Strong career opportunities, zero income tax and political and economic stability make Qatar attractive to expat professionals. Could more be done to encourage them to invest locally?
Qatar has developed a strong economy in recent decades, and it could not have done so without a significant contribution of expat workers, both for white collar and blue collar roles, to build the infrastructure and maintain and grow the country’s industries and services.
Interest rates have been rising in the past few months, led by the US Federal Reserve. This has major implications for Gulf states and for expats. The region has strong economies and currencies that are pegged to the dollar. So the exchange rate relative to many of the home countries of expats has increased in their favour, though to the detriment of their families back home.
Where there has been a modest revaluation, there could be an incentive to remit more money to take advantage. In some nations, however, the valuation has fallen considerably, and capital controls have been introduced along with limits on bank withdrawals in US dollars, so it makes more sense for the expat to retain more money in Qatar, remitting smaller amounts.
More than 85% of individuals in Qatar are expats, and the amount remitted home has been above QR40bn ($11bn) per year in the past few years, according to figures from the World Bank, which amounts to 6.1% of Qatar GDP in 2021. Some other sources put the amount at a higher figure. The amount dipped during the Covid-19 epidemic, but indications are that they have been rising since.
Many individuals remit money to support their family and to invest in real estate in their home country. Yet many also keep their savings in their country of origin, and make investments there. This raises the issue of whether Qatari institutions could do more to encourage investment locally, to retain more of the wealth. Some expats are in the medium-high income categories. Such a policy could encourage investment in Qatari businesses, including startups and equity ownership.
The focus over the past few years has been to encourage inward investment from abroad. There has not been a similar attention regarding how to retain the internal wealth being generated in the country. There are initiatives by the Ministry of Commerce, Invest Qatar, QFC, QDB, Qatar Free Zone, the Qatar Stock Exchange and others promoting investment in Qatar. These mainly target external inward investments, and there is no central overall strategy, which means there are overlaps and duplications.
An obvious measure to retain more capital is enhanced incentives to own property. Non-Qatari citizens are free to buy a home in the country in few designated areas. Given that many expats stay for five years or more, this makes sense and is to mutual advantage: The expat gains an asset and some security, while Qatar benefits from a professional being more invested in the location, more likely to send their children to school or university locally, and spend or invest their income and savings in ways that benefit Qatar’s economy. The regulators and major lending banks could make sure that mortgages are easy to obtain, encouraging the property ownership that would encourage further investment. An investor visa, covering a single property for personal use as well as more ambitious investments, could prove attractive and to mutual benefit. Expats with an investor visa who own a property can be allowed to stay and work without the need to be sponsored by their employers, encouraging them to stay and invest in the country. A clear policy involving all stakeholders should be drafted and implemented at a national level.
Owning equities is another option for expats. The Qatar stock market is mature, and features companies with strong earnings and prospects. There is high liquidity, so it is easy to enter and exit the market. The process for setting up an account to invest in equities could be streamlined, however. The online account opening process should be improved, subject obviously to necessary checks and regulations. Many SMEs are owned by non-Qatari citizens, though in some cases indirectly. The government is implementing reform to create more transparency around the beneficiary owner. The profits generated from those businesses need to be invested back in the country instead of being remitted abroad. More investment, including in start-ups, would help economic growth in the country, and attract smart entrepreneurs, with potentially significant growth in high added-value industry sectors.
Qatar offers a safe haven and opportunities for investor returns at a time when many economies have featured bank failures, falling currencies and capital controls. Having a large percentage of the wealth generated in the country being remitted abroad is worrying and should be addressed at the highest level of the government, as it represents a hidden opportunity.
The author is a Qatari banker, with many years of experience in the banking sector in senior positions.
