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Qatar: Amended economic zone laws to boost economy

In a drive to diversify from its energy-based economy, Qatar’s government has passed a draft law for companies in its economic zones to waiver the prevailing company laws applicable elsewhere.

Ras Bufontas Special Economic Zone, adjacent to Hamad International Airport is well located for companies looking for world-class infrastructure and international connectivity. (Image Manateq)
Ras Bufontas Special Economic Zone, adjacent to Hamad International Airport is well located for companies looking for world-class infrastructure and international connectivity. (Image Manateq)

A draft law has been cleared by the government allowing new companies set up by a legal professional from Qatar or outside to not have to adhere to current company laws.

In a drive to diversify from its energy-based economy, Qatar’s government has passed a draft law, allowing any form of company to be set up by a legal professional from either Qatar or outside, without necessitating adherence to the prevailing company laws applicable elsewhere, reports The Edge.

Nick Witty, director, Real Estate, Deloitte & Touche, Middle East explained: “Finite natural resources coupled more recently with falling oil prices means diversification into non-hydrocarbon based industries/services as a way of attracting foreign direct investment (FDI) is becoming increasingly more relevant.”

He outlined that besides driving economic change by encouraging FDI and promoting international trade ties, economic zones make running business easier and increase gross domestic product (GDP) for a country.

He added: “Economic zones also promote wider trade development, which is likely to include the manufacturing sector.

“In the case of Qatar, manufacturing and technology businesses are to be the focus of enterprise zone one, located closest to Hamad International Airport (HIA).”

Qatar presently has three economic zones set up by Manataq, in Ras Bufontas, Al Karana, and Um Alhoul.

The company has been granted a 50-year concession during which it will be in charge of the management, development, operation, and maintenance of the zones.

Under the new law, companies setting up inside Qatar’s economic zones will have 100% ownership, as well as enjoy freedom for the unrestricted transfer of capital, revenues or investments out of the country.

In general, the draft law on economic zones in Qatar highlights the growing importance of the sector within the Gulf Cooperation Council.

While Qatar has already set up tax-friendly zones – Qatar Financial Center and Qatar Science and Technology Park – to attract FDI within the industrial sector, the new free zones will provide to all types of businesses – which may give the country an edge over other regional competitors.

Availability of better levels of accommodation, along with free zone status, would inspire larger investment within these sectors and produce new employment prospects, further supporting expansion away from the oil and gas industry.

Mark Proudley, director, DTZ Qatar, said, “Qatar logistics sector will benefit from better quality infrastructure and also availability of higher quality warehousing and ancillary spaces.

“These also aim to lower the costs of occupying this type of space if these schemes flood the market with space as anticipated.”

He cautioned however, that it will be difficult for Qatar to compete with established locations such as Dubai, as the UAE has become a global hub for distribution throughout the region.

Witty, on the other hand, said, “Economic zones across the region tend to cater only for commercial and trading enterprises whereas the three proposed zones in Qatar will aim to attract a wider range of businesses including, hydro-carbon based industries, manufacturing, technology and transport, potentially attracting greater occupational diversity.”

While the majority of zones across the region offer similar incentives in the form of 100% foreign ownership and repatriation of profits, and no income, import or export taxes, he said, “It may be that Qatar can further differentiate itself from its regional competitors by offering more competitive rental packages, low cost and efficient licensing procedures, removal of restrictions on hiring foreign employees.”

It can also look at having a wide variety of on-site amenities such as retail, food and beverage outlets, banks, gyms, health centres and the provision of mortgage facilities for buildings developed on leased land.

Qatar’s non-hydrocarbon, logistics sector is predominantly based in and around the old Industrial Area, located approximately 18 kilometres to the west of the HIA and the New Doha Port.

“The location of the existing Industrial Area and its ageing infrastructure means it is not readily accessible from the airport and port and as such, it is likely that, over time, the new economic zones will compete directly in terms of attracting some of the existing businesses to relocate,” concluded Witty.

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