“The motive behind establishing Business Start Up Qatar (BSUQ) was in large driven by my own unsuccessful attempt to start a close protection and event management company here in Qatar. As many business owners will attest, the unclear and time-consuming procedures make it difficult to navigate the incorporation process in Qatar,” says Stevie Mackie, Founder of BSUQ.
Mackie recalls how he spent 10 months and a substantial portion of his capital without successfully incorporating. As a result in 2009, Mackie launched BSUQ.com with the aim to put his own hurdles into a positive use in order to assist foreign investors to start or expand their business in Qatar. Initially, the website was intended as a guide on doing business in Qatar and how to avoid the common pitfalls.
“When an increasing number of executives and prospective business owners began to consult us on setting up their ventures, I decided to start a firm specialising in company formation,” continues Mackie; “I set up Solutions Four in 2010 after discovering that local regulations prohibited using ‘Qatar’ in a registered company name. As part of Solutions Four, BSUQ streamlines the incorporation process enabling our clients to immediately focus on their core business.”
Furthermore, Mackie explicates how company formation today remains with their core offering in addition to pre-incorporation and post-incorporation consultation. In other words, pre-incorporation offers feasibility studies and market research to assess whether the business is suitable for the local market whereas post-incorporation enables their clients to enter their respective market quickly. “We also carry out the entire incorporation process on behalf of our client. This includes preparing all relevant legal documents, securing a local partner, obtaining approvals for the proposed business activities, finding appropriate office space and so forth.”
According to Mackie the most common foreign businesses setting up in Qatar are in construction, contracting and various downstream industries. “This is primarily due to the abundance of large-scale public sector projects and infrastructure developments currently underway such as Lusail City, Msheireb Properties, the World Cup Stadia and the Doha Metro.”
In fact, there has also been a growth of foreign investment in the medical, financial services, and retail sectors. “Over the next few years, we will see a renewed wave of investment in hospitality, tourism and the entertainment sectors. As outlined in the 2030 Qatar National Tourism Sector Strategy, a combined USD 45 billion in public and private funds will be invested into various tourism and hospitality developments,” adds Mackie.
Unquestionably, Mackie adds how Doha is repositioning as a global tourist destination, which has become a national priority. “As such, four and five-star hotels, food and beverage outlets, leisure and recreation facilities, and downstream industries are increasingly attractive opportunities for foreign investment.”
Subsequently, Jane Ashford, director of Pro Partner Group explains how having worked in company formation for ten years in Qatar – has witnessed that there is still a huge need for trustworthy local partners. “I founded Pro-Partnership a company that I successfully managed and built for five years. I have first-hand experience of what can go wrong when running your own business in Qatar. This experience made me even more determined to help companies to find the right partner for a lasting and mutually beneficial partnership.”
Ashford further adds how the main challenge when establishing a company in Qatar is to find the right local partner, which can offer security, reliability, and flexibility.
Resultantly, Pro Partner Group is able to source the appropriate local partners for these requirements. “We would recommend that the local partner is not an individual person but a company. When choosing a company as a local partner, you have to be wary of companies that promise a lot but fail to deliver. Ensure that your local partner is the correct partner for you and your business and that they can be trusted,” continues Ashford, “We would recommend that you always obtain external lawyers to draft the documents between you and your local partner and that you do not rely on the local partner to draft documents.”
For this reason, many companies will need to source a 51 percent Qatari shareholder, however not all. “Many companies in Qatar may be eligible to setup under Qatar Financial Centre (QFC) and thus avoid the 51 percent shareholding. QFC has recently opened its doors to more ‘non-regulated’ companies, allowing them to establish as a 100 percent foreign owned company. The QFC now offers not only an alternative to having a local Qatari partner but it also offers a simple and affordable alternative,” says Ashford.
Unquestionably, Mackie of BSUQ agrees on how the ownership restriction is a major grievance among foreign investors. “The primary concern for many is the inability to retain control of the venture. Once we walk a prospective client through what the typical partnership arrangement entails, they usually become less reluctant to ceding majority ownership. However, there are various profit distribution, liability and management clauses that we can include prior to registering to protect our clients’ interests.”
Consequently, Mackie strongly believes prospective business owners should opt for securing a reputable and experienced local partner. “An active local partner can facilitate the success of your business by securing new contracts, corresponding with officials, and giving you access to their professional network.”
Once the local and foreign partner negotiate their partnership and all the legal documentation is in place, the commercial registration process could take around two weeks. This timeframe tends to vary from one business to another – depending on which additional government approvals are required.
“Once registration is complete, we proceed with securing immigration visas, registering for taxes and so forth. A limited liability company will typically spend around QR 20,000 in official registration fees including the cost of obtaining a trade license. Prospective investors should be aware that there is additional investment required upfront,” explains Mackie.
Accordingly, all businesses, irrespective of sector, are required to obtain a twelve-month lease or a deed to a commercial property. Virtual offices and residential leases do not meet this requirement. Moreover, all limited liability companies are required to present a bank issued letter to verify possession of the minimum paid up capital of QR 200,000. “However, the common convention is to withdraw the deposit after incorporation. Without prior preparation and the experience of a specialist, getting the necessary legal framework in place can take months.”
On a positive note, Mackie highlights how although over the past five years there still have not been significant changes in the commercial regulations concerning establishing a business in Doha, there are several initiatives and proposed reforms underway.
For instance, an amendment reform to the Foreign Investment Law, implemented in 2010, which exempted twelve sectors from local ownership requirements.
“However, few businesses have successfully secured this concession till now. Forthcoming initiatives such as the economic zones ‘Manateq’ will offer streamlined in-house setup procedures for businesses in over 16 target sectors. Other local entrepreneurship and SME support organisations offer consultancy and various business development services although direct support for setting up is rather scarce,” says Mackie.
Referring back to Pro Partner Group, Ashford, based on previous experience, says how some of the most common challenges prior to setting up a business is the bureaucracy, in addition to the difficulty in finding the right information and the language barriers. “Having a well-trained team, who have made contacts within the Ministries is essential to the smooth running of any company. When a company first opens, it wouldn’t make sense for the company to employ a government liaison officer and therefore using the services of companies who have the knowledge and experience is essential.”
As a result, Ashford adds how it was important for Pro Partner Group to expand into the United Arab Emirates (UAE) – in order for their clients to have the same quality service, which they receive in Qatar. “Many expressed a desire to expand operations into the UAE and some into Oman. We have affinity partners in Muscat and Doha for those companies wishing to have a presence in Oman or Qatar. “
In the UAE and Oman there are Free Zone opportunities for many companies. In the UAE, unlike Qatar and Oman, companies can open a branch office without having a government contract. Branch offices can be 100 percent foreign owned and this option appeals to many companies in the UAE.
“For a few companies in the UAE the 51/49 percent shareholding may be the only option. In this case we can assist companies by acting as the 51 percent nominee partner. The laws in the UAE allow for a nominee local partner unlike Qatar where there is a proxy law stating that the local partner must be an active partner,” says Ashford.
In reference to small SMEs in Qatar and Oman, Ashford pinpoints how it is often difficult as the share capital in both countries is relatively high. “In Qatar you also have the disadvantage of the cost of office space. There is little choice in small offices and what is out there, is very expensive.”
Generally speaking, in the UAE there are a lot more possibilities and options for start-ups. “We will look at the activities of the SME and recommend the most effective and economical solution for setup, whilst also ensuring that the SME will be able to operate and they are set up securely.”
Simultaneously, Mackie of BSUQ agrees how unquestionably to some, Qatar’s small market may appear to be a disadvantage, particularly in comparison to the UAE. However, he believes how this also opens opportunities for new players to become industry leaders.
“The added benefit of investing in Qatar is that many industries remain unsaturated. While setting up a venture is considerably easier in the UAE, the high levels of competition make it difficult for business to achieve the profitability levels of their counterparts in Qatar,” adds Mackie.
Although investing in Qatar does present some challenges, particularly in the start-up phase, investors will find many unrivalled opportunities within Doha. “Ultimately, today’s investors will have the unique opportunity to take part in the ambitious growth and development of Doha into a hub for the region and beyond.”
BSUQ is indeed involved in assisting start-ups and SMEs. However, the start-up scene in Qatar is largely in its infancy level. “Fortunately, local entrepreneurs have the support of incubators and support centres such as ictQatar’s Digital Incubation Centre and the recently opened Qatar Business Incubation Centre.”
In summary, Jane Ashford recommends foreign investors keen to invest in the Gulf Cooperation Council to set up in the UAE. “No need to deposit share capital, no corporate tax, doing business in the UAE is less bureaucratic and the staff at the Ministries are for the most part helpful.”
Conversely, Stevie Mackie, advises his clients to do as much research and homework as possible. “While there are many lucrative opportunities [in Qatar], investors should take into consideration that lead-time for securing contracts and other business deals is typically longer than seen in Western markets.”