Qatar Seeks Closer Ties With China to Drive Economic Transition

04 Jul 2024

By Han Wei

Qatar is looking to attract more Chinese investment and deepen bilateral business ties in emerging sectors, particularly in advanced manufacturing, as part of the Gulf state’s drive to diversify its economy.

China’s technology innovation and manufacturing capabilities, coupled with Qatar’s strategic market access, strong logistics and low energy costs, create an excellent platform for manufacturing expansion, said Fahad Ali Al-Kuwari, senior manager of investor relations at Invest Qatar, an investment promotion agency.

To foster business ties, Invest Qatar has opened an office in Hong Kong to promote partnership and serve potential investors in China and neighboring countries.

Hong Kong was chosen because it was recognized that China and its neighboring countries are at the forefront of technological innovation, and because of their ability to mass produce these innovations, said Ali Al-Kuwari, at the Collision tech conference in Toronto.

“We recognize the excellence that China offers. As a country strategically positioned between the East and West, we aim to capitalize on the best,” he said.

Chinese companies increasingly see Doha as a gateway from which to tap markets in the Middle East or Africa.

According to Invest Qatar, more than 250 Chinese companies have registered in Qatar, including telecom giant Huawei Technologies Co. Ltd., electric-vehicle maker Zhengzhou Yutong Bus Co. Ltd. and engineering group Weifang Changda.

In 2015, Qatar became the first Middle Eastern country to open a Chinese yuan clearing facility to enhance economic relations. It also holds the region’s exclusive currency-swap agreement with the Chinese central bank. According to Invest Qatar, China’s direct investment in Qatar surged from $1.4 million in 2014 to $157 million in 2022.

Qatar, one of the world’s largest exporters of liquefied natural gas, has been intensifying efforts to attract businesses and talent as the oil- and gas-rich country seeks to accelerate its economic transition.

The country has set ambitious goals to spur economic growth through foreign investment. The third Qatar National Development Strategy, covering 2024 to 2030, targets an average annual growth of 4% until 2030, while lifting labor productivity by an average of 2% a year and boosting accumulative foreign direct investment by $100 billion by 2030.

Qatar’s expansive trade partnerships, low energy costs, advanced local research capabilities, and relaxed localization requirements all benefit foreign businesses in the country, said Al-Kuwari.

The Gulf state is signatory to dozens of free trade agreements, investment protection agreements and double taxation agreements, allowing businesses to enjoy broad market access and favored taxation treatments.

Qatar has unveiled a series of incentives and support services this year to help early-stage startups launch or expand business there. Its startup investment program, unveiled in March, has received more than 1,000 applications for access to government grants, according to Invest Qatar.

Backed by a Qatar Development Bank, the Startup Qatar Investment Program offers funding of up to $500,000 for early-stage startups looking to establish a presence in Qatar, and up to $5 million for growth-stage companies seeking to expand in the country.

Additionally, the Qatar Investment Authority (QIA) has launched a $1 billion venture capital fund of funds for international and regional venture capital to support innovative businesses in sectors including advanced manufacturing, logistics and tourism, fintech, edtech and healthcare.

Incubation and accelerator programs such as Qatar Fintech Hub, Qatar Science & Technology Park and Sport Accelerator have also been launched.

Qatar is developing a startup support network aimed at generating a 2%-4% GDP boost by 2033, creating nearly 40,000 jobs, diversifying the economy, and enhancing foreign direct investment through global venture capital, according to Al-Kuwari.

“It is moving towards a knowledge-based economy, and the best way to achieve this is by attracting expertise,” he added.

With a small population of 2.7 million people, including about 300,000 local Qataris, Qatar has infrastructure capable of accommodating about 5 million people. “What we would like to do is fill the rest of that infrastructure with (expatriate) talent,” said Al-Kuwari.

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