The Qatari economy's steadfastness and rise in the face of the siege has boosted investor confidence, opening up wider horizons for attracting more foreign investments to the different sectors, a recent study by Qatar University (QU) showed.
The study, "Foreign Investment Openness in the State of Qatar and Its Interaction in Development of Qatari Economy", was prepared by QU’s College of Business and Economics dean Dr Khalid al-Abdulqader.
“The steadfastness of Qatar against the siege thwarted the plans and expectations of the siege countries who had expected the economy to collapse once they imposed it,” it was stated.
The study pointed out the fact that major foreign companies continued to operate in Qatar despite the siege indicates the strength of the Qatari economy, which in turn illustrates investor confidence in the ability of Qatar to face the siege.
Another proof of the strength of Qatar's economy is that its credit rating is in the highest range for global rating agencies such as Standard and Poor's, Fitch, Moody's and Capital Intelligence, the study says.
In the same context, the International Monetary Fund puts Qatar's projected economic growth in 2018 at the higher level in the Gulf region despite the siege. The IMF expects a real gross domestic product (GDP) for the Qatari economy by 2.6%, which is the highest IMF forecast for real GDP in the Gulf, the study noted.
Moreover, the study showed that the Qatari economy is considered a global hub in manufacturing and exporting liquefied natural gas, and is also qualified to be an economic player in a comprehensive and complete manner, especially after Qatar announced a package of laws to open up foreign investment.
The aforementioned package comprises the laws on real estate acquisition, permanent visa and residence, and opening the economy for foreign investment. The laws on opening foreign investment are very important to in terms of attracting capital and finding the appropriate mechanism to constantly keep such investments.
The study touched on the importance of attracting foreign investment so as to boost economic activity and economic development. Most of the foreign investment is currently concentrated in the energy sector, which has an abundance of oil and gas at globally commercial quantities and low production costs, thus ensuring profit.
After foreign investment in Qatar's energy sector proved to be worthwhile, the study argued, time has come for foreign investment to enter the Qatari economy, especially in meeting the important needs of the economy.
The study highlighted the need to ensure that the Qatari economy is positioned on the regional and global economic map, not only in the energy sector but also in the fields of commodities and services.
In addition, the study said that foreign investment is a complementary factor in the ability of the national private sector in meeting the needs of the economy in terms of goods and services. The national private sector may not be able to meet all the needs of the Qatari economy, especially those that come from self-sufficiency and import substitution projects, the study added.
The QU exercise said that opening the local economy to foreign investment would accelerate the growth of the private sector and expand its productive base. The Qatari economy needs to expand its production capacity today more than ever in order to meet local and market needs, the study added, noting that the entry of foreign investment will be important in strengthening and diversifying the production base and creating import alternatives to the Qatari economy.
Additionally, the study argued that foreign investment will contribute to reducing Qatar's reliance on imports as Doha imports most of its consumer goods from abroad. The country's imports stand at an average of $32bn a year, which represents about 20% of GDP.
The study stressed that foreign investment will accelerate the implementation of economic diversification projects and double the size of economic activity. In many areas, foreign investment, in partnership with national capital, has been able to promote the strategy of economic diversification such as health, tourism and the financial sectors, the study argued, highlighting that more than 100 international financial and advisory companies have entered the economy through Qatar Financial Centre.
As for the economic feasibility of attracting foreign investment in the establishment of self-sufficiency projects and import alternatives, the study said that the private sector might refrain from many projects of local production because importing is less expensive. However, it pointed out that the economic feasibility of the presence of such projects in the difficult circumstances makes more sense than their absence, and the government will support their presence.
The study reaffirmed the importance of innovation and creativity to achieve quality, competitiveness and lower costs in some commodities, pointing out that the lower costs will be indirectly supported by the advanced infrastructure and low government rents in the industrial and logistics zone, in addition to the major financing advantages in foreign trade outlets such as Hamad Port and Hamad International Airport.
In addition, the study expressed Qatar's readiness to receive foreign investment more than ever before, reiterating that the diversity of the military and defence protection of Qatar as a deterrent raises confidence in the country's economy because it is important for the foreign investor that the country to which investment is directed is militarily safe and can protect itself from any aggression.
The study recommended strengthening the role of the private sector in order to meet the needs of the Qatari economy, make it more competitive in the region, accomplish export achievements and compete at the global level.
It also recommended that the entry of the foreign element be mainly through the private sector, because it will be accompanied by the entry and emergence of several projects that the economy needs, which would prove its competitiveness in the regional markets.
In this regard, the study pointed to the cabinet's approval in December 2017 of a draft law on non-Qatari ownership of real estate, including empty land, buildings, detached residential units and residential complex units, in addition to the issue of the law on industrial areas in May and, before that, the amendment of the law on free zones in November 2017.
The study concluded that the package of laws on foreign investment openness will also be compatible with the allocation and provision of industrial areas and free zones so as to attract investments, expertise, technology and best practices, and combine them with citizens' investments to establish industries that meet the needs of the local economy.
It also noted that the package of laws will enhance the economic movement, especially on the demand front, which would be an incentive for investments to enter the economy and then be employed to meet that demand.
Additionally, the study concluded that Qatar's patience in imposing the Value Added Tax and delaying its implementation have had a significant impact on attracting and transferring human expertise from the siege countries to Qatar after Doha proved its ability to flourish in an excellent manner while leaving the effects of the siege behind.
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