World Cup just the start of $250 billion Qatari investment boom
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, offering potential business opportunities for years to come.
|By Sherie Morais, head of transaction services origination for Middle East and Africa, and Gerard McHugh, country head, Qatar, RBS
There is currently $250 billion of infrastructure investment up for grabs in Qatar. The World Cup has brought into sharp focus its push for world-class infrastructure and transport. 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 wants to diversify its economy away from the petrochemical industry, on which it relies on 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 fertilisers.
But it has set itself the target of funding the Qatari budget from non-petrochemical income by 2020.
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 $36 billion investment in the new Qatari rail network, we are seeing $18 billion put aside for education and welfare and $20 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 – with daytime temperatures reaching above 40 C, they will need to be. 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 $100 billion earmarked for development projects in preparation for it.
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.
This is welcome news for the many global companies already based in Qatar, specialising in everything from construction to accountancy. Those that aren’t, and want to make the most of these opportunities, need to think about opening up there.
The country wants to keep its businesses, including financial services, local to ensure they support the economy. Bonds or letters of credit, for example, have to be issued by a locally-registered bank.
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 more than 80 per cent since 2007.
But all these rises have been fuelled largely by LNG exports – Japan, for example, is the largest importer of Qatar’s LNG in the world – reflecting the government’s need to diversify.
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 $3.2 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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