New economic zones in Qatar attract investment and develop local talent

In line with Qatar National Vision 2030 (QNV 2030) goals to boost domestic industry and human capital development, Qatar has ramped up its efforts to attract new domestic and foreign investment, particularly in technology, communications and industry. With QNV 2030 emphasising creation of a diverse, industrialised, knowledge-based economy, stakeholders have noted that, as well as attracting foreign capital, plans to develop new special economic zones (SEZ) are also meant to foster local talent, industry and innovation, while foreign companies hoping to invest will also benefit from tax holidays and other incentives.

FUTURE GROWTH: SEZs have been recognised as one of the best ways to encourage entrepreneurship and foster growth among small and medium-sized enterprises (SMEs), which the government has prioritised under QNV 2030. The state is therefore in the process of launching three sizeable SEZs which will support local industry and SMEs, offering benefits and exemptions: Ras Bufontas, located near the new Hamad International Airport; Um Alhoul, situated close to the new Hamad Port; and Al Karaana, located between Doha and Abu Samra. Developed by Manateq, a state-backed entity created in 2011 with the express purpose of providing infrastructure, services and policies to bolster SME growth, these SEZs are expected to serve as the base of a home-grown private sector comprised largely of SMEs. “The idea is to encourage local industrial capacity. The overall aim is to target locals across a wide range of sectors, while attracting international tenants to be the main anchors in the zones,” Fahad Rashid Al Kaabi, CEO of Manateq, told OBG.

The Ras Bufontas project spans 4.1 sq km and will be dedicated to communications, IT, energy, construction, logistics and transportation firms. Applications for the zone will be received during the second quarter of 2015, while plots for the zone’s first phase of development will be available in early 2016. Um Alhoul will be located next to the new port facilities on a 33. 52-sq-km plot, and is expected to become a major centre for light industrial activity. This zone will focus on petrochemicals, building materials, maritime metals, logistics and food processing, with Manateq reporting its first phase of development is scheduled to finish in the second quarter of 2017. Al Karaana, for its part, will cover 38.43 sq km, with a focus on building materials, machinery and fabrications, specialised spillover industries and warehousing. Construction of its first phase is expected to wrap up in the fourth quarter of 2019.

TECHNOLOGY PARK: The 45,000-sq-metre Qatar Science and Technology Park (QSTP) is a free zone with a tenant base comprised largely of firms in energy, health sciences, environmental and IT. Established in 2005 as part of the Qatar Foundation’s 1000-ha Education City, its tenants include Cisco, GE, Microsoft, Rolls-Royce and Tata. QSTP has been nurturing entrepreneurship and start-ups, most recently through a three-month mentoring programme that helps develop business strategies for late-stage research projects. Financial support is provided through the Proof of Concept Fund, QSTP’s principal means for helping research centres, universities or SMEs prove that their ideas have commercial legs in the marketplace. QSTP recently enhanced eligibility criteria and is making a renewed push for SMEs to participate, awarding grants to help determine if a technology can make money. Recent beneficiaries have been home-grown companies like iHorizons, which created a digital platform for analysing Arabic social media content, and Aman Information Security, which launched a commercial cybersecurity software application.

ZONE BENEFITS: While non-Qataris are permitted to set up businesses in the state, foreign ownership of capital and stocks in a listed company are limited to 49%. International companies have two options for establishing operations: partner with a local sponsor or locate within certain industrial zones. Companies in some sectors can be wholly owned by foreigners and those in certain zones are exempt from Qatarisation quotas, tax obligations and Customs duties, as well as benefit from unrestricted repatriation of capital and profits.