Qatar: Market Profile
22 June 2018
Growth is expected to recover to 2.8% in 2018, and rise further to an average of 3% in 2019-20, as rising energy receipts help ease fiscal constraints, spending on the multi-year infrastructure upgrade ahead of the FIFA World Cup continues, and as the USD10 billion Barzan natural gas facility comes onstream in 2020. Qatar’s peg to the US Dollar means that monetary policy will gradually tighten in tandem with the US. Government efforts to ease the costs and to lighten the effects of the blockade on the population will likely limit the scope for cutting spending sharply. Nevertheless, key tax policy and administration measures, including the introduction of a VAT and excises during 2018 are expected to further contain the fiscal deficit over the medium term, although inflation should also rise to close to 2.4% as a result in 2018. A recovery in imports, in particular capital goods related to infrastructure spending, should keep the current account surplus modest in the near term.
Source: World Bank
2. Major Economic/Political Events and Upcoming Elections
Qatar wins bid to host 2022 FIFA World Cup.
Qatar joins international military operations in Libya.
Sheikh Tamim bin Hamad al-Thani takes over as emir after his father abdicates.
Saudi Arabia, Bahrain and the UAE temporarily withdraw their ambassadors from Qatar after alleging that it has been meddling in their internal affairs.
Qatar and four other Arab states take part in US-led air strikes on Islamic State militants in Syria.
Government says it is abolishing the controversial labour sponsorship system or "kafala" that forces foreign workers to seek their employers' consent to change jobs or leave the country.
Diplomatic crisis as Saudi Arabia leads an air, land and sea blockade by Arab countries, in an attempt to get Qatar to cut its alleged connections with terrorism and distance itself from Iran.
In a bid to boost non-GCC foreign investment (especially in the wake of the GCC crisis), Qatar passed a new foreign investment law in January 2018 (which came into effect from March 2018). This law has removed the 49% cap on foreign ownership of businesses in Qatar in a wide variety of sectors. Now, 100% foreign ownership is permitted, with no Qatari equity partner required. Restrictions on the purchasing of real estate and franchises still apply, and government approval for banking and insurance licenses is still required.
The CEO of the Qatar Financial Centre announced that Qatar is looking to diversify its sources of inward FDI towards Asia in this new era. Qatar is reportedly looking to assist this process by making it easier for foreigners to obtain work visas and purchase real estate within its borders. Officials are also set to embark on a tour of various Asian countries in the next few months to promote Qatar as an investment destination.
Source: BBC, BMI
3. Major Economic Indicators
Note: (e) estimate, (f) forecast
Source: IMF, World Bank
4. External Trade
4.1 Merchandise Trade
Note: (e) estimate
Source: WTO, World Bank WITS database
4.2 Trade in Services
5. Trade Policies
- Qatar has been a member of WTO since 13 January 1996 and a member of GATT since 7 April 1994. The standard rate of external tariff is 5% (ad valorem) in accordance with the GCC customs union. As a result, Qatar’s customs duty is calculated on the CIF value at the rate of 5% for most Hong Kong products. It also provides a list of items that can be imported duty-free. According to the WTO, Qatar‘s simple average most favoured nation (MFN) applied tariff was set at 5.7% for agricultural goods and 4.6% for non-agricultural goods in 2016.
- Non-Qataris are barred from engaging in distribution activities in Qatar. Importers, who must be Qatari nationals, have to register in the Importers Register and be approved by the Qatar Chamber of Commerce and Industry (QCCI).
- Qatar is a member of the Gulf Cooperation Council (GCC), which consists of Saudi Arabia, Kuwait, Oman, the UAE, Bahrain and Qatar. In 1999, the GCC agreed to form a customs union, which took effect from 2003 to zero-rate goods traded within the GCC. To qualify for zero-tariff, such goods must be accompanied by a certificate of origin (CO) by the chambers of commerce in the GCC. Under the accord, goods imported into the GCC area can be freely transported subsequently throughout the region without paying additional tariffs.
- Certain local manufacturers are protected by a higher customs duty. For example, Qatar has a 15% tariff on records and musical instruments, 20% on steel and cement, 30% on urea and 100% on alcohol. Imports of pork and pork products had been prohibited. The Qatar Distribution Company (QDC), a subsidiary of the national air carrier Qatar Airways, has the sole authority to import alcohol products.
- With the approval of the Director General of Customs, some categories of goods may be temporarily allowed to be imported without collection of customs duties. These include heavy machinery and equipment for project execution, semi-finished products, use in exhibitions and temporary events and machinery, and commercial samples. This approval is normally valid for a period of 6 months, but may be extended by another 6 months.
- Negotiations are currently ongoing between the GCC and Pakistan for the conclusion of an FTA between them (the third round of negotiations was held in August 2017). While in 2016, Pakistan accounted only for an estimated 1.2% of Qatari exports (mostly LNG and a small amount of crude), and only around 0.3% of Qatari imports, there has been a recent shift in these dynamics brought on by the GCC diplomatic crisis. Since June 2017, when the Saudi-led bloc severed all diplomatic and transport ties with Qatar, Qatar has been required to diversify its import partner portfolio (especially for foodstuffs).Therefore, in August 2017, a new direct shipping route was launched between Qatar's Hamad Port and Pakistan's Karachi Port (with shipping times estimated at taking around four days). Qatar Airways has also reportedly strengthened its air operations to Pakistan, and it is now much easier for Pakistan citizens to obtain visas to work in Qatar. In 2017 trade flows since the blockade was imposed between Qatar and Pakistan had received a significant boost.
- Sanctions (on June 5 2017, Saudi Arabia, the UAE, Bahrain, Egypt, Yemen and the Maldives, among others, moved to cut diplomatic and transport ties with Qatar, accusing it of supporting terrorism) - Modest price pressures associated with higher import costs from the ongoing diplomatic crisis in the Gulf - and resultant restrictions on intra-regional cross-border movements - appear mostly transitory, fading with the government-led (and partly government-funded) development of new supply chains.
- There are additional import requirements for meat and meat products to ensure that they are halal-compliant.
Source: WTO - Trade Policy Review, HKTDC, BMI
6. Trade Agreement
6.1 Trade Updates
FTA negotiations between the GCC and the EU, Japan, China, India, Pakistan, Turkey, Australia, Korea and the Mercosur (Brazil, Argentina, Uruguay, Paraguay and Venezuela) are on-going.
6.2 Multinational Trade Agreements
- Qatar is a member of the Greater Arab Free Trade Area Agreement (GAFTA) that came into force in 1998. Under the GAFTA, Qatar enjoys free trade with Algeria, Bahrain, Egypt, Iraq, Kuwait, Lebanon, Libya, Morocco, Oman, Palestine, Saudi Arabia, Sudan, Syria, Tunisia, the UAE and Yemen. GAFTA saw tariffs between 17 Arab states rapidly decline from an average 15% in 2002 to 6% in 2009.
- Qatar is a Member of Gulf Co-operation Council (GCC). As part of the GCC, Qatar also holds free trade agreements (FTAs) with Singapore, New Zealand and the European Free Trade Association (EFTA), the latter of which consists of Switzerland, Norway, Iceland, and the Principality of Liechtenstein.
- GCC (member state) and European Free Trade Association (EFTA) - where EFTA member states are Norway, Switzerland, Iceland and Lichtenstein.
GCC and Pakistan FTA.
Source: WTO Regional Trade Agreements database, National Sources, BMI
7. Investment Policy
7.1 Foreign Direct Investment
7.2 Foreign Direct Investment Policy
- Two Free Zones, namely the Qatar Financial Centre (QFC) and the Qatar Science and Technology Park (QSTP), have been established, with tax & duty incentives provided. Currently, Qatar’s government is encouraging foreign investment by streamlining licensing and financial sector regulations, with the corporate tax rate set at 10%. More recently, Qatar has started work on the country’s new special economic zones, which will be divided into three projects, namely the Ras Bufontos, the Umm Al Houl and the Al Karaana, to focus on different sectors. These three zones are expected to be completed in phases between 2017 and 2022 and offer favorable tax & duty incentives.
- Qatar offers various incentives in attracting FDI, including import duty exemption on machinery, equipment and spare parts for industrial projects, tax exemptions on corporate tax for pre-determined periods and export duty exemption. The Qatar Business Development and Investment Promotion Department under the Ministry of Economy and Commerce (MEC) is responsible for promoting business development and attracting FDI. Information related to Qatar’s investment climate and incentive schemes are provided on the MEC website.
- Qatar uses its trade surplus accumulated from oil and gas wealth to establish the Qatar Investment Authority (QIA). QIA and its subsidiaries invest in leading companies in non-oil sectors, such as hotels, retail, real estate and manufacturing, in the hope that such experiences will help lift Qatari standards and diversify the economy. The establishment of sizeable financial endowments helps Qatar provide continuity and predictability of funding for essential services such as health and education despite the fluctuation of hydrocarbon receipts.
- Massive infrastructure projects are underway including construction of stadiums, rail connections and highways. In an effort to increase transparency of available investment projects, the Qatari government in June 2016 launched a new online procurement portal to consolidate information on all government tenders.
- In Qatar, FDI projects are generally limited to 49% of the investment capital. However, Qatari Foreign Investment Law allows, upon obtaining special government approval, up to 100% ownership by foreign investors in the following sectors: agriculture, industry, healthcare, education, tourism, development and exploitation of natural resources, energy and mining, consultancy services, technical work services, information technology, cultural services and sport services.
To remove obstacles that hinder new companies in starting their operations, a new Commercial Companies Law which permits limited liability companies (LLCs) to have one member (as opposed to two as previously required) took effect in August 2015. The prior requirement for LLCs to have a minimum paid-up share capital of QAR200,000 was also removed.
- There are also some restrictions on foreign ownership of property. Although GCC nationals are allowed to own up to three properties in Qatar, other foreigners are limited in terms of the areas (Pearl, West Bay Lagoon and parts of Al Khor) in which they can purchase real estate.
Non-GGC foreigners can own property in these specific areas (land or residential), or they can enjoy rights to property for a period of 99 years (which is renewable) in certain 'investment areas'. This right has to be registered in order to be legally recognised.
This creates some long-term uncertainty for foreign participation in sectors such as tourism, real estate, infrastructure and transport.
- Foreign participation is not allowed at all in the public transportation, electricity and water, steel, cement, and fuel distribution and marketing sectors.
- Quotas exist for the mandatory employment of Qatari nationals in certain sectors, such as banking and insurance.
- The telecoms sector was made open to private competition from 2007, and there are some international players in operation in Qatar in the critical oil and gas sectors.
- Foreign players hold interests in the upstream oil sector.However, the downstream sector is completely dominated by state-owned Qatar Petroleum. Qatar's large and lucrative hydrocarbons industry has historically offered the main attractions for foreign investment, with exploration and production by foreign companies permitted through production sharing contracts with the state-owned company Qatar Petroleum, which controls all hydrocarbons activities in the country. Foreign investment is nevertheless warmly received due to the technology and expertise that can be provided by foreign businesses.
Sources: WTO - Trade Policy Review, The International Trade Administration (ITA), U.S. Department of Commerce
7.3 Free Trade Zones and Investment Incentives
|Free Trade Zone/Incentive Programme||Main Incentives Available|
|Qatar Science and Technology Park in Doha||-Intended to attract companies with a science and research focus.|
-Applicants who receive license to operate within this Free Trade Zone receive the following benefits: operate as a local company, or operate as a branch of a foreign company; 100% foreign ownership; hire expatriate employees; no taxes; duty-free import of goods, services, equipment and tools into the free zone; unrestricted.
|Three further free trade zones are also under development in the capital city, one near the Hamad International Airport (with a focus on light manufacturing and financial services), one near the Industrial Area (for manufacturing and transport industries) and one near Mesaieed (with an emphasis on the energy sector)||These zones allow businesses to import goods and services customs-free, and offer a range of other incentives.|
|Qatar Financial Centre (QFC)||-The QFC was set up in 2005 in order to assist in turning Qatar into a global financial hub and encourage investment from foreign banks and financial services providers in Qatar.|
-Incentives include: 100% foreign ownership; 100% profit repatriation; a flat 10% corporate tax on locally-sourced profits only; and a legal environment based on English common law.
-Large foreign companies that are currently based in the QFC include AIG (the large global insurance company) and Eversheds (a large international law firm).
8. Taxation – 2017
- Value added tax: 5%
- Corporate income tax: 10%
Source: PwC Taxes at a Glance 2017
8.1 Important Updates to Taxation Information
- Qatar has entered into double tax agreements (DTAs) with over 40 countries including the Chinese mainland and a Comprehensive Double Taxation Agreement with Hong Kong, which was concluded in 2013.
- Key tax policy and administration measures, including the introduction of a VAT and excises during 2018 are expected to further contain the fiscal deficit over the medium term.
8.2 Business Taxes
|Type of Tax||Tax Rate and Base|
|Resident companies wholly owned by Qatari citizens/GCC nationals||Exempt from taxation|
|Resident companies not wholly owned by Qatari citizens/GCC nationals||Taxable up to the levels of profits ultimately attributable to non-GCC national shareholders and GCC shareholders who are not tax residents in Qatar, at a flat rate of 10% (but only on profits on Qatari-sourced income)|
|Non-resident companies||Flat rate of 10%|
|Petroleum companies (engaged in oil operations)||Taxed at rates specified in their agreements, provided tax rate is not less than 35% of their taxable income|
|GST/VAT||A VAT rate of 5% on certain goods will be implemented at some point in 2018|
|Property Transfer Tax||None|
Source: General Department of Taxation, PwC
9. Foreign Worker Requirements
9.1 Localisation Requirements
Developing human capital and increasing nationals' workforce participation constitute key elements of the Gulf Cooperation Council (GCC) member states' economic diversification plans, and will thus continue to drive labour market policies across the region over the coming decade. Localisation policies have been devised to promote the employment of Qatari nationals in the private and public sectors. Therefore, quotas for the mandatory employment of Qatari nationals exist in certain sectors such as banking and insurance.
9.2 Kafala System and New Immigration Law
Typically, as a result of relatively small domestic populations and the fact that a large portion of the domestic working-age population is employed by the public sector in all six of the GCC states, employing foreign workers to fill lower-skilled and higher-skilled positions for the private sector has been relatively easy. The large presence of migrant workers in Qatar is attributed to the 'Kafala' (sponsorship) system, which emerged in the 1850s in many GCC states in order to regulate the relationship between employers and migrant workers in these countries. The employer is seen as the foreign worker's sponsor, and is entirely responsible for their visa and legal status. A downside risk is that some foreign workers have had their passports and wages illegally withheld by GCC employers, and some risk not being allowed to leave the country or change employers without their current employer's permission.
The main commercial objective of the Kafala system is to facilitate the steady supply of temporary and rotating labour rapidly in to such countries at times of an economic boom, and which could be expelled fairly easy in less prosperous periods. However, increasing pressure on GCC states from human rights groups about the exploitation of foreign workers under this system (specifically in relation to the treatment of foreign workers on various construction projects for FIFA 2022 projects), paired with rising economic pressures in GCC states due to the 2015/2016 global slump in oil prices, the ease and costs of hiring foreign workers in Qatar is expected to become more difficult over the medium term. From December 2016, the Qatar government announced the coming into force of its New Immigration Law. Under this new law, the Qatari government plans to change the sponsorship relationship, which forms the basis of the Kafala system, to one of an employment contract.
Furthermore, migrant workers employed under the Kafala system will no longer require their employer's permission to leave the country, but instead are required to apply to the Ministry of Interior, which will in turn inform the employer. Migrant workers who have completed their fixed-term contracts will no longer need their employer's permission to take another job.
9.3 Obtaining Foreign Worker Permits for Skilled Workers
Under Qatar's New Immigration law (which came in to force in late 2016), a foreign worker may only apply for a work permit if they have an offer of employment from a Qatari national, a business registered as a legal entity or a resident family member on whom the individual is dependent.
Once the employer has made the application to the relevant Qatari labour authority, the expatriate employee will be issued their residence permit (if granted) within 30 days.
9.4 Visa/Travel Restrictions
In a bid to make Qatar a more attractive international tourist and business destination for countries outside of the Gulf region, in early August 2017, the Qatari government announced the launch of its new visa-free program for over 80 countries worldwide. Nationals from over 33 countries will be allowed to enter and stay in Qatar for up to 180 days without a visa (only a valid passport being required), and citizens of another 47 countries will be permitted to stay in Qatar for up to 30 days without a visa. This will make business travel to the country far easier for a wide range of international companies. Citizens of GCC states and Turkey do not require a visa. Citizens from a wide array of countries (main eurozone states, the US, various Central Asian states, Japan and Malaysia) may apply for a 30-day visa upon arrival.
Visitors may be denied entry if they have an Israeli visa or stamp in their passport.
10.1 Sovereign Credit Ratings
|Rating (Outlook)||Rating Date|
|Standard & Poor's||AA-||07/06/2017|
Source: Moody's, Standard & Poor's, Fitch Ratings
10.2 Competitiveness and Efficiency Indicators
|Ease of Doing Business Index ||68/189||83/190||83/190|
|Ease of Paying Taxes Index||1/189||1/190||1/190|
|Logistics Performance Index ||30/160||N/A||N/A|
|Corruption Perception Index||31/176||29/180||N/A|
|IMD World Competitiveness||13/63||17/63||N/A|
Source: World Bank, IMD, Transparency International
10.3 BMI Risk Indices
|Economic Risk Index Rank||73/202|
|Short-Term Economic Risk||57.5||58.3 ||59.2 |
|Long-Term Economic Risk Score||58.2||57.4||58|
|Political Risk Index Rank||77/202|
|Short-Term Economic Risk||84.4||84.4||84.4 |
|Long-Term Economic Risk Score||71||69||69|
|Operational Risk Index Rank||34/201|
|Operational Risk Index Score||64.7||64.5||66.3 |
Source: BMI Research
10.4 BMI Risk Summary
The primary economic threat for Qatar is lower energy prices, given its over-reliance on hydrocarbon exports. Nevertheless, the sheer size of the country's exports of liquefied natural gas (LNG) - Qatar accounts for one-third of global LNG trade - means that the fiscal account will remain roughly balanced even in a structurally lower energy price environment. Moreover, the government's plans to boost the non-hydrocarbon private sector will gradually reduce the economy's reliance on oil and gas revenues, limiting the risks involved in a future crisis.
Qatar is one of the GCC and MENA outperformers in terms of the relatively sound operating environment that this market provides for businesses. Qatar is a regional outperformer logistics network and the country provides safer operating environment than many of its regional peers. While interstate tensions between Qatar and a Saudi-led bloc have become far more elevated since June 2017, with five states (Saudi Arabia, the UAE, Bahrain, Egypt, Yemen and the Maldives) cutting diplomatic and transport ties with Qatar, we do not expect tensions to escalate beyond these measures. Qatar has efficient tax, bureaucratic and legal systems, a low tax burden and lower perceived levels of corruption than its regional peers. However, investors must be aware of the considerable obstacles to investment, which include stringent laws governing employment of expatriates and restrictions on foreign ownership in many sectors.
10.5 BMI Operational Risk Index
|Operational Risk||Labour Market Risk||Trade and Investment Risk||Logistics Risk||Crime and Security Risk|
|Qatar Score||66.3||63.9||63.1 ||67.8||70.5|
|MENA Position (out of 18)||2||2||3||3||3|
|MENA Position (out of 18)||2||2||3||3||3|
|Global Position (out of 201)||34||20||49||41||37|
Note: 100 = Lowest risk; 0 = highest risk
Source: BMI Operational Risk Index
|Country||Operational Risk Index||Labour Market Risk Index||Trade and Investment Risk Index||Logistics Risk Index||Crime and Secruity Risk Index|
|West Bank And Gaza||33.7||46.4||36.8||30.2||21.5|
|Emerging Markets Averages||46.8||48.0||47.5||45.8||46.1|
|Global Markets Averages||49.8||49.8||50.0||49.3||49.9|
Note: Higher Score = Lower Risk
Source: BMI Operational Risk Index
11. Hong Kong Connection
11.1 Hong Kong’s Trade with Qatar
|Number of Qatar residents visiting Hong Kong||3,668||-0.88%|
|Number of Qatari residents in Hong Kong||N/A||N/A|
Source: Hong Kong Tourism Board, Hong Kong Immigration Department
|Number of GCC residents visiting Hong Kong||38,629||-22.7%|
|Number of GCC people residents in Hong Kong||N/A||N/A|
11.2 Commercial Presence in Hong Kong
|Number of Qatari companies in Hong Kong||N/A ||N/A|
|- Regional headquarters|
|- Regional offices|
|- Local offices|
11.3 Treaties and agreements between Hong Kong and Qatar
Qatar is a member of the GCC and GAFTA. It has also entered into DTAs with over 40 countries including the Chinese mainland and concluded a Comprehensive Double Taxation Agreement (CDTA) with Hong Kong in 2013.
11.4 Chamber of Commerce (or Related Organisations) in Hong Kong
The Arab Chamber of Commerce & Industry (ARABCCI)
The Arab Chamber of Commerce & Industry (ARABCCI) was established in Hong Kong 2006 as a leading organization at promoting commercial ties between Hong Kong/Greater China and the Arab World. From a base of 8 founding member companies, ARABCCI has now evolved to include an ever-growing number of members. The Chamber is run by business experts for business professionals, dedicated to opening enormous trade opportunities by providing extensive information and professional services to our members.
Source: Directory of Hong Kong Trade and Industrial Organisations, Hong Kong Trade and Industry Department
Qatar Consulate General in Hong Kong, Hong Kong
Address: Level 19, Cheung Kong Center, 2 Queen’s Road Central, Hong Kong
Hours of Business: Monday to Friday, 9:00 a.m. - 5:00 p.m.
Consul General: Mr Sin Siya
Tel: (852) 3469 5259
Fax: (852) 3469 5257
11.5 Visa Requirements for Hong Kong Residents
- Qatar adopts a visa-exemption policy for more than 30 countries, as well as the GCC members, to boost tourism. The current regulations are applicable to GCC residence permit holders.
- Business Visas are issued to businessmen who have applied in advance. To obtain a tourist visa, the individual should have traveled into the country by Qatar Airways. Fourteen-day visas are usually given by the Immigration Department at Doha International Airport.
- The visas are renewable every three months. A tourist can get a visa on arrival at the entry points in the country or from Qatar’s embassies abroad. The joint-entry visa of Qatar and Oman could be used which permits visits to either country. But, for traveling to a third country, new visas need to be obtained at the point of entry.
- Nationals from Hong Kong are eligible for such joint-visa.
Source: Visa on Demand
- Middle East