing for their start-up projects.
We believe that through these programmes and initiatives, we are building a better future. At first glance, low energy prices might seem like a setback to a dynamic economy like ours. But if we seize the moment, they can turn out to be a blessing in disguise.