Qatar's free zones to attract foreign capital

In October 2018, as part of its efforts to drive foreign direct investment (FDI) and industrial diversification, Qatar pledged to invest $3bn in new free zones (FZs) and industrial clusters around key logistics centres. According to the Qatar Free Zones Authority (QFZA), the Umm Al Houl Free Zone will open near the Hamad International Port in the first quarter of 2019. A second FZ adjacent to Hamad International Airport, Ras Bufontas, is set to commence operations later in the year.

The two sites will cater to firms with different cargo and freight needs, but Qatar hopes that both FZs will enable commerce across chemicals, plastics and artificial intelligence platforms. “After building significant physical, social and economic infrastructure, we are ready to welcome the most talented foreigners to live with us, and work and manage their businesses from here,” Ahmad Mohammed Al Sayed, chairman of QFZA, told OBG.

Incentives

The $3bn fund had been created as an incentive to FDI and accompanies a law issued in January 2019 that allows international investors to own 49% of Qatari businesses listed on the Qatar Stock Exchange and 100% of unlisted Qatari firms. The QFZA told local media it was in early negotiations with several multinational firms to form joint ventures or trading agreements with key enterprises like Qatar Petroleum and Qatar Airways. In addition to the opportunity to wholly own companies in the FZs, businesses and their employees could be granted 20-year, renewable exemptions from income and corporate taxation.

Manateq

Manateq was established in 2011 as the government agency that is responsible for administering FZs, industrial parks and warehousing and logistics zones. The company’s range of duties include land and building allocations, company registration and licensing, building permits, visa issuing and assessments of tax exemption applications.

Manateq has stated that the infrastructure and incentives available to potential investors will provide Qatar’s new FZs an advantage over competing FZs in other GCC countries.

While the focus of the FZs may be to attract FDI, part of Manateq’s mandate is also to nurture new domestic industries to produce goods that are currently imported — or to establish entirely new product lines altogether.

Logistics Parks

To this end, Manateq is developing four new logistics parks – Jery Al Samur, Birkat Al Awamer, Aba Saleel and Al Wakrah – three of which will offer 25-year leases to local businesses. The parks encompass development plots with utilities services and cater to a range of activities, including manufacturing, assembly, food processing, storage and warehousing, electronics, printing, laundering, shipyard and maritime services, and construction. In addition, they will provide easy access to land and air transport connections.

In 2017 Manateq assumed some administrative responsibility for the Mesaieed Industrial Zone, which hosts a range of petrochemical, fertiliser, refining, metallurgical and construction activities. Manateq also oversees Al Kaarana, an under construction, 40-sq-km industrial zone between Doha and Abu Samra, which is currently served by road and will soon be accessible by rail. Al Kaarana’s tenants are expected to specialise in construction materials, metals, chemicals and plastics.

In 2015 Manateq sponsored four warehousing projects on a build-operate-transfer basis, with the developer assuming ownership of the facilities after 25 years. While the warehouse projects are relatively small when compared to Manateq’s FZs, their development is intended to serve a similar strategic purpose, by encouraging the kinds of private investment and enterprise that can drive the diversification of industry and the wider economy.