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Qatar’s progress takes many roads

Authorities seem serious about Doha metro, as evidenced by an award in June amounting to $8.2b

  • Dr. Jasim Ali; Special to Gulf News
  • Published: 13:38 July 27, 2013
  • Gulf News

Sustained project activity in non-hydrocarbon sectors is making up for the indefinite freeze on new hydrocarbon related operations in Qatar. The Gulf state had made a self-imposed moratorium on new projects in the gas sector until 2015 based on a reasonable logic.

The rationale is meant to assess the sustainability of increasing production, which is already at a record level. Currently, Qatar boasts a LNG output of 77 million tonnes a year. Suffice to say that it is the world’s largest exporter of LNG.

Recently, Malaysia joined Thailand and Singapore in south-east Asia as a recipient of Qatar’s LNG. A cargo of LNG was loaded at Ras Laffan in Qatar bound for a receiving terminal in Melaka for use by Petronas of Malaysia.

By one account, Qatar’s non-hydrocarbon sectors accounted for a solid 58 per cent of GDP in 2012. In a relatively short span, the hydrocarbon sector had been the dominant component thanks to high output and prices for petroleum resources.

Yet, the share of non-hydrocarbon sectors is projected to rise in the period leading to the World Cup 2022 on the back of investments in infrastructure projects besides initiatives by private sector investors. The planned investments, substantial by international let alone local benchmarks, should contribute to economic diversification.

Suggested figures are in the neighbourhood of $200 billion (Dh734 billion) in a span of 10 years for a new airport, seaport, a metro system and an extensive road network. The authorities seem serious about Doha metro, as evidenced by an award in June amounting to $8.2 billion.

A consortium from Italy, South Korea and Qatar had won the Red Line North project, designed to link to stadiums that will be used for the World Cup. Other consortiums have won contracts for the multi-billion dollar novel development.

Other investments

Still, these major projects are supplemented by other investments by public and private firms in excess of $100 billion in numerous areas, notably hospitality and the services sectors.

Thanks primarily to investment in hydrocarbon activities, Qatar’s GDP stands at $200 billion, almost double that from four years ago. It is the turn now of non-hydrocarbon sectors to help maintain the economic momentum.

Understandably, Ananthakrishnan Prasad of the IMF rightly contends that economic diversification via targeted infrastructure investments has positive spillover effects, including creating investment opportunities for the private sector. One such benefit would be enhancing the private sector’s role, certainly a desirable virtue.

Other benefits entail providing employment opportunities for foreign workers, and therefore the ability to remit funds.

Aside from the investment variable, strong population growth rates should help preserve the consumption variable of the economy. In fact, solid infrastructure projects partly explain the population growth rate.

The rating agency Standard & Poor’s projects an average annual population growth rate of 6 per cent until 2016. Already, foreign nationals make up around 87 per cent of Qatar’s 2 million strong population.

Also, expatriates represent around 93 of total workforce in the country, hence the validity of the remittances’ argument. Interestingly enough, private sector investors enjoy a unique advantage by doing business in Qatar, namely the absence of pressures from the authorities to employ locals.

There is hardly any unemployment amongst male Qatari nationals. However, there is joblessness amongst Qatari females who desire to enter the job market but limited to certain employment possibilities.

Increasingly, many roads are leading to Qatar.

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