Qatar, entirely located on a small peninsula jutting into the Persian Gulf, is one of the richest countries in the world by GDP per capita due to its ownership of the third-largest natural gas reserves globally.
This resource endowment has helped Qatar’s economy endure an economic blockade imposed by four of its closest neighbours in recent years, but foreign investment into the country has declined sharply.
The latest balance of payments statement from Qatar Central Bank suggests that the divestment trend was accelerating in 2020, even before the full economic impacts of the Covid-19 pandemic had been felt. Divestments were valued at over $2bn (roughly QR7.5bn) more than investments during the first quarter of 2020, compared with a deficit of around $1.2bn in the fourth quarter of 2019.
In contrast, the value of foreign-held FDI stock has grown sharply over the past 20 years, from $74bn in 2000 to $13bn in 2010, and reaching $44.78bn in 2019.
Qatar’s changing approach to attracting FDI
Qatar’s annual growth in GDP fell into negative territory for the first time in 2019. In July of that year the country established its first investment promotion agency. The Investment Promotion Agency of Qatar (IPAQ) joined the World Association of Investment Promotion Agencies in September 2019.
Other recent measures intended to boost inward investment include allowing 100% foreign ownership in almost all economic sectors, with exceptions including banking and insurance.
Qatar Financial Center, a business and financial centre for foreign-owned businesses located in capital city Doha, said in September 2020 that it still expected to meet its target of registering 1,000 active companies on its platform by 2022, despite the challenges of Covid-19.
Since its establishment, IPAQ has announced a number of FDI deals, such as an expansion by Turkey’s Dogus Group Holding into Qatar’s food and beverage, hospitality and construction sectors in September 2019.
In February 2020, Swiss-based sustainable technologies company iQ International signed a memorandum of understanding with IPAQ to establish a subsidiary in Qatar, and IPAQ has said it is targeting the tech sector for inward investment.
IPAQ will be hoping it can reverse the negative trend for FDI in Qatar, despite the additional challenges that Covid-19 creates.
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