Sheikh Abdullah bin Nasser bin Khalifa Al Thani, Prime Minister and Minister of Interior: Interview

Interview: Sheikh Abdullah bin Nasser bin Khalifa Al Thani

Which sectors are providing the highest return on investment to potential shareholders?

SHEIKH ABDULLAH BIN NASSER BIN KHALIFA AL THANI: Qatar’s public-sector investment expenditures are designed to support infrastructure development in the lead up to the 2022 FIFA World Cup, while also contributing to the wider objectives of Qatar National Vision 2030. In order to meet these infrastructure plans and objectives, alternative funding methods have been explored, and public-private partnerships (PPPs) are a proven method of delivering such projects while reducing the burden of public spending.

PPPs are not new to Qatar, having previously been utilised in various sectors, such as power and water, and their usage has been evolving over several years. The government is now aiming to extend PPPs across all sectors including infrastructure, sports, education, health and government services. Qatar is in the process of developing a legal and institutional PPP framework based on international best practice, but tailored to Qatar’s unique context, with the goal of accelerating and easing the implementation of PPPs, speeding up economic and social infrastructure projects, and providing opportunities for both local and foreign investors. A PPP law has been drafted and is in the process of being approved. The new law will serve to consolidate government support for PPPs, and establish a clear legal basis for this instrument using an efficient and transparent procurement process.

How can Qatar ensure that the white-collar foreign labour force remains in the country to participate in its ongoing diversification?

SHEIKH ABDULLAH: The government is in the process of implementing structural policy reforms to enhance the productivity and competitiveness of priority sectors – including financial services, manufacturing, business services, ICT, logistics and tourism – to help diversify our national economy. The development of these highly productive sectors will increase the demand for skilled white-collar workers in Qatar, while also encouraging existing workers to remain in the country.

Qatar is also one of the first countries in the Gulf region to offer permanent resident status for skilled expatriate workers who have given service to Qatar or possess skills that can benefit the country. Under this new scheme, announced by the Cabinet in August 2017, permanent residency ID holders will receive the same access as Qataris to public services such as education and health care, and will be given priority, after locals, in holding public military and civil jobs. In addition, beneficiaries will have the right to own property and engage in some commercial businesses without the need to have a Qatari partner. These changes will provide additional incentives to live and work longer in Qatar. Qatar has also waived entry visa requirements for citizens of 80 countries, making it easier for friends and relatives of expatriate workers to visit them.

What measures are being considered to encourage further foreign direct investment (FDI)?

SHEIKH ABDULLAH: The existing Law No. 13 of 2000 allows foreign investors to apply for up to 100% ownership in most economic sectors. However, a new law is under consideration that will make the process easier and quicker. Also, as part of the second National Development Strategy 2017-22, and following the imposition of the illegal blockade on Qatar, additional regulatory and institutional reforms are under consideration to encourage FDI. These reforms include further empowering the Ministry of Economy and Commerce’s role as a one-stop shop for investment approvals for foreign investment; a review of the country’s regulatory framework to remove restrictions on entry into priority sectors; and a review of the existing legal investment framework to enhance investor protection rights in key areas relating to capital transfers, expropriation and the guarantee of national treatment (equal treatment under the law with local investors) to bring regulations in line with international best practices.

What types of policies are currently being developed to encourage growth among small and medium-sized enterprises (SMEs)?

SHEIKH ABDULLAH: SME development is pivotal for private sector development and economic diversification. Qatar has worked to create an appropriate environment for investors by issuing laws and regulations to encourage and motivate local SMEs to invest in various sectors. Issuance of the new Commercial Companies Law facilitated the establishment of small and medium firms by cancelling minimum capital requirements to establish limited liability companies.

A one-stop service for investors was launched to simplify and expedite the procedures of all start-up transactions in front of investors and businessmen. This service stimulates the private sector and overcomes the obstacles facing individual companies.“Own a factory within 72 hours in Qatar” is another one-stop initiative in which 250 investment opportunities were offered in the industrial sector. The initiative witnessed a huge turnout of 9349 investors.

The Ta’heel localisation initiative aims to boost the capacity of Qatari products, enhance the participation of local factories in development projects, and encourage existing and new investors to invest in establishing new factories that contribute to providing the requirements of current and future state projects. It covers eight major sectors: food, paper, medical, chemical, electrical, machinery and automotive, rubber and plastics, and metals. The 250 investment opportunities comprising the initiative attracted enormous interest, especially that of the food industry, with 3168 investors.

SMEs are also being encouraged to participate and showcase their technical capabilities by bidding for government contracts and various supply contracts for Qatar Shell. 26 Qatari SMEs have been shortlisted to tender for six business opportunities offered by Qatar Development Bank and Qatar Shell.

All of the above mentioned regulations, initiatives and efforts are reaping dividends, and will continue to have a positive effect on SME development in Qatar.

How will the implementation of value-added tax (VAT) affect Qatar’s business climate?

SHEIKH ABDULLAH: The government is committed to implementing VAT in Qatar in the first half of 2018. With the enactment of the VAT law, the Qatar Tax Authority will commence active engagement with business groups to underline the imperative for all firms to be prepared for the implementation of the new law. It is advisable for businesses operating in Qatar to take immediate steps to become compliant with the respective GCC member states’ VAT laws, particularly in relation to processes, IT systems and overall organisation.

The new law is based on the GCC VAT and Excise Tax Framework Agreement, which obligates each member state to take domestic procedures for the issuance of local law and procedural policies for the implementation of the tax with a view to implementing the provisions of the agreement. The GCC has long planned to adopt the tax in 2018 as a way to increase non-oil revenues. Implementing VAT will have implications for businesses and new taxpayers, both in Qatar and abroad, directly and/or indirectly.

However, a broad-based VAT at a low rate is unlikely to deter investment into Qatar, or the surrounding region, in which appeal stretches much further than its low-tax status. Infrastructure development, access to high-potential growth markets in Africa and Asia, free trade zones, competitive labour costs, few trade barriers and economic and political stability are all factors which add to the region’s appeal.

In addition, VAT, as it is a tax on the consumption of goods and services, will have a neutral impact on registered businesses when managed efficiently.