Empowering investors: IPA’s pioneering future growth
27 December 2023
Author: Jeroen Carl Maria Nijland, Director of Investor Relations, Investment Promotion Agency Qatar (Invest Qatar)
- Investment Promotion Agencies (IPAs) navigate constant shifts due to market developments and geopolitical factors, demanding adaptability in a rapidly changing landscape
- IPA’s growth is contingent upon embracing emerging trends of sustainability and technology-related greenfield investments
- IPAs need to develop a centre of government approach, change their investor facilitation and update measurement metrics to facilitate growth
In the quest to pioneer future growth, Investment Promotion Agencies (IPAs) find themselves compelled to shift their focus towards emerging investment developments such as technology-related greenfield investments and navigating the unpredictable currents of global economic fluctuations. These changes, while promising, pose challenges to the traditional role of IPAs within governments, demanding a re-evaluation of their methods of working with the government, enhancing investor facilitation and measuring metrics. To navigate these complexities, IPAs must embrace a culture of experimentation, learning and knowledge exchange, with the World Investment Conference (WIC) serving as a crucial platform for these conversations.
Navigating global investment fluctuations
Given the constant fluctuations of short-term and medium-term global investments, IPAs face continuous shifts due to market developments and geopolitical factors. The latest insights from the United Nations Conference on Trade and Development (UNCTAD) suggest that IPAs must prioritise sustainability and technology investments to attain stability and growth. The UNCTAD publications identified 17 key frontier technologies, which are at the cutting edge of green innovation with a market value of $1.5 trillion in 2020, projected to increase to $9.5 trillion by the year 2030. The technologies include artificial intelligence, electric vehicles, green hydrogen, biofuels, nanotechnology, 5G, gene editing, robotics, wind energy and blockchain[1]. However, unless developing nations promptly implement decisive measures, a significant portion of the value created in those thriving markets will elude them. Considering these challenges and changes, IPAS must adhere to the suggested changes in internal, external policies and methods as highlighted.
Future investment implications for IPAs
a) Embracing 'Centre of Government' approach: As IPAs strive to attract impactful investments, they are evolving to embrace a "centre of government” approach in a rapidly changing landscape. They are now required to navigate a range of complex challenges, from sustainability-related infrastructure concerns to regulatory shifts driven by emerging technologies. Being successful in attracting these investments requires supporting policies potentially impacting all ministries. Given the scale of many sustainability-related investments, they may impose questions about connectivity to the grid, they may require new types of arrangements in financing, and they significantly impact spatial planning, challenging current frameworks. The volume, profile, and funding principles in the public research infrastructure affect the attractiveness of potential foreign investments. Therefore the need to have a much closer alignment between the core of government and IPA functions becomes increasingly vital, sparking crucial questions about organisational positioning and active participation in policy procedures and impact assessments.
As energy and technology become more connected to global politics, it’s becoming a significant concern for governments. This shift means that governments see them as important for their overall strategy. IPAs used to focus mainly on bringing investments and creating jobs, but now, they play a crucial role in helping governments secure the energy mix or technology they want (known as 'strategic autonomy'). They also help protect their existing positions, as shown by the growing number of countries using investment screening.
For example, Singapore Economic Development Board (EDB Singapore), an inbound investment promotion agency, works toward the Singapore Economy Vision 2030, with a comprehensive goal of fostering innovation, technology and sustainable development. Similarly, other IPAs, such as the Investment Promotion Agency Qatar (Invest Qatar), serve as a vehicle for economic development in alignment with their respective countries’ national goals outlined in the Qatar National Vision 2030.
b) Broadening investment facilitation: IPA success hinges on the effective attraction of investments, presenting significant implications for these agencies. To adapt to the shifts in sustainability and technology projects, IPAs need to redefine their approach to investment facilitation. Beyond the usual factors like regulation, taxation and infrastructure, IPAs must be able to provide detailed information about many more factors like talent availability, research programmes, quality of life and opportunities for dual careers, energy and environmental policies etc. This expanded role, however, also poses a substantial challenge, prompting IPAs to reassess their networks, incentives and strategies to align with the evolving nature of projects. This dynamic environment underscores why IPAs need to develop a centre of government approach, as it facilitates their adaptability to the shifting demands of the investment landscape.
In a strategic move, IPAs now emphasise established practices for ongoing talent development, particularly in emerging industries. For instance, IDA Ireland includes talent as a key factor influencing investment decisions, along with its economy, infrastructure and quality of life. Ireland's annual investment of over €1 billion in upskilling and reskilling programmes further strengthens its commitment to developing local talent, including fostering collaborations for industry-focused training programmes.
c) Changing investment metrics for success: The shifts in what to attract and how to achieve it require a re-evaluation of the metrics used by IPAs to guide their efforts and demonstrate impact. Traditionally, IPAs focused primarily on metrics such as the total amount of investment attracted, or the number of projects secured. However, the evolving approach recognises the need to move beyond these measures, adding qualitative metrics. Future key metrics may include research partnerships, technology transfer or quality of jobs created; reporting about the impact of IPA will need to go beyond investment sums and job creation and should focus on contributions to the long-term prosperity and sustainability of the society.
In conclusion, the ongoing evolution of IPAs requires proactive exploration of innovative methods, tools and metrics aligned with core government policies. This demands a deep understanding of emerging trends and the flexibility to experiment with novel approaches. The collective efforts of IPAs across the globe are pivotal in shaping the future trajectory of the industry, enabling them to pioneer sustainable and technology-driven investments successfully.
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Here are some key processes to know as you start your investment journey in Qatar.
Businesses can incorporate and operate through Qatar’s licensing platforms including:
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- On average, the maximum working hours are 48 per week. During the month of Ramadan, it is reduced to a maximum of 36 hours per week or 6 hours per day. Workers are entitled to at least one day of rest per week.
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Work permits are issued for a minimum of one year and a maximum of five years approved by the Ministry of Labor (MoL). The MoL offers an e-service for the issuance and renewal of work permits for workers.
There are over 32 higher education institutions in Qatar, with world-renowned universities and local training centres for upskilling talent.
Qatar has a vibrant knowledge ecosystem and rich culture offering:
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- Under Law No. 24 of 2018 (the Tax Law), non-Qatari nationals and Qatari and/or GCC nationals who are not residents in Qatar are subject to corporate income tax at a flat rate of 10%.
- A different tax rate applies to entities undertaking oil and gas / petrochemical operations, or where the activities are carried out under an Agreement with the Government. Such entities are generally taxed at a rate of 35% or higher.
- A legal entity incorporated in Qatar, which is wholly owned by Qatari and/or GCC nationals that are tax resident in Qatar, is exempt from corporate income tax.
All taxpayers operating businesses in Qatar must obtain tax cards from the General Tax Authority (GTA).
Applications should be submitted within 30 days from commencing activities or registering with the Ministry of Commerce and Industry Commercial Register.
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In alignment with the GCC Customs Union, Qatar imposes a 5% ad valorem tariff on the value of cost, insurance and freight (CIF) invoice of general cargo goods, excluding those exempted by law provisions. The tariff may also include a fixed amount levied on each unit of the goods. The limited tariff exceptions are:
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TThe Commercial Companies Law provides for the following types of legal entities that may be formed and registered in the State of Qatar:
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Foreign Investment Law (Law No. 1 of 2019) allows the establishment of 100% foreign-owned companies, with various incentives and benefits for non-Qatari investors as outlined by the law.
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Ministry of Commerce and Industry (MOCI) offers a range of investment incentives, including land allocation for foreign investment projects by way of use or renewable rent. The foreign investor has the right to import what is necessary for the establishment, operation or expansion of their investment project, and the investor may be exempt from income tax and customs duties for machinery and equipment.
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Qatar Science and Technology Park (QSTP) provides multiple funding opportunities for local and international tech founders and entrepreneurs. Through the Product Development Fund (PDF), QSTP provides up to 50% of the total budget as a grant to encourage local startups and SMEs, and the QSTP Tech Venture Fund (TVF) provides source-seed funding and follow-on capital for local and international tech founders and entrepreneurs looking to scale-up in the region.
With its future-ready digital and physical infrastructures, abundant natural resources and global connectivity, Qatar is a major international hub that provides unparalleled market access, enabling international investors to benefit from an increasingly seamless flow of trade and capital.
- More than 2 billion people across 25 countries worth $6 trillion in combined GDP are located within 3000 km of Qatar
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Overview
A stable and resilient economy
Here are some key processes to know as you start your investment journey in Qatar.
Qatar’s stable and competitive economy has been growing at a faster rate on average than advanced economies. The country's high per capita income, vast hydrocarbon reserves, and strong economic fundamentals support its credit profile.
Early indicators are signaling robust economic activity and strong business conditions. The economy is expected to record strong growth thanks to favorable hydrocarbon prices and increased demand during the 2022 FIFA World Cup. Cup.
Qatar’s S&P rating is AA-, Moody’s Aa3, and Fitch AA-, displaying a stable outlook.
Qatar is a key contributor to global energy security as the largest exporter of natural gas globally. Qatar’s top five export partners include China, India, South Korea, Japan, and the UK.
FDI markets estimate ~QAR 4bn worth of projects in 2021, a 33% increase compared to the previous year.
In 2022, Qatar recorded the highest total investment in the region, attracting USD 23.7 bn worth of projects. According to fDi intelligence, Qatar ranked 1st globally in terms of investment momentum for 2023.
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Qatar provides a wide range of accommodation options from modest to high-end, smart, and sustainable living environments. Some of the world-class central and modern living places are found in Msheireb Downtown Doha, West Bay, Lusail City, and the Pearl.
The average monthly rent for a one-bedroom apartment varies from $1,118 to $1,763. Whereas the average monthly rent for a three-bedroom apartment lies between $2,130 and $3,137.
Qatar has over 207 private schools offering a comprehensive and integrated curriculum, and over 332 private schools offering various curricula – like the International Baccalaureate (IB), British curriculum, Indian curriculum, among others.
Qatar offers a multimodal transport system, including the:
- Doha Metro, a state-of-the-art automated rail network with single fares of QAR 2 (Standard)
- Mowasalat (Karwa) Public Bus Service with fares attractively priced from QAR 2.50 - QAR 9
- Mowasalat (Karwa) Taxi Service
- Lusail Tram with single fares for QAR 2
Qatar provides world-class healthcare through 27 regional Primary Healthcare Care Corporation Centers (PHCC), 12 public hospitals run by Hamad Medical Corporation (HMC), and over 20 private hospitals and clinics.
To apply for a Qatari Driving License, you must be a resident in Qatar, at least 18 years of age.
To apply for a Qatari Driving License, simply present the required documents to the traffic departments located in driving schools.
Documents include:
- Qatari ID card and passport
- A copy of the ID card of the sponsor (if the sponsor is a person)
- A letter from the sponsor to approve the request for a new license
- 3 recent colour photographs (passport size)
The license fee is QAR 250 for non-Qataris (valid for 5 years), and QAR 300 for heavy vehicles (valid for five years for non-Qatari). Additional fees apply for driving and vision tests.
Qatar is home to an innovative and advanced banking ecosystem – offering digital and mobile banking for users to seamlessly transfer and transact online. There are around 18 banks operating in Qatar through 202 local branches and about 20 exchange companies.
To open a bank account, the following are typically required:
- - Documents including a copy of Qatar ID, and passport
- - Minimum deposit per bank requirements
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