The FINANCIAL — The 2022 World Cup, hosted by Qatar, has galvanised the country’s infrastructure investment and made it the fastest-growing area in the Middle East. But there’s more behind this growth than football.
By Sherie Morais, RBS Head of Transaction Services Origination for Middle East and Africa, and Gerard McHugh, Country Head, Qatar, RBS.
Infrastructure investment worth USD250 billion is up for grabs in Qatar as the World Cup has brought the country’s push for world-class infrastructure and transport into sharp focus.
Although football is the catalyst, there is another reason why the country could be the next important growth area in the Middle East.
The government wants Qatar to stay on the global stage long after the tournament is over. It also wants to diversify its economy away from the petrochemical industry, on which it relies heavily, to ensure long-term prosperity.
Qatar has the third largest gas reserve in the world, behind Iran and Russia. Most of its wealth comes from liquefied natural gas, crude oil production and refining, ammonia and fertilizers.
But it has set itself the target of funding the Qatari budget from non-petrochemical income by 2020.
Big ambitions — The ruling families have big ambitions. They have a national development plan in place looking at all aspects of transport, IT, healthcare and education up to 2030.
That is why, alongside a USD36 billion investment in the new Qatari rail network, we are seeing USD18 billion put aside for education and welfare and USD20 billion for tourism infrastructure.
All this is designed to build on the investment sparked by the World Cup.
According to its proposal to FIFA, Qatar will build nine new stadiums and renovate three. Each one is expected to be zero-carbon emitting and air conditioned. This gives global businesses an opportunity to get involved in building something from scratch.
With the 2022 deadline for the tournament looming, the country’s growth is accelerating with more than USD100 billion earmarked for development projects in preparation for it.
As Royal Bank of Scotland said, these major projects will obviously involve contracts for large local and multinational businesses, but they will also generate opportunities for smaller businesses in Qatar.
Some of the most significant projects underway or about to be include: New Doha International Airport; New Doha Port project; Energy City Qatar – the region’s first integrated energy hub for the hydrocarbon industry; island housing development The Pearl; and the Qatar Railway project.
Pitch perfect — Companies bidding for projects need to know exactly who the decision-makers are – a relatively concentrated group in Qatar – to ensure they are pitching to the right audience, and be very clear on what they can offer and by when. The government has a lot to achieve in little time.
Qatar’s rapidly rising trade flows across the globe reinforce the level of opportunity it presents. Asia is its top trade partner with bilateral trade up over 80 per cent since 2007, and it is forging particularly strong links with China and South Korea. Bilateral trade has tripled with China and doubled with South Korea since 2007.
In terms of outgoing investment, in addition to the Qatar Investment Authority’s international investments, it has been supporting regional economies going through transition such as Egypt, Morocco and Tunisia. According to the International Monetary Fund, Qatar has given USD3.2 billion in the form of aid and investments to such countries since 2010.
Qatar’s growth has started with a sense of urgency as the World Cup approaches, but its desire to diversify and fast-growing trade flows – particularly with Asia – should bring more long-term opportunities too.
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