Eye on efficiency: A strong focus on improving the business environment

A key part of Qatar’s National Development Strategy 2011-16 (NDS 2011-16) is the development of better business regulation and efficiency. This is seen as being important in increasing the country’s competitiveness, attracting foreign investors and developing a stronger local private sector. A range of measures are therefore being implemented to enhance regulation and efficiency, with an eye to a dashboard of global competitiveness indicators, from the World Bank’s (WB) “Doing Business” rankings to the World Economic Forum’s (WEF) “Global Competitiveness Report”.

High Scores

In the WB’s 2014 report, Qatar achieved an overall ranking of 48th in the world for ease of doing business. This compared with regional peers Kuwait at 104th, Bahrain (46th), Oman (47th), Saudi Arabia (26th) and the UAE (23rd). Qatar’s score represented a slight drop from its ranking of 40th in 2013, yet improvement, year-on-year, was recorded in one area – paying taxes. The report noted that certain requirements associated with the corporate income tax return had now been eliminated. The two areas most in need of improvement were protecting investors and accessing credit (see analysis). The WB survey tends to concentrate on regulatory issues, while the WEF takes a more wide-ranging approach, indexing everything from the incidence of tuberculosis to inflation.

Regional Leader

In the 2013-14 Global Competitiveness Report, Qatar came 13th out of 148 countries, maintaining its position from the previous year, when adjusted for the fact that in 2012-13 only 144 countries were listed. This was the highest ranking in the GCC, and the highest of any non-OECD country with the exceptions of Singapore, Hong Kong and Taiwan. The report commended Qatar for its high-quality institutional framework, stable macroeconomic environment and efficient goods market. It also found minimal corruption and high efficiency in government institutions. The report affirmed the strategy of diversification and moving towards a knowledge-based economy, which underlies the government’s development strategy.

Where improvements could be made, the WEF report continues, is in promoting even greater use of the latest technologies, boosting primary education and fostering more openness to foreign competition. On the latter point, the WEF said the country’s ranking of 30th reflected perceived barriers to international trade and red tape in starting a business. Another respected international survey in this area is the “IMD Global Competitiveness Yearbook”, which ranked Qatar 10th out of the 60 countries covered on its 2013 scorecard – the same as in 2012. This was second highest in the GCC, and ahead of countries like the UK and the Netherlands.

These scores reflect rapid progress in many areas.

Institutionally, there has been a shift towards performance- rather than input-based evaluations in the public sector, with the NDS 2011-16 emphasising the need to cut waste and enhance service delivery. Encouragement of foreign investors is also an area where improvements are being made – 100% foreign ownership is allowed in special economic zones, such as Qatar Science and Technology Park and Qatar Financial Centre, and in many economic areas. Public-private partnerships (PPPs) are also a key plank of the strategy, while anti-trust laws have been in place since 2004.

Liberalisation

The NDS 2011-16 sets out its intention to see foreign investment liberalisation continue, along with liberalisation of trade in services, in line with international agreements. The existing competition law is also being increasingly implemented, supported by the necessary regulations. The plan itself is a way of boosting efficiency too, by enabling a more strategic approach to decision making, while streamlining business regulation remains a priority. Although cognisant that much of the current heavy expenditure in infrastructure development will have to be funded by the government, Qatar is also keen to increase the level of private sector involvement through PPPs. Many eyes will therefore be on 2014’s scorecards as an indicator of how far Qatar has come in what is an increasingly competitive regional and international environment.