Qatar’s game-changing economic reforms to trigger growth: PwC

By Satish Kanady I The Peninsula

Qatar’s ongoing localisation initiatives, privatisation, and digitisation efforts are some of the important developments to watch out in 2019, in terms of the country’s future growth. The non-oil growth will be boosted by localisation drive, including the QP-led Tawteen initiative, PwC noted in its “Qatar

On the localisation drive, the PwC analysts said  the “Tawteen” program, launched in February, aims to add at least QR8bn a year in value to the economy, create thousands of high-skilled white-collar jobs and help to develop SMEs.

This will be achieved through a focus on In-Country Value (ICV). This calculates the portion of revenue of each of QP’s suppliers that is spent on local goods and services, workforce training, local supplier development, and investment in fixed assets.

“(Qatar’s) economy has recovered from a period of low energy prices and the impact of the regional blockade and is looking ahead to new opportunities. These will come as a result of economic reforms, such as the new foreign investment law, as well as from projects such as the North Field LNG expansion and preparations for the 2022 World Cup.

“Other important developments to watch out for in 2019 include localisation, privatisation, and digitisation efforts, the opening of new free zones, and infrastructural improvements such as the ongoing rollout of Metro services and the launch of 5G networks”,  said Bassam Hajhamad (pictured), Country Senior Partner, PwC.

The PwC noted Non-oil growth will be boosted by Qatar’s ongoing localisation drive. In addition to the QP-led Tawteen initiative, a new round of digital investment—supported by the launch of 5G networks, new government platforms and technology ranging from blockchain to AI—offers growth potential in many sectors.

Qatar’s localisation has been supported by public procurement policies and by incubating local small- and medium-sized enterprises (SMEs), including through Qatar Development Bank. The focus on localisation has intensified in the last few years, ranging from local agricultural production, like Baladna’s dairy farming, to many of new light manufacturing facilities.

On the privatisation front,  Qatar has been giving a growing emphasis on harnessing the private sector as an engine for growth. The government has already handed over control of some previously public companies, such as Ooredoo, to private shareholders.

Even in downstream industries, although QP has maintained control it has shared equity ownership through IPOs, most recently of Qatar Aluminium Manufacturing Company’s (Qamco) last year.

Looking ahead, there is growing interest in utilising public private partnerships (PPPs) to both develop infrastructure and deliver services. The existing regulatory framework is flexible and robust enough to implement PPPs.

However, Qatar is introducing dedicated PPP Law and regulatory guidelines. This will define a clear governance regime for delivering PPP projects, sending a strong market signal that the government intends to ensure that the projects are bankable and are executed in a way that delivers social and economic benefits.

Qatar has a low tax environment, outside of the hydrocarbons sector, and ranks 2nd globally in the Paying Taxes1 report developed by PwC and the World Bank.  The Qatar Financial Centre (QFC) already offers a separate tax and legal environment for certain financial and business service firms.

The state has recently allocated $2bn to incentivise foreign investors in these areas through tax holidays, office costs and seed capital. Multinational businesses value a tax territory which helps prevent double taxation and mitigates risk related to compliance with disclosure requirements in other jurisdictions.

The Qatari authorities have worked to create such an environment, including through over 60 double-tax treaties and signing up to both the Base Erosion and Profits Shifting (BEPS) Inclusive Framework and the Multilateral Convention to Implement Tax Treaty Related

Measures to Prevent BEPS. Notably, unlike some low-tax territories, Qatar has not appeared in the EU’s blacklist of non-cooperative tax jurisdictions. The formation in early 2019 of the General Tax Authority (GTA), as an independent body with increased resources, should help further improve the tax environment.

Source from: The Peninsula