The government continues to improve the business climate, facilitating the private sector in order to build a diversified and sustainable economy
Qatar has overtaken the UAE as having the most competitive economy in the Middle East, according to Swiss business school IMD’s World Competiveness Index, released in May. Qatar ranked 13th out of 61 countries, while the UAE fell from 12th place to 15th.
Qatar’s main strengths are shown by indicators such as economic performance (second) and government efficiency (fifth). Both are backed by Qatar’s budget surpluses and sound macroeconomic fundamentals. But the authorities cannot rest on their laurels in a country that, despite its small size, aspires to become a prominent global player. This is why they are focusing on those indicators where there is still scope for improvement.
Dr. Saleh bin Mohammed Al-Nabit, Minister of Development Planning & Statistics, welcomed the results of the IMD report but also emphasized the need to work on the elements that are preventing the country from further moving up the ladder.
“These results confirm that our overall performance is solid and they will certainly help us to identify those areas where we need to consolidate gains and make further improvements”, the Minister said, referring specifically to upcoming challenges like strengthening direct inward investment flows, boosting high-tech exports or increasing the share of renewables in total energy consumption.
The IMD report has not been the only international recognition of Qatar’s efforts. In the latest edition of the World Economic Forum’s (WEF) Global Competitiveness Index, released in September last year, the country ranked 14th and regained its position as the most competitive economy in the MENA region.
However, the WEF has warned that the recent decline in the price of oil and gas may undermine the country’s performance in the future. That begs the question: can a country like Qatar, which has built its international preeminence on hydrocarbons, thrive in a global economy where low energy prices become the norm?
The WEF has a clear answer: yes, as long as Qatar invests its exceptional wealth in innovation, technology and know-how that can translate into future economic growth. That would help the country absorb the likely shocks looming over the international energy market.
Qatar is already hands-on in this undertaking. According to the WEF, it is an innovation-driven nation whose economy is in stage three of development. This means that it ranks alongside the world’s most economically advanced countries. Only three other MENA states (the UAE, Israel and Bahrain) can count themselves in the same league.
Efforts must be made, nonetheless, to further diversify the Qatari economy. Diversification has become the mantra of the country’s authorities, and lies at the core of National Vision 2030, which intends to gradually reduce the country’s dependence on energy while maintaining its competitiveness and increasing the role of the private sector.
Aysha Al Mudahka, CEO of the Qatar Business Incubation Centre, recently said in a Qatar Times report that the country “must support a strong and diversified private sector, with small and medium-sized enterprises and entrepreneurs providing the engine room for growth”.
Qatar hopes to increase the role of foreign direct investment (FDI) as “one of the main drivers of economic development” over the medium and long term, the Minister of Economy, Sheikh Ahmed bin Jassim bin Mohamed Al-Thani, told The Gulf Times.
FDI and government investment will have to go hand-in-hand if Qatar is to revamp its infrastructure in a way that matches the country’s aspirations (one of the few competitiveness indicators in which Qatar is lagging behind is precisely that of infrastructures). And one secure way to fund these projects is by bringing in private capital, specifically through public-private partnerships (PPPs).
A draft law aimed at unlocking the PPP potential in the country is currently being discussed, and is likely to be implemented by the end of the year. The new legislation would enable Qatar to resort to PPP funding mechanisms to continue investing heavily in key areas such as infrastructure, education, healthcare and tourism. Therefore, PPP could be instrumental in ensuring the execution and completion of projects that may have otherwise been delayed or cancelled.
Private involvement would enable Qatar to maintain its ambition without straining public finances and compromising the country’s strong macroeconomic foundations. Meeting investment commitments would also help non-hydrocarbons industries take off, which will mitigate the country’s overreliance on gas.
Indeed, the private sector is already playing an important role, as it has pumped an estimated $8.2bn into various public projects over a period of one year.
The idea of complicity between the public and the private sector becomes clearer in the thoughts of Adel Ali bin Ali al Muslimani, Chairman of the Ali Bin Ali Group, who refers to globally renowned national brands like Qatar Airways or Al Jazeera as examples “that highlight what can be achieved when national strategies are aligned with the power of markets and led by a private sector mindset”.