Qatar’s economic performance is expected to remain strong in 2009, despite the current global economic downturn. Qatar’s economy will continue to grow robustly because of planned increases in its gas production. Six new liquefied natural gas (LNG) super trains will come on line, fueling strong economic growth.
Qatari’s real GDP growth was 13% for 2008, and is projected to be around 10% for 2009. The decline in GDP is attributed to falling oil prices and world demand, compounded by the global economic crisis.
Qatar’s gross domestic product (GDP) rose to a record high of $102 billion in 2008, compared to $71 billion the previous year.
From 2004 – 2008, Qatar’s nominal GDP growth averaged 34%. The main drivers for this rapid growth are attributed to ongoing increases in production and exports of LNG, oil, petrochemicals and related industries. During the same period, the non-oil and gas sector has likewise surged, averaging 32% growth.
In 2008, the oil and gas sector accounted for 61% of overall GDP, while the nonoil and gas sector accounted for 39%. Per capita GDP in Qatar is among the highest in the world: $65,000. There is no personal income tax in Qatar.
Foreign investors must receive permission from the government to invest in the banking and insurance sectors.
Banking: A total of 18 banks operate in Qatar, including 11 Qatari institutions and seven foreign branch banks. Out of the 11 Qatari banks, eight are commercial institutions (Ahlibank, Al Khaliji Bank, Barwa Bank, Commercial Bank of Qatar, Doha Bank, International Bank of Qatar, Qatar Development Bank, and Qatar National Bank); the other three are Islamic institutions (Masraf Al Rayan, International Islamic and Qatar Islamic Bank). The seven foreign banks include: Arab Bank, Bank Saderat Iran, BNP Paribas, HSBC, Mashreq Bank, Standard Chartered, and United Bank.
Commercial Agents: The Commercial Agents law requires all agency agreements to be exclusive arrangements.
Corporate Income Tax: Foreign companies must pay corporate income taxes between five and 35%, while Qataris are exempted from this tax. New legislation is expected to be passed to reduce the corporate income tax rates for foreign companies to a flat rate of 10%. In certain circumstances foreign companies can obtain an exemption from income tax for periods of up to five years.
Import Duties: The import duty for most processed food products is a flat five percent ad valorem. There is no import duty for live animals, fresh fruits and vegetables, seafood, grains, flours, tea, sugar, spices and seeds for planting. The import duty on cigarettes and other tobacco product is 100 percent.
Import Restrictions: Qatar has no import quotas. However, imports of pork products are prohibited in Qatar for cultural reasons.
Inflation: The booming economy in Qatar is leading to shortages of materials and labor. This is compounded by a rapidly growing population, which is approaching two million people, up from just 700,000 five years ago.
Standards and Labeling: As part of the GCC Customs Union, the six Member States are working toward unifying their standards and conformity assessment regimes. However, each Member State applies its own standards until a uniform GCC standard has been set. Labeling and marking requirements are compulsory for any products exported to Qatar.
Food Labeling and Packaging: Arabic or bilingual English and Arabic language labels (or stickers) are required for all food products. Production and expiry dates are required to be on all “original” food labels.
Energy Sector: Qatar has attracted an estimated $100 billion in investment. It is estimated that Qatar will invest over $120 billion in the energy sector in the next ten years.
Construction: It is estimated that Qatar will invest $60 billion in roads, infrastructure development, housing and real estate, health/medical and sanitation projects in the next decade. The GOQ and private sector are actively seeking project designers, engineers and managers, in addition to needed production inputs like cement and heavy machinery and equipment.
Qatar imports over 90 percent of its food. Major food suppliers to the Qatar market include the EU, Australia and Saudi Arabia. Most of Qatar’s food product imports transit through the United Arab Emirates.
Other sectors with significant opportunities include: Education and Training Services, Information Communication Technologies, Architecture, Construction, Engineering Services, Air Conditioning Equipment, Safety and Security, Defense Sales, Oil and Gas Equipment and Services, Medical Equipment and Services, and other sectors.
Market Entry Strategy
Many companies advise that acquiring good legal representation is an important first step to entering the market. This helps to establish and maintain good business relationships with Qatari partners. Hiring a lawyer is especially important before concluding commercial agreements.
Conducting a feasibility study about your products or service’s chances for success in the Qatari market. This study should be based on such factors as pre-existing competition, market channels, and local tastes.
Importers and distributors are most commonly used in the retail food business.
Food processors and the hotel, restaurant, and institutional (HRI) sector may import directly or purchase goods locally from distributors.