The Bottom Line

Qatari businessmen recently met with the Prime Minister to put forward concerns and challenges faced by the private sector – a report.

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Private sector

Some believe the government had long pampered the private sector, having protected it against competition in relatively less riskier businesses like trading and contracting earlier. The patronage continues to some extent in direct and indirect ways in some areas, believe others. But the time has now come for the state to rely partly, if not fully, on private businesses to push the national economy ahead in these testing times when world oil prices have been falling and the prospects of a quick rebound look bleak.

Qatar has admitted that sliding crude prices are a matter of concern. Prime Minister H.E. Sheikh Abdullah bin Nasser bin Khalifa Al Thani told Qatari businessmen at a meeting on 3 December, 2014 that fluctuating world oil prices were raising alarm and making the government quicken its efforts to promote the private sector in a bid to help diversify the national economy.

The occasion was his maiden meeting with members of Qatar’s trade and industry held at the Ritz-Carlton under the auspices of Qatar Chamber, representative body of the private sector.

The Prime Minister pointed out that the signs were already encouraging for private businesses as the non-hydrocarbons sector of the Qatari economy was performing well and its growth rate was in double digits: 13 percent in 2012, 11 percent in 2013, and expected to be 12 percent in 2014. He said this pace of growth was likely to continue until the sector’s share in the GDP (in the country’s economy) had reached 50 percent.

Private sector a sheet anchor?

But some observers of trade and industry, as also economists, privately wonder if the time is ripe and Qatar’s trade and industry are mature enough and ready to shoulder this huge responsibility. In other words, what they are wondering is: Is the government realistic enough in its belief that the private sector is independent and capable enough to play the role of a sheet anchor of the economy?

Interestingly, by its own admission, Qatar’s private sector is too small, though growing. If the listed entities are excluded,

the collective capital of 75 percent of the companies that were registered in Qatar by 2013-end was barely 20 percent of the total capital of companies in the country.

By contrast, venture and foreign companies with a presence here account for 50 percent of the total capital of private companies in the country. And these companies represent just two percent of the total number of companies that were registered in Qatar by 2013-end, said Mohamed bin Jauhar Al Mohamed. A member of the Board of Directors of Qatar Chamber, Al Mohamed was speaking at the businessmen’s meeting with the PM on behalf of the private sector. “The Qatari market is small and consumerist and not one that produces enough,” he said as a matter of fact.

Al Mohamed said, as the audience listened in rapt attention, that some 95 percent of Qatari companies were engaged in the construction sector and a majority of them faced financial constraints. Again, most of them being small and medium-sized enterprises (SMEs) they have no access to government projects, even the smaller ones. Their participation in local production was not more than 10 percent.

Al Mohamed laid out the private sector’s woes publicly in front of the PM and said the challenges the sector faced were multifarious and formidable. A sudden raise in diesel prices, soaring rates of real estate, shortage of land for different uses, delays in clearance of goods at various points of entry of imports, and traffic jams were some of the major obstacles the private sector was battling in its day-to-day operations, said Al Mohamed.

Mega development projects are being launched almost simultaneously and this means that raw materials are becoming expensive literally by the day much to the discomfort of local trade and industry, according to Al Mohamed who poured his heart out at the meet. About government policies and laws, he said they were good but there were problems in their implementation.

He suggested that a higher committee be set up with top officials from various government ministries and agencies and members of the Chamber’s board being on it. The panel should meet regularly to help resolve the woes of the private sector.

Al Mohamed, in his address, rued that private companies were not allowed to depute their legally qualified employees to represent them in courts in litigations and other legal matters. This forces companies to hire the services of lawyers, which entails a lot of expense.

In fact, until about 20 years ago companies enjoyed this privilege but a new law passed at the time to regulate the legal profession put a blanket ban on company staffers from representing their employers in court in legal matters. That law is being amended again and its draft is being discussed at various forums currently. It seeks to give companies this privilege back. But sources tell bq that the Qatari Lawyers’ Association is opposed to the idea and has urged the Ministry of Justice to remove this clause from the draft.

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Member of the Board of Directors of Qatar Chamber, Mohamed bin Jauhar Al Mohamed spoke at the businessmen’s meeting on behalf of the private sector

Addressing private sector woes

Al Mohamed was, though, all praise for the government and the PM, especially, and said that his recent instructions that no ministry or state agency, even the one funded by the state, could launch any new company or business or expand an existing one without permission from his office showed that the state was keen to encourage the private sector.

Back to the Premier’s maiden conclave with businessmen, he (the PM) told them he was willing to meet with them several times a year if that would help solve their woes. Sheikh Abdullah said various ministries had been asked to specify requirements for land for purposes like housing (including labour camps), commercial activities and for education, health and food security projects. Financial markets are being expanded.

Visas for professional workers from countries of choice of companies were being issued unrestrictedly. “But Qatar has inked bilateral labour agreements with countries and they must be respected,” said the PM.

Areas are being identified by the government to encourage the private sector’s participation.

The PM hinted that a draft law prepared by the tourism promotion agency, Qatar Tourism Authority, was with the Cabinet, having been forwarded recently which sought to make tourist visa rules easier and include more nationalities in the scheme as beneficiaries.

Sheikh Abdullah fielded a number of questions from members of the audience who also included a large number of foreign businessmen and women as well as stock investors. Questions included one about delays being made by the Ministry of Municipality and Urban Planning in allotting plots of land, the other about licenses for pharmacies not being issued, yet another one about the need for opening up the higher education sector to private participation and still others about foreign insurance companies blocking the progress of their local counterparts.

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