Qatar mulls foreign ownership changes to boost GDP
Posted on 01 April 2010 with no comments from readers
Qatar is mulling an amendment to its investment law to allow foreign ownership to exceed 49 per cent in business consulting, technical services, IT, distribution and sports and leisure services, according to the Gulf Times, citing official sources.
This would mark a substantial extension of foreign ownership in the gas-rich Gulf State that is expected to boast the highest GDP growth in the world this year due to the opening of four new LNG trains.
New exemptions
Until now foreign investors have only been exempt from the 49 per cent rule in a limited number of sectors: agriculture, manufacturing, health, tourism, development and exploitation of natural resources, energy and mining.
The new liberalization of ownership is part of a national strategy to ‘enhance competitiveness and attract investment in a dynamic and increasingly borderless international economy’ as set out in Qatar Vision 2030 white paper, said the newspaper.
Extending foreign ownership to the local service sector makes good sense to maximize GDP growth over the next few years. Qatar is hardly short of capital but the transfer of technology and influx of educated professionals will be very welcome. Local talent is thin on the ground and very expensive to hire.
High GDP growth
Existing joint venture arrangements can be wound-up in favor of new company structures under the proposed legislation. There is enormous global interest in Qatar at the moment because its high rate of GDP growth is such a contrast to the depressed business conditions in many parts of the world, and even in the neighboring Gulf emirate of Dubai.
Qatar is keeping to its ambitious 2030 Vision plan, and the skyline is decked with cranes, albeit prestige projects like the massive new airport are running two years late. For many companies new orders in Qatar have been a lifeline after the real estate crash in the UAE.
Not that such growth comes without a price. The cost of doing business in Doha has soared in recent years and after a welcome fall last year, inflation is set to pick up again in 2010. Making the local service sector more competitive will clearly help to keep costs in this sector down.
