QATAR STEPS UP TRANSPORT SPENDING
Economic diversification in Qatar takes many forms. Qatar Petroleum (QP) for example acquired a natural gas import terminal facility in cooperation with Exxon Mobil and Conoco Phillips in Texas and is now in the process of obtaining permission by the US g
Increase in spending on Qatar's transport sector has resulted in building the momentum across Qatar's rail, aviation and port projects, which in turn is paving the way for a broadening of the state's economic base.
As the US becomes a net producer of gas, the investment would also allow QP to open up new markets for its natural gas and Qatar to maintain its current position worldwide as a major broker in the natural gas market. It also ensures that hydrocarbon revenues for Qatar will continue unabated in a changing global landscape for energy demand.
But what does this have to do with entrepreneurship? Just like QP adapting to changing demand for energy, Qatar's non-hydrocarbon sector, which constitutes about half of total economic output, needs to adapt, evolve and grow. It's not just a matter of national pride to diversify Qatar's economy away from oil and gas, it is essential for the country's long-term economic sustainability. And who better to do it than entrepreneurs? Men and women who create businesses that grow into small and medium sized enterprises are the engines of wealth and job creation worldwide.
And Qatar is well positioned to offer entrepreneurs a base from which to do business - it ranks in the top tier countries for ease of doing business according to the World Bank, is the richest country in the GCC by per capita income, and has an active youth population. Youth constitute over 30% of the population, have high levels of educational attainment when compared to other MENA countries, and have an employment rate of nearly 70% - well over any other country in MENA. While the numbers are encouraging, entrepreneurship in Qatar is very low when compared to international benchmarks.
The entrepreneurship landscape in Qatar has some weaknesses but also presents some opportunities for adjustment and growth. For example it's expensive to do business in Qatar because salaries in the public sector are relatively high, so businesses who want to compete regionally find it difficult because their cost structures are higher than their competitors. This is why many businesses in Qatar that are successful tend to be in the non-tradable sector – retail, restaurants and hospitality.
Also, there are currently no Dubai-style free zones from which businesses fully owned and operated by foreigners can flourish. While Qatar has plans to open up economic zones, the regulatory details have not been worked out yet so it's difficult to know how much these zones are going to contribute to economic diversification and this is an opportunity for the government to design a regulatory framework that allows Doha to compete as a business hub with other economies in the region.
On the other hand, for companies that are established by foreigners in Doha, the 51/49% ownership law implies that many Qataris are actively involved in managing businesses that are set up by foreigners. This is interesting because this is a different form of entrepreneurship than what we observe in other countries. The ownership law gives an opportunity for Qataris to get involved in, and contribute to SMEs that have been established by foreign entrepreneurs while at the same time getting on-the-job training, skills-building and professional experience.
What other factors drive entrepreneurship in Qatar and what practical solutions can be put in place to stimulate a richer entrepreneurship ecosystem? To find out, a gathering of entrepreneurs, policy makers, academics and others who are interested in creating an ecosystem that fosters growth of entrepreneurial activity in Qatar will meet from November 16 to November 22, 2014 at Global Entrepreneurship Week (GEW). Thousands of similar GEW events take place in November every year, bringing in more than 7.5 million people and 125 countries last year alone. Launched in 2007 by Carl Schramm of the Kauffman Foundation and Gordon Brown, former Prime Minister of the United Kingdom, the event will now be hosted this November in 140 countries worldwide.
In Qatar, a number of workshops organised by Silatech will be dedicated to better understanding the entrepreneurship experience. These include a meeting of the Entrepreneurship Policy Working Group that will discuss improvements in the regulatory environment that can benefit Qatar's global competitiveness, a workshop on the upcoming economic zones and how they can be shaped to allow entrepreneurs from across the world to create wealth and jobs in Qatar and many other workshops focusing on youth and women entrepreneurs that will shed light on the challenges and opportunities faced by Qataris in starting an operating a business.
Just like QP adapting to new market conditions, the private sector in Qatar will need to evolve and adapt to provide a sustainable basis for national economic growth. Global Entrepreneurship Week is an excellent occasion to explore how exactly the private sector will have to adapt to make this transformation possible
BY DR TAREK COURY is an economist at Silatech, a social initiative based in Doha.