The insider view: Doha
Published: 14 Jan 2015
We examine how business is conducted in cities around the world, with local experts acting as guides
Economic growth in Qatar has averaged 14 per cent annually over the past decade and last year its GDP per capita exceeded the $100,000 mark – the highest of any country. According to a 2014 report by the International Monetary Fund (IMF), the world’s largest exporter of liquefied natural gas has become an important global investor, donor and importer of labour.
The IMF remains confident about the outlook for Qatar, which is insulated from the sluggish global economy thanks to the continuing high demand for fossil fuels and the government’s large investment in supporting economic diversification and its preparations for hosting the 2022 Fifa World Cup. Qatar’s macroeconomic performance is expected to remain strong, driven by a non-hydrocarbon sector that accounts for almost half of the nation’s output.
Iftekhar Ahmad ACMA, group CFO at Ali Bin Ali, one of the nation’s largest distribution and retail groups, says that building the infrastructure for the World Cup is a top priority for Qatar.
“The construction sector has been contributing the maximum to GDP growth in recent times,” he says, but adds that the state has also been investing heavily in three other areas – health, education and sport – for the past two decades and building capabilities there.
“Bottlenecks still exist in places, which the government is working hard to improve,” Ahmad observes. “But Qatar has huge potential to be recognised as one of the best-performing economies in the world.”
Certain industries – including public transport, electricity, water, steel and cement – aren’t open to either foreign or domestic competition. But Doha is home to the Qatar Financial Centre (QFC), which permits international financial institutions and corporations to establish offices with 100 per cent foreign ownership and all profits remitted overseas, says Ahmad.
He reports that more than 170 licensed businesses – representing a wide range of banks, investment houses, insurance groups and professional services firms – have started operating in the centre.
“Moreover, companies operating in the Qatar Science and Technology Park (QSTP) on the outskirts of Doha can import goods and services duty free, and are also exempt from all other levies, including income tax. These initiatives have brought a significant number of multinationals here.”
“Qatar has some of the highest standards of ethics in conducting business – and the government and the business community are both keen to maintain this,” Ahmad says.
As a result, the culture here remains largely traditional Arabic, with honour and integrity playing a big role.
“Traditionally, business deals have been done in the evening majlis – a place where Qataris congregate for various occasions,” Ahmad explains. “With the arrival of more modern practices, attention has shifted to offices, but the majlis remains an important place for big commercial decisions. Word of mouth in the majlis is still worth more than a written document – it will be honoured.”
While the arrival of foreign companies has helped to improve productivity and efficiency in Qatar, it has brought with it other cultures and a different commercial ethos.
“Doing business is becoming more formal and driven by the legalities here,” he notes. “Arab culture still dominates, but the business community is keen to have a healthy blend that mixes our traditional ways with a more modern outlook.”
“The culture of entrepreneurship is strong in Doha, dating back centuries to when pearl extraction and trade were a big source of income here,” Ahmad says. “Many family businesses started in the early 20th century and expanded through diversification as Qatar’s economy grew alongside its oil and gas exports.”
Doha is a relatively small city and most families know each other. “As most businesses are still owned and run by locals, personal relationships remain key to success in business here. But the establishment of the QFC and the QSTP has tempted many multinational companies to bring operations to this part of the world. The Qatari economy is opening up for foreign investors. Linking up with local business communities by bringing in know-how and technology remains the best way for foreign business people to gain a foothold here.”
The increasing emphasis on developing Qatar’s non-hydrocarbon industries has brought changes in the way the economy is run, says Ahmad. “The changes have been welcomed by Qatari firms, as these have helped them to improve their productivity and efficiency through the introduction of best practices in various areas,” he says. “The commercial culture has seen a vast change in recent times, with local businesses setting foot in other territories. In years to come, most of these firms will enter the global business environment.”