A higher up to 100% foreign direct investment (FDI) and the planned annual 100mn tonnes of liquefied natural gas (LNG) are slated to "tremendously" enhance the foreign flows into Qatar's banking system, which in turn benefits the economy, according to a top asset manager.
"The decision to allow 100% foreign capital is a step in the right way," Talal F Samhouri, head of asset management, Amwal, told Gulf Times.
As this step would increase international investment flows into the country, he said, it along with the expected increase in LNG production to 100 mta will "tremendously increase the foreign flow into the banking system where it will trickle down the economy."
The Ministry of Economy and Commerce recently issued a draft law that will allow foreign investors to own up to 100% holding in all sectors, pending legislative approval.
It is expected that certain sectors such as manufacturing, health, education, tourism, development, natural resources and power, or mining, ought to benefit from higher foreign participation.
"I believe in the coming years, all sectors will benefit, given the opening up of all sectors of the economy to foreign investment, along with energised local investors," said Samhouri.
Lifting the 12-year moratorium, Qatar Petroleum had last year announced further enhancing the LNG production from North Field. In July 2017, Qatar announced a new development from the North Field would produce 23mn tonnes per year by 2024, an increase of 30% from the current total LNG production levels, to about 100mn tonnes per year, cementing Qatar’s position as the leading LNG producer.
Samhouri said Qatar's moves (both higher foreign ownership and LNG production) have encouraged foreign investors in the Qatari market and this can be seen in the higher demand for the latest sovereign bond issue.
"That was a clear indication that investors were confident in Qatari debt despite the geopolitical challenges facing the region and the fact that Qatar’s bond issue came after a series of large high profile issuances which technically should have dried the market out of some of the liquidity," he said.
Despite the slight slowdown in the third quarter of 2017, the economy started picking up right after the embargo and went back to full speed ahead, and actually exceeded all expectations in the first quarter of 2018, he said.
The government reassured the economy that it will continue ahead with its normal spending, especially for the World Cup in 2022. It was helped by the increase in oil prices during the first few months of 2018, Samhouri said.
“These actions reassured not only local investors, but international investors. This can be seen in the very successful sovereign bond issue, as investors rushed to show interest in owning the Qatari debt, where total interest was around $53bn,” he added.