Qatar's downstream segments such as chemicals, plastics and petrochemicals are expected to receive a boost with the expansion of the North Field, though the effects of Covid-19 on long-term prospects remain to be seen, Oxford Business Group has said in a report.
The 2022 FIFA World Cup offers the country the chance to showcase to both spectators and potential investors its infrastructure- and manufacturing-related strengths, OBG said in its ‘The Report: Qatar 2020’.
“Industry in Qatar has proven to be agile and capable of adapting to and overcoming challenges imposed by the economic blockade. An emphasis on self-sufficiency has opened up new avenues for diversification and growth, with local firms expanding their size and offerings as the availability of exported goods became constrained,” OBG said.
Qatar’s industrial sector has the potential to play a pivotal role in economic diversification, with both heavy and light manufacturing in a position to benefit from major milestones ahead. These include the 2022 FIFA World Cup; the opening of the Middle East’s largest petrochemicals complex, which is expected to come on-line in 2025; and the planned expansion of the North Field, which is expected to increase the production of liquefied natural gas (LNG) by 64% by 2027.
Industry and the economy overall have “developed resilience and a level of self-sufficiency” since the June 2017 blockade imposed on the country by some Arab nations.
An abundance of natural gas reserves has allowed the country to develop value-added and energy-intensive segments, especially as the country shifts towards cleaner and renewable sources of energy.
These products include petrochemicals such as ethylene, which is used to create polyethylene — one of the most important plastics (see analysis). As the authorities seek to cushion the economy from the impact of cyclical hydrocarbons and related commodity prices they are working to identify new industries that could be the engines for diversification in the future, OBG noted.
The Ministry of Commerce and Industry (MoCI) — led by HE Ali bin Ahmed al-Kuwari — is the government entity responsible for implementing policies aimed at supporting the development of the local industrial and commercial sectors. The ministry provides public services to businesses, regulates trade professions and supervises markets under its area of competence.
The licensing and regulation of commercial enterprises, consumer protection, investment promotion and reform of the business climate also falls under the MoCI’s purview. A key part of reform efforts was a 2019 law that eased restrictions on foreign investment, it said.
The new legislation permitted 100% foreign ownership in most businesses, with the exception of sectors such as banking, insurance and commercial agencies. The purpose of this change was to stimulate economic diversification, boost foreign direct investment (FDI) and accelerate development, particularly in non-hydrocarbons-related activities.
Qatar Chamber, the national chamber of commerce and industry, plays a leading role in championing privatisation efforts and promoting the business community’s interests both at home and abroad.
“Qatar’s aspirations envisage a greater role for the private sector — especially small and medium-sized enterprises — in the economy overall and the industrial sector in particular,” OBG said. Historically, many industries have been wholly or partially owned by the government as a result of the dramatic impact of oil and gas wealth. By-products of oil and gas extraction and the availability of cheap feedstock have spawned downstream petrochemicals and base-metal industries, with start-up capital provided by the state.
As these projects developed, family businesses evolved into diverse conglomerates capable of serving a growing economy, often through strategic agreements with multinational corporations.
Some of these family-owned businesses have since floated on the Qatar Stock Exchange (QSE) alongside state-owned enterprises such as telecoms provider Ooredoo and financial services institutions, OBG noted.