SAVVY governments in the GCC are spending a lot of time planning for a world in which oil and gas revenues are no longer the most significant factor funding their national development. Natural resources are a diminishing resource and while exploiting them more efficiently is certainly on the agenda, finding other sources of revenue offers a longer-term solution to forward-thinking governments. This has prompted a number of governments in the Gulf region, with Qatar at the head of the pack, to focus on sustainability, digital business, e-commerce, aviation and much more. The basic game plan is pretty simple: build an economic foundation for the next generation from new business lines and investments that produces the same levels of income currently generated from oil and gas.

Naturally this means a big role for sovereign wealth funds like the Qatar Investment Authority and other state-owned investment vehicles. But it also means big opportunities for the rest of the business sector in Qatar; small, medium and large, as well as for their business and investment partners the world over. The opportunities seem endless and touch on every segment of the economy as Qatar starts to spread its wings.

Recent instances of this new investment focus are not hard to find. Some are relatively straightforward such as the state-run utility, Qatar Electricity & Water Company (QEWC), which has just announced plans to increase the desalination capacity at its Ras Laffan project to 65m gallons per day from 35m gallons per day. By any measure this is breathtaking growth and its like has rarely been seen before. The project is slated to begin in the first half of 2017, but the hard work has already begun. QEWC’s financial results for the first nine months of 2014 showed an increase of 11 per cent in net profit on the corresponding period last year to $322m, giving some sense of

the natural growth in the Qatari economy as well as the need to plan big for the future. Reinvesting these profits gives a through-the-looking-glass example of the future of business in Qatar.

On a grander scale Qatar Investment Authority (QIA) is looking increasingly to China, north Asia and Singapore in the medium- to long-term as the place where the best returns are likely to be had for an earmarked $15bn-$20bn of its war chest. QIA manages an estimated $304bn of holdings in total. While some of these new markets are well developed, some of them are virtually frontier markets and this begins to hint at the increasingly sophisticated investment strategy being deployed by QIA. Recent headline deals between QIA and Hong Kong’s Lau family look set to involve a full takeover of the department store operator, Lifestyle International Holdings, and taking the $2.9bn company private.

While the Lifestyle acquisition is QIA’s maiden major acquisition in Asia, QIA is no stranger to the luxury consumer sector, owning Harrods in London as well as a 13 per cent stake in Tiffany & Co. QIA has also been trying to buy HSBC’s global HQ in Canary Wharf, London – the capital’s biggest and most expensive office building, on which HSBC has a 13-year lease. The takeover bid involves both QIA and Canada-based Brookfield Property Partners. The skyscraper’s owner, Songbird Estates, has now twice rejected the joint takeover bid. On 4 December, Songbird stated that it considered the bid did not reflect the true value of the company, even after the original bid made in early November was raised from $3.4bn to $4bn.

In the financial services arena, QIA already has stakes in Barclays and the Credit Suisse Group while the global reach of some of Qatar’s other finance houses also continues to grow. Leading

regional institution, Qatar National Bank (QNB), has recently increased its stake in African lender Ecobank Transnational after upping its stake to 23.5 per cent. In a statement QNB said that it had raised its stake after spending $283m to buy an additional 11 per cent share in the lender. Only weeks earlier the bank had bought a 12.5 per cent stake worth about $220m from Nigeria’s Asset Management Corporation.

QNB had previously made public its vision of becoming the largest bank in the Middle East and Africa by 2017. At present QNB is second in terms of assets behind Standard Bank of South Africa and QNB has had the African continent under the microscope for years. QNB knows that it has NBAD from neighbouring Abu Dhabi hot on its heels in the African banking sector and understands that speed is of the essence in concluding big deals before asset prices skyrocket.

Qatar Airways, one of the fastest growing carriers in the world, is also not resting on its laurels. Over recent months

the airline has announced that it intends to buy 20 Gulfstream business jets in order to more than double the size of its corporate charter fleet. The airline’s plans include orders and options for the new wide-cabin Gulfstream G500 and the extended-range version of the G650ER, the world’s biggest and quickest business jet. The G500 will be used for flights from Qatar to London, Geneva and Paris, according to the airline. Akbar Al Baker, Qatar Airways CEO said, “In order to keep pace with the future strategic growth plans of our private jet division, the fleet is being expanded with aircraft that meet the needs of our guests, providing a wide range of options.”

Elements of the world media have also dined out on stories of low wage levels and poor safety standards for migrant workers, mostly from the Indian subcontinent, who have been drafted in to undertake much of the new construction being seen in Doha, the emirate’s capital. Similar accusations have also been levelled at Lebanon, Saudi Arabia, Jordan, Bahrain, Iraq, Kuwait, Oman, and the UAE in recent years.

Global firms that have outsourced and offshored their call centre work to places like Bangalore and Manila will understand why cheaper labour costs are desirable but it seems likely that the Gulf states will have to improve their levels of transparency before the ‘exploitation’ bogey man is put to rest. Gulf Cooperation Council ministers are in the process of preparing to ratify a new draft employment contract that will cover maids, household workers as well as manual labourers.

New contracts should limit the

working day to eight hours, with two hours overtime and guarantee of a day off every week and annual leave. In addition to this, all of the GCC states have either introduced their own reforms or are looking at national legislation to protect domestic worker rights in a more structured way. Qatar says that next year it will reform its kafala or sponsorship system and will redraft the requirement of workers to secure their employer’s permission to leave the country.

Sheikh Tamim bin Khalifa Al Thani, the emir of the nation since June 2013 when his father abdicated, has also come under increasing scrutiny over his involvement in the religious politics of the region. The CIA Factbook seems fairly sanguine about the new Sheikh: “Tamim has prioritised improving the domestic welfare of Qataris, including establishing advanced healthcare and education systems and expanding the country’s infrastructure in anticipation of Doha’s hosting of the 2022 World Cup.”

Cynics suggest that elements of Qatar’s national population have become the main financial supporter of the Muslim Brotherhood and that they fund Hamas. This is hardly the sort of pedigree that would see the UK’s GCHQ sign a security pact with Qatar to share classified intelligence and yet that is just what has happened. This is one of the most significant accomplishments to come out of diplomatic talks between Sheikh Tamim and the British prime minister in recent times.

Qatar and the UK are looking to strengthen the ties between their security agencies to help combat the international threat from jihadism and

cyber warfare by signing the security memorandum. The new agreement will focus on digital defence and cyber security as well as intelligence co-operation on combating terrorism. It will also include the sale of British security products and services to Doha. The Home Office said, “We are pleased to be working in partnership with the Qatari government… (to) broaden and deepen the important security relationship between our respective countries.”

Sheikh Tamim is said to want more discipline at home and less risk-taking overseas but knows that his biggest challenge is keeping Qatar at the forefront of the Arab world’s development story. He has to do this without the help of his powerful cousin, Hamad bin Jassim al-Thani, who had been foreign minister since 1992 and also prime minister since 2007. He had become the most dominant figure in government after the former emir and focused on foreign policy rather than domestic policy. His replacement as prime minister is Abdullah bin Nasser al-Thani, who has been promoted from the interior ministry, which he will still run, with a keen focus on domestic issues and policy.

The immediate future for Qatar looks set to be punctuated by breakneck-paced development, increasingly high profile overseas acquisitions and opportunities-aplenty for foreign partners wishing to be part of the Gulf’s next growth story. No doubt the headlines will continue, good and bad, as the pace of development hots up. The important thing will be scratching through the thin veneer on the surface and seeing where the greatest opportunities lie.

The State of Qatar

It’s no secret that the world’s hydrocarbon economies are being forced to undergo a process of diversification away from oil and gas and into value added products and services. Qatar has enshrined this diversification into its national plan, but the growth story has many instructive facets. Paul McNamara reports

World Business Times Insight: The State of Qatar

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This report is produced and published by World Business Times, which takes sole responsibility for the content

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December 9, 2014

Qatar spreads its wings

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Finessing the financial system

Football fans concerned about the summer temperatures during the Qatar World Cup 2022 have nothing to worry about. It’s all covered. By Ilkley Satterthwaite

It ain’t half hot mum

THE message is unequivocal: “Summer or winter, we will be ready,” says Qatar 2022 communications director Nasser Al Khater. The organisers are confident that they have already proved the cooling technologies which will be used at the World Cup work flawlessly. “We have proven that a FIFA World Cup in Qatar in the summer is possible with state-of-the-art cooling technology,” Al Khater says. “We have demonstrated that our cooling works in outdoor areas beyond stadia. This summer we welcomed fans in Doha to an open-air

Brazil 2014 Fan Zone with temperatures cooled to a comfortable 22°C. The evolution of environmentally-friendly cooling technologies is an important legacy for our nation, region and for countries with similar climates, promising to expand the reach of hosting major sporting events to countries where it was never thought possible before.”

The fact that the World Cup is being held in the Arab world for the first time ever is of enormous significance for Arabs everywhere and Qatar is determined to

show the Arab world at its best. So how will Qatar cope with the heat? Tamim El Abed, the Qatar 2022 technical project manager, told Al Jazeera, “The process employs fresh air handling units that draw ambient air from the exterior of the venue. It will reduce the temperature of that air through chilled water pipes and then distribute it around the venue through subtly concealed outlets.”

But it is not just about cooled air. The architecture of the stadia optimise wall height and use a roof-opening size

that keeps hot air out to ensure the level of cooling on the field remains at a controlled temperature with vents that project cold air towards the field of play. “We will optimise and maximise the use of shade. As well as optimising the curvature of external walls and height to ensure hot air continues to pass over the stadium and not dip in to scoop out the cold air. It will be a challenge and we’re committed to do it sustainably and cleverly as we’ve committed all along in the bid,” El Abed said.

David Cameron greets Emir of Qatar, Sheikh Tamim bin Hamad Al Thani, outside Downing Street

Qatar and the UK are looking to strengthen the ties between their security agencies to help combat the international threat from jihadism and cyber warfare.

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QATAR 9 December 20142 World Business Times is a leading global provider of business intelligence and insight

WHILE Qatar is spending a lot of time and effort diversifying its economy away from its dependence on hydrocarbons, one rather obvious fact is that for the present a huge proportion of the nation’s revenues still come from gas.

As long as Chinese industry continues to grow, even at reduced levels, the demand for oil and gas will remain high. At the start of November Chinese premier Li Keqiang held a symbolic meeting in Beijing with Sheikh Tamim bin Khalifa Al Thani. But there was real substance behind the meeting as Qatar and China made public their intention to deepen their relationship with a sharp focus on oil and gas cooperation.

This is no short-term quick fix and China is looking to build an enduring, strategic relationship involving a number of facets of energy cooperation with Qatar as well as in strengthening bilateral cooperation in oil and gas exploration and development, liquefied national gas production and integrated cooperation in the petrochemical industry. Sheikh Tamim, in turn, focused on the development of Qatar-China relations and stressed that Qatar intended to strengthen bilateral ties and cooperation as well as people-to-people exchanges. It seems certain that China will remain a long-term customer for Qatari gas.

Energy specialists from around the world have been attempting for some time to establish what effect US fracking will have on the oil and gas economies of the Gulf but it seems fairly certain that Qatar will remain a major gas exporter irrespective of developments in US shale. The emirate aims to trim exports of condensate and instead produce more naphtha and other higher-value products for sale to Asia, while the boom in US shale output continues and oil prices plummet.

Gas is here to stay, especially if the Pearl Gas-To-Liquids plant is anything to go by. Its scale is breathtaking. Wael Sawan, MD and chairman of Qatar Shell Companies says, “From a project perspective, Pearl GTL is of a scale and of a materiality that for both Qatar and Shell is huge. It is the largest single value asset in the Shell portfolio. Definitely the largest GTL plant in the world by a factor of four times. Given the production levels of this asset, it makes a lot of money for both stakeholders but more importantly, it really is a source of pride for the partnership... It is a very complex plant. We have a thousand people and a couple of thousand contractor partners who work on Pearl GTL on a daily basis. Our ability to make sure that everyone is safe every single day is a big challenge and something we are very focused on.”

It is easy to see that Shell is proud of its achievements in Qatar. “We are incredibly proud… It is an asset that is made up of technologies that involve 3,500 patents, all having to be put together at world-scale proportions. At peak we had 52,000 people building this plant. Thankfully all technologies worked as planned so over the past two to three years what we have had is a focus on seeing how can we continue to achieve the production levels that we have set for ourselves. More importantly, how do we keep raising the bar so that we can really achieve what our long term destination was going to be? On many, many fronts we are very proud,” says Sawan.

Qatar’s interest in working with global companies like Shell is driven by a complex series of reasons, but skills transfer and expertise transfer both lie at the core of the relationship. Sawan says, “Technology earned us the right to be partners with Qatar and Pearl GTL.

We developed this technology as proprietary in house and we showed that it worked and this is what got us through to be chosen as the partner. From that point onwards there has been a whole stream of technologies from how we process gas, take out contaminants from the gas and so on. Having developed the technologies that we had, it allowed us to do these tasks a lot cheaper. It doesn’t just end at building the project. In terms of LNG, our partnership with Qatar has helped us achieve a lot of firsts. Of course the scale of the trains that we talk about, 7.8 million tonnes are the largest LNG trains in the world. This also goes all the way through the supply chain into shipping. The Q-Max and the Q-Flex vessels are the largest of their kind in the world and allow economies of scale to be deployed in order to ship large quantities of LNG all around the world. Technology is the bread and butter of how we drive our business.”

Safety and regulation have recently become bywords in the extractive industries and this has not passed Qatar by. Dr Mohammed bin Saleh Al-Sada, minister of Energy and Industry and chairman of Qatar Petroleum has made it clear that the nation is acutely aware of the health, safety and environmental (HSE) burden being placed on the oil and gas sector in Qatar. Opening the Petroleum Engineers Middle East Health, Safety, Environment and Sustainable Development conference in Doha recently Al-Sada said, “This

year’s theme captures what the industry needs to do in the face of evolving global HSE trends and how to overcome the technical challenges at present. It is a theme that is brought to the front by the changing balance of priorities across a wide spectrum of global industries, foremost of which is oil and gas. Therefore, the question remains: How can we optimise our business performance and accommodate technological advances, yet at the same time manage to reduce the risks associated with our industry; protect the people, both our workers and the communities within which

we operate; and preserve the local, regional, and global environment.”

Oil prices have plunged lately in part because of US shale oil production and in part because of weaker global demand and market oversupply but the reality is that economic growth in China and the rest of Asia are set to absorb any spike in supply caused by US shale gas volumes. There is no denying that Qatar has felt its gas prices being squeezed. Three years ago, Qatar could sell its liquefied gas to the US for $5.82 per thousand cubic feet. In 2013 the price had fallen to $3.40 but there is no sign that Qatar will cut supply to lift prices. Qatar simply has too much invested in the industry and this is nowhere more evident than in the Laffan Refinery’s role in the diversification process.

At the 18th Annual Condesate and Naphtha Doha Forum in November , Qatargas CEO Sheikh Khalid bin Khalifa al-Thani said, “The Laffan Refinery is of strategic importance as it will contribute to diversifying Qatar’s energy mix and further strengthens the capacity to respond to the country’s changing needs and future challenges.”

It is impossible to go very far in the Qatari business landscape without running into the Qatar National Vision 2030 and the Laffan Refinery is no exception. The refinery is, “yet another step in realising the Qatar National Vision 2030 through achieving

sustainable development by ensuring the optimisation of Qatar’s natural resources,” according to the Qatargas CEO.

Laffan Refinery 1 and Laffan Refinery 2 projects are set to double their current condensate refining capacity to 300,000 bpd but with greater attention paid to environmental concerns. The design of the Laffan Refinery is said to meet stringent environmental standards while its refined products undergo treatment to produce an ultra-low sulphur content. Producing such refined products from condensate lets Qatar assume the position of a leading producer of cleaner fuels and helps to position the emirate as the biggest condensate processor in the world.

Qatar National Vision 2030 is underpinned by environmental concerns and this tends to colour the way that projects are undertaken, particularly in the oil and gas space. Qatargas, for instance, recently inaugurated the Jetty Boil-off Gas Recovery Project in Ras Laffan Industrial City, which is a $1bn environmental project designed to eliminate flaring at the LNG terminal. The project is owned by Qatar Petroleum, ExxonMobil, Total, ConocoPhillips and Shell, the facilities are operated by Qatargas and RasGas and form the largest LNG boil-off recovery project in the world.

The Jetty Boil-off Gas Recovery Project facilities kicked off in October and projections suggest that 100 million standard cubic feet per day of natural gas previously wasted during the loading of LNG containers for shipping will be recovered and used in the LNG production plants as fuel. Over 30 years, the project could save up to 1 trillion cubic feet of gas. Along the way, greenhouse gas emissions are slashed and help maintain a clean environment.

Barzan going strong

The Barzan natural gas field should begin producing early next year and contribute about 50,000 bpd of condensate. Qatar already exports 500,000 bpd of condensate but will reduce shipments to 350,000 barrels daily as it uses more at home. Additional condensate from Barzan will help to offset some of that drop. Some of the condensate will be processed into naphtha and lift exports of naphtha by three million metric tons a year, once the Ras Laffan refinery starts operating. Qatar presently ships seven million tons of naphtha annually.

Both the oil and gas industry have come under increasing scrutiny over recent years in terms of sustainability. Sustainability developments have become apparent in the sector driven in large part by shareholder concerns. “At the Royal Dutch Shell level, we were one of the first companies to

start talking about sustainability publicly. Over the past decade what we have been able to do is shift from a generic concept of sustainability to matching that sustainability with our core fundamental values and what the countries themselves need. There are some basic values that we hold as Shell, now let us take those basic values and see what Qatar is trying to do and then match the elements of sustainability in a way that meets Qatar’s requirements,” says Sawan.

Qatar’s requirements are likely to increase in the coming years rather than decrease as business grows and tourism, including sports tourism, becomes a defining factor in the growing integration of the economies of the Gulf and those of Europe.

Money might make the world go ‘round but the world wouldn’t get far without oil and gas. And that is good news for Qatar. William Maimer reports

An entire ecosystem is required to ensure the efficient workings of a gas-based economy. This involves the downstream side of the business, such as fertilisers, as well as value-added services like marketing and promotions. Whatever the stripe of the business, in Qatar it is big business. Daniel Cliff reports

GAS is big business. Downstream gas industries are big business. Getting the products to market is big business too. Naturally enough, for a sector that plays so dominant a role in the Qatari economy, the government has a big hand in making sure that all sectors are profitable, modern and the most competitive that they can be.

Qatar is currently exploring and evaluating various potential opportunities to establish value added projects and industries, diversifying the national economy and providing high tech jobs. These projects and industries will make available the needed raw material feedstock for the petrochemicals conversion projects that will be developed by the private sector.

Alwaseeta, also known as Qatar Intermediate Industries Company, is a big part of the gas infrastructure jigsaw. Ali Hassan Al-Sidiky, vice chairman and managing director of Alwaseeta says, “We are really the missing link between the primary industry, which is handled by Qatar Petroleum and the Qatari government and the secondary downstream industry managed by the private sector. We link the two together. We used to be called Qatar Holding and rebranded as Alwaseeta, which means ‘intermediate’ in Arabic, to share this message.” Without doubt the rebranding has helped Alwaseeta in establishing a distinct identity in intermediate

industries and the greater economy of the region.Alwaseeta was conceptualised by QP and

established by the Supreme Council of Ministers in 2005 with instructions to identify, invest in, build and develop a broad-range of intermediate and downstream industrial projects. The aim is to contribute to the transformation of Qatar’s business landscape into manufacturing and industrial clusters that produce a wide range of products destined for local, regional and global markets and for the use of the private sector.

“Any product that comes out of petrochemicals used to be exported, but since 2011 some of these products have been allocated locally and developed further into intermediate industries. Muntajat, the marketing firm, takes some of the products and markets them. Some of them come to us and we use them as feedstock to develop further intermediate products. Other products include metals. Qatalum is a primary company specialising in aluminium. We are developing projects to use Qatalaum’s products to produce downstream derivatives of aluminium that can then be made into consumer products,” says Al-Sidiky.

One of the core drivers behind Alwaseeta is a constant search to see how it can help in the diversification of the Qatari economy. “We try to develop intermediate industries that use high

technology and produce high quality but varied intermediate products,” Al-Sidiky adds. In doing so the firm aims to create more opportunities in the private sector among local companies to develop more business and to enhance their businesses using Alwaseeta products and benefit end users. The net result is growth in the local economy allowing firms to import less and use locally made and locally sourced products. Since Qatar is rich in resources, this inevitably means identifying projects that use raw materials that are readily available in Qatar.

“We are always looking for self-sustaining business opportunities,” says Al-Sidiky. “The core areas we look at are both hydrocarbon resources and non-hydrocarbon. In non-hydrocarbons, Alwaseeta is targeting metals, particularly aluminium, new technology and ‘green’ environmentally-friendly technology.”

In line with Qatar National vision 2030, it is critical that Alwaseeta ensures that its green footprint is fully in line with international standards. This involves a complex system of checks and measure to ensure that all the major boxes are ticked in terms of environmentally aware business practices. This covers sectors like waste management where Alwaseeta uses a waste-to-energy conversion process to extract natural gas and then uses waste trucks fuelled by

compressed LNG. “While evaluating technology, we ensure that waste generation is kept to a minimum,” says Al-Sidiky. “We also aim to eliminate landfill and incineration using the latest environmentally friendly processes.”

As with every fast growing sector in Qatar, the search for overseas partners who can bring expertise and technology to bear continues. Al-Sidiky adds, “We are always looking for foreign partners who can bring technology to bear and help reduce the cost of our projects, especially in the downstream sector. This is tough sometimes with issues around JVs and patents and IP and so on but we are trying to manage these through incentives and partnership structures.

Indeed the list of JVs undertaken by Alwaseeta is impressive: SEEF, Qatar Melamine Company and Gasal. There is no secret to how Alwaseeta chooses its partners. “We look for partners, who can bring both technology and financing to the table,” says Al-Sidiky. “We are always happy to talk to partners who are interested in expanding their market in the Middle East region in association with us. Our evaluation is done on the basis of the value addition and what it would create in terms of technology, operational expertise and niche market. Naturally we also undertake thorough due diligence before selecting a partner.”

As with all Qatari firms, there is a strong

encouragement that jobs are found for promising young nationals and this process is known as Qatarisation. How Alwaseeta ensures that this drive becomes a natural part of its growth pattern is also no secret. The firm endeavours to use high tech systems in order to create best working environment to develop young talent. This message is spread constantly by the firm using recruitment drives in local high schools and colleges while also making sure the firm has a high profile presence in the many career fairs that take place throughout the year in Qatar.

Still a lot of mileage in gas

Chemical and petrochemical decade

Ali Hassan Al-Sidiky, Vice Chairman and Managing Director, Qatar Intermediate Industries Company Ltd (Alwaseeta)

Dr Mohammed bin Saleh Al-Sada, Minister of Energy and Industry and Chairman of Qatar Petroleum

Qatar is set to remain a major gas exporter irrespective of developments in US fracking and the boom in US shale output

www.world-businesstimes.com QATAR 3

Satellite Company Es’hailSat may be a young firm but it is making some big strides in the broadcasting arena. Toni Vicenti reports

Broadband is such a central part of any economy’s infrastructure these days that it is sometimes easy to forget that it requires constant investment and attention. Ilkley Satterthwaite reports

Dr. Hessa Al Jaber, Minister of Information

and Communications Technology

AL Jaber is an engineer, academic and politician and is the first-ever minister of Information and Communication Technology (ICT) in Qatar following the formation of the nation’s new Cabinet by emir Sheikh Tamim Bin Hamad Al Thani in 2013. She is also the third Qatari woman to assume a ministerial position in the state.

The role of the ministry is wide indeed. “We are the policy maker for the ICT sector. We are responsible for eGovernment, for part of the cyber security, Q-Post and we oversee the telecoms regulator,” says Al Jaber (pictured) who is justifiably proud of the industry-leading state of the ICT sector in the country. “We are number one in the region in terms of network readiness. When it comes to the penetration rate of mobile and 4G we have covered almost the whole of Qatar. So overall we have very advanced mobile communication. Eighty five per cent of households are connected to a very high speed fibre optic network. We have set very clear targets that by 2016 we will have 50 meg for uploads and 100 meg for downloads and this will deliver us a very speedy infrastructure,” Al Jaber says.

This enviable level of development is aimed at servicing every sector from small and medium enterprises to big business through to government and residential users. In terms of open data, the ministry is in the process of creating a back end that will govern all public data and will be accessible to anyone in the nation and facilitate innovation. “We already have an economic portal that has been there for almost six years and we have all the government services and now we are really enhancing it with information,” says Al Jaber. “We have the policy and regulation covering open data, eParticipation policy, privacy laws that will be issued soon. This is where we are at now and for the next 10 years we have set very clear targets. ICT will play a major role in the government’s objective of diversification away from hydrocarbons.”

The recurrent theme of all government

and business in Qatar at present is the issue of diversification away from over-reliance on hydrocarbons revenues, and the ICT sector is playing a major role in this. However, Qatar is realistic that the world of ICT is truly a global one and to find the best-of-the-best means inviting collaboration and participation from players from around the region and around the world. “Around the globe ICT is developing around a small number of themes: Big Data, Cloud Computing, the Internet of Things and so on. Now, we don’t develop these technologies but this is what will be driving the ICT space in Qatar. If you aim to be the leading knowledge economy in the region by 2020 and this is our aim, can we do this? Yes, we can do this because we have the right infrastructure and the right policy and the right regulation,” says Al Jaber. “We are working very hard to make sure that our regulation sits in line with international best practices.”

It is easy enough for Qatar to attract foreign capital and expertise in its lucrative gas sector. But is it so easy in the lower-profile ICT sector? “There is no geographic boundary to technology so if we do nothing to make sure that we have the right environment to attract, retain and encourage the creation of companies here in Qatar, then these companies will simply do so overseas. This is all part of becoming the leading knowledge economy in the region by 2020,” Al Jaber says. “We know that cyber security is very critical and this is the number one growth market in the Middle East. If we don’t provide the right environment for small companies to grow then we will end up dependent upon other countries in 10 years’ time.”

With much of the west still in financial meltdown after the global financial crisis and with the USA only just beginning to crawl out of recession, Qatar is looking increasingly like a very comfortable oasis in the middle of an economic desert. “When businesses come to Qatar, they are thinking

about two things: overall profitability and trust. If they are forming a partnership with someone here they need to be able to trust them. We have the telecom regulatory website, the ministry website, we have the eGovernment website where people can come and get information. Policy is something that can be changed, but law is much harder to change and in Qatar we have already issued a number of laws and are working on others just to reassure foreign partners,” Al Jaber says. “Our privacy laws are now almost in their final stage. We are also working on a written media law. People like Google know that the future is about data, it is about digital content and people need to know that they will own the digital content that they create here and the law should be very clear for them.”

Indeed the entire public and private sector in Qatar is only too aware that partnership, collaboration, JVs and the sharing of expertise are the only safe routes to success in a sector that is as fast moving as ICT. Al Jaber is sanguine about this, “We will always depend on international companies in ICT but I really don’t want to see a situation where only 10 per cent of the revenue will stay here and 90 per cent will be repatriated. I want to see it help to build Qatar. I am a big believer in

being realistic about what we can do. The Qatari population is around 300,000 and only 50 per cent is of working age and this will help define the proportion of Qataris in the workplace.”

With such a small indigenous population, it is increasingly important to make sure that the next generation is as technologically savvy as possible and ready to take up the reins of business and government when the time comes. Al Jaber’s ministry already has a plan for this. “We also need to make sure that young Qataris work as hard as they can and that are stretched as much as they can to achieve the best results. To really make a difference you need to know how smart you are. If you cannot compete with the best of what is coming from abroad, then you will lose. It is very important to develop the right skills. I work with a lot of young Qataris and many of them are highly motivated to change the world. We need to make sure that the working environment drives them to their maximum potential. Only by doing this will we become the leading digital economy in the region by 2020 and I really believe

that we can achieve this.” And these efforts seem to be paying off. “We

have a huge number of very well educated Qatari youngsters: don’t underestimate the quality of the education that we have to offer. Graduates of Qatar University can go to any university in the world to pursue their studies. They are amazing.”

There’s always magic in the air

THERE is a new star shining above Qatar, soon to become a growing constellation. The entity responsible is Qatar’s young satellite company Es’hailSat, named after the Es’hail star which becomes visible in the night sky of the Middle East as summer turns to autumn and heralds cooler weather.

At the helm of the firm is Ali Ahmed Al-Kuwari, a former assistant secretary general and finance director of ictQatar, who shared with us Es’hailSat was established more out of neces-sity than choice. “This project started back in 2009 when Qatar started to face broadcast transmission troubles during Al Jazeera Sport’s coverage of the World Cup 2010 in South Africa. They lost a substantial amount of revenue because their broadcast sig-nals were attacked by neighbouring countries quite deliberately. We have the same kinds of attacks today. It is common practice, especially in this region because of lack of regulation, an ab-sence of policies and difficulty to identify the location of the interference. And even if identified, you don’t have the power to switch it off. The reasons for the interference could be political or commercial,” says Al-Kuwari.

To counter this and ensure that Qatar could continue to broadcast unimpeded, Es’hailSat undertook a programme of satellite launches to guarantee independence. Es’hail 1 satellite was the first step on a long path. From placing an order to hav-ing a satellite in orbit typically takes three years. Es’hail 1 was successfully launched mid last year and today is in commercial service. Es’hail 2 is in development and is expected to launch at the end of Q4 2016. Es’hail 3 is already well under way in the planning stage with a fleet of satellites to follow.

Al-Kuwari says, “Es’hail 1 satellite has been operational for one year now and we have started generating revenues. The satellite serves Al Jazeera, beIN Sport, Qatar TV and Qatar Army but we also serve other customers outside of Qatar be-cause this is a strategic and commercial project. Today we have

30 plus channels. Our target is to increase viewership levels. We don’t just want to be seen to be serving Qatar. We are serving all in the region.”

The rationale for the satellite fleet has mixed justifications. “It is both strategic and commercial. From a strategic point of view, part of it has to do with state sovereignty, service avail-ability, reliability, independence and to meet the Qatar 2030 Vision in terms of diversification,” says Al-Kuwari. “Commer-cially, we want to move away from being only a hydrocarbon-based economy. The government has spent a lot of money in establishing this company and our first two satellites will make enough revenue to expand without relying on government fund-ing. By 2017 this company should be self-financing. This is our main goal.”

“Satellite is a new area for Qatar in which expertise was fairly thin on the ground. The establishment of Es’hailSat was the impetus to deploy Qatari engineers to focus on the satellite arena, to monitor its progress and to attend lectures on the com-mercial aspects of satellite. “Today we have Qatari engineers fully trained and have a plan to send others to Japan for further training. We also have Qatari students sitting in Surrey Univer-sity studying satellite technology as part of our human develop-ment initiative in support of the national vision.”

Es’hailSat faces the same problems as other satellite com-panies around the world but the biggest problem is easily identi-fied. “Spectrum is our biggest challenge. Qatar started late in this business and there is opportunity for the UK to lease some clean spectrum to Qatar,” says Al-Kuwari with an eye firmly on the future. “Es’hail 1 and 2 are enough to let us cover the MENA region but with the arrival of Es’hail 3 we will look fur-ther afield. We will look for acquisitions, JVs, partnerships and Asia is the market for that. Europe is full of satellite operators but we are looking at opportunities in Asia and Africa.”

Es’hailSat shines brightly

BROADBAND is a central part of the modern communication matrix, affecting everything from schools up to government departments and everything in between. Qatar National Broadband Network plays a critical role in supporting the realisation of Qatar National Vision 2030 and the attendant National Broadband Plan.

Mohamad Ali Al Mannai, CEO of Qatar National Broadband Network, is fully aware of the scale of the undertaking he faces and the pivotal role that QNBN plays in the whole Qatari development jigsaw. “The wireless sector here has seen competition but the wired sector has not yet seen the same level of competition. The government recognised that and has taken the required steps to make sure that the wired sector will also benefit from the same level of competition. They decided that the best option was to create a company that would provide the base infrastructure and enable the different service providers to use it,” says Al Mannai.

The challenge with wired line business lies in building the cable infrastructure and in this regard has a lot in common with other utilities like electricity and water. Cable companies need to be able to lay cables and connect every home and every business. It is a time-consuming and capital-intensive endeavour that the private sector generally does not want to undertake.

Qatar tackled the problem by establishing QNBN. Al Mannai is very bullish: “Our growth is continuing. As a wholesaler, we don’t have competitors but we don’t sell to the end consumer. We sell to the telecom operators on a wholesale basis. We are the only wholesaler in the region that operates in domestic fibre connectivity. We lay the cable and the operators come and light it with their laser beams. We have a 25-year license and whether or not there is competition brought into this sector will depend very much on the Communications Regulatory Authority. At present, nothing is planned.”

The target of QNBN is to achieve 95 per cent fibre optic coverage of Qatar by 2016 and progress to date has been swift with the nation roughly 80 per cent covered at present with fibre technology. Because of the sheer scale of the undertaking, central

government funding is pretty much a prerequisite. “QNBN is owned by an entity called ICT Holding and chaired by the minister of telecommunications. So we are owned by the government. ICT Holding tends to invest in areas that the private sector is not attracted to investing in, or invests in businesses that have a strategic requirement for the country and tend to be very capital intensive. It would be hard for the private sector to invest in the satellite sector in Qatar, for instance,” says Al Mannai.

But QNBN is keen to develop and attract partnerships with the private sector, particularly with foreign entities with capital, technology and expertise to share. Al Mannai says, “There are plenty of ways overseas companies can get involved in this sector with us. Issues around innovation and technology, specifically on the application layers. We see a lot of demand for this because the majority of applications these days operate on a global level. In the UK, for instance, you find lots of applications that are designed to address very local needs and we see a gap for this in Qatar.”

Most of the challenges facing the sector are fairly easy to manage but a few pose thorny issues. “There are still some issues around questions like duct ownership. We are helping the government to do some quantification to establish what the government owns and set a framework to establish access to all the ducts in the country by all operators so that we avoid duplication of investment and make sure that competition takes place and that no one is blocking anyone else,” says Al Mannai.

eGovernment meets digital literacy Information and Communication Technology has

never been more important to the Qatar economy. Dr Hessa Al Jaber, minister of information and communication technology has the lowdown. Pamula MacRan reports

Our growth is continuing. As a wholesaler, we don’t have competitors but we don’t sell to the consumer.

9 December 2014World Business Times is a leading global provider of business intelligence and insight4 QATAR

THE banking system in Qatar is subject to two quite separate sources of stress. The first is generated internally and is caused by the rapid pace of development within the country. Fast growth means expanding balance sheets and this can mean banks coping with stresses of their own. From vastly increased business volumes with the same numbers of staff through to banks engaging in new lines of business with which some of their staff might be unfamiliar.

The second source of stress is generated externally and stems from the requirements that banks need to reassess their capital bases in the light of the new Basel III requirements. In Qatar, ultimately, the central bank is the party charged with making sure that nothing goes off the rails.

Qatar Central Bank’s governor since 2006 has been Sheikh Abdulla Bin Saoud Al-Thani (pictured), who started his career in the bank in 1981. Al-Thani has also been

chairman of both the Qatar Financial

Centre Regulatory Authority and chairman of Qatar Financial Markets Authority since

2012. Al-Thani is also managing director of the Qatar Investment Authority.

In December 2013 the QCB, QFCRA and QFMA jointly launched a strategic plan for the future of financial sector regulation in Qatar. The financial sector as a whole has a crucial role to play in realising the goals of the Qatar National Vision 2030 and the strategic plan itself contains six goals, each of which is supported by specific strategies and work plans within the QCB, QFCRA and QFMA. The goals include enhancing regulation by developing a consistent risk-based micro-prudential framework, expanding macro-prudential oversight, strengthening financial market infrastructure, enhancing consumer and investor protection, promoting regulatory cooperation and building human capital.

Matters at home are doubtless more predictable but still involve a lot of oversight.

What is QCB’s strategy for

ensuring that all regulated banks

in Qatar are Basel III compliant?

The Basel III Capital Adequacy was issued to conventional banks and Islamic banks separately in January 2014. Banks have been advised to report on a quarterly basis, both on a solo and consolidated basis. These submissions are required to be audited by the bank’s external auditor prior to submission to QCB… the capital adequacy reports are scrutinised to ensure that the banks have followed the correct intent of the circular. As regards, Liquidity Coverage Ratio, a circular was issued to banks in January 2014 and amended in May 2014 to incorporate the changes effected by the Basel Committee on Banking Supervision. The circular on Leverage Ratio was issued in July 2014 and implementation started with effect from September 2014 as per the finalised BCBS document issued in January 2014. All these submissions are to be audited or reviewed by the external auditors of the banks prior to submission to QCB.

Do you expect to see an increase

in the number and size of hybrids

issued in the market?

As of now, two banks have issued additional Tier 1 instruments compliant with the eligibility criteria stated in the Basel III Capital Adequacy circulars. As regards other banks going in for such instruments, it is left to the bank’s analysis and policy of their projections of business plans and capital planning. However, when a bank intends to issue such instruments, banks are required to seek prior approval from QCB.

Does QCB have any plans to help

develop short-term liquidity

instruments for Islamic banks in

Qatar?

QCB has recognised the International Islamic Liquidity Management Sukuk as one of the high quality liquid assets in Level 2A as short-term instruments to help Islamic banks in complying with the LCR.

In addition to the IILM Sukuk, QCB also recognises Islamic Sukuk issued by any other international organisation. Further, there are certain sovereign Sukuk issued in Qatar which will be eligible as liquidity instruments for Islamic banks.

QCB has successfully issued

Sukuk in the past. Do you foresee

the need to do so again in the

near future?

The QCB has held quarterly auctions of government bonds, both conventional and Sukuk, since March 2013. The type of bonds and the auction volume to be issued in the future depends on liquidity conditions as well as the stance of monetary policy at that time.

What were some of the issues

you faced in drawing up your

strategic plan for regulation of

the finance sector — bearing in

mind how fast the economy is

growing?

QCB’s Strategic Plan 2013-2016 has been developed in line with the National Development Strategy 2011-16 to realise the goals of Qatar’s National Vision 2030. The Strategic Plan provides the mission, vision, values and objectives that underpin a coordinated approach to strengthen the financial sector and foster stable and robust economic growth. At the core of this strategy is the development of a diversified and more

resilient economy – which will have lesser reliance on hydrocarbon revenues – in which the financial sector will have a predominant role. In achieving the goals of the Strategic Plan, the financial regulatory infrastructure will meet international standards and best practices with the objective to provide a conducive and investor friendly environment.

In addition to building a robust banking sector to support the economic growth and diversification goals, QCB is leading the coordination efforts with Qatar Financial Markets Authority and Qatar Financial Centre Regulatory Authority to provide a stable financial environment to a broad range of businesses. In this context, the Financial Stability and Risk Control Committee was established in 2013 to facilitate regulatory coordination and augment management of systemic risk. As envisaged in the Strategic Plan for Financial Regulation and conforming to international standards, QCB has been moving to risk-based regulation, expanding macro-prudential oversight, enhancing transparency, strengthening market infrastructure, and improving consumer and investor protection.

Progress achieved to date includes a wider QCB’s financial regulatory agenda together with the upgrades to emerging market status by leading rating agencies, the increase in foreign investors ownership to up to 49 per cent for listed Qatari companies, and more recently, the establishment of Qatar as the first regional renminbi clearing centre; all of which have opened up the financial market as part of an important step to develop the financial industry domestically and internationally.

Maintaining a world-class regulatory environment for the financial services sector of one of the wealthiest nations on earth is no small task. In an exclusive interview Qatar Central Bank’s governor Sheikh Abdulla Bin Saoud Al-Thani tells Paul McNamara how it’s done.

The map of Qatar’s financial services industry has recently been redrawn, but this probably means more rather than less opportunity for global financial firms. Paul McNamara reports

Finessing the financial system

BEFORE 2004, western finance companies wishing to transact business in the Gulf would send in suitcase bankers from London and Geneva to service their wealth management and project finance clients. An intrepid bunch opened offices in Manama, Bahrain, which, for a time, declared itself the financial capital of the region. However it was not until the DIFC opened in Dubai in 2004, allowing foreign finance houses to set up wholly owned subsidiaries, that the financial service sector in the region took off. The Qatar Financial Centre was not far behind, opening in 2005.

QFC was established as an onshore financial free zone rather than an offshore financial centre and the idea was to bring a different focus to the financial service arena to that which was offered by DIFC. Accordingly both reinsurance and asset management were the initial areas of focus. Much has changed since those early days and Qatar Financial Centre Regulatory Authority, CEO, Michael Ryan says, “We had new laws come out covering the Qatar Central Bank that became effective 1 February 2013 and that brought in some fairly fundamental changes to the things we do and how we do them. The premise is that all three regulators, QCB, Qatar Financial Markets Authority and ourselves, remain independent, hence we continue to have overall responsibility for licensing and supervision of entities within the QFC.”

It is a fact of life that the world of banking and insurance changed dramatically after the global financial crisis and Qatar has adopted a regulatory approach that is fairly formulaic but robust for all that. Ryan says, “The other thing the new law did was establish the Financial Stability and Risk Control Committee. This is a formal mechanism to ensure cooperation across all three regulators on areas of common concern; regulatory

policy, regulatory action, supervision and the like. The committee is responsible for reviewing risks to financial stability but it extends beyond that to ensure that there is effective coordination between all three regulators. Further to that the committee also ensures that there is consistency in regulatory policy.”

In the past the QCB’s role had been largely domestic and QFCRA’s role was limited to firms within the QFC, but even so, there would inevitably have been areas of overlap. Ryan says, “QCB is now responsible for insurance in the state. Both QCB and QFCRA are working very closely to try to develop a framework because QFCRA also regulates QFC insurance companies and we ensure that there is an appropriate level of consistency in the approaches taken by the two. What we do at QFCRA is build a regulatory environment for firms that want to come and take advantage of the growth environment of the Qatari market. They can come here and build their relationships with Qatar and the Qatar economy. They will be working in the same kind of environment that has enabled them to build their businesses in other jurisdictions.”

Building up the capital markets in Qatar features heavily in the new strategy. It is built around a number of very specific themes such as building market infrastructure, ensuring greater resilience in the payments system, regulatory coordination on a local and international level, consumer and investor protection, keeping pace with the development of international regulation on the micro level and maintaining a strong macro view across all three of the regulators with regard to current risks in the system and potential points of weakness. “The strategy is very ambitious and very broad and very specific about the things we intend to do,” says Ryan.

Three into one does go

www.world-businesstimes.com QATAR 5

ongoing effort of Qatar’s nation building strategy. “The best way for Barwa Bank to contribute to Qatar’s nation building is through high-profi le quality transactions: our role as Joint Lead Manager and Book runner for the UK Sukuk is an excellent example,” says Sheikh Mohammad. “We are, of course, already heavily engaged in the physical building of our nation, given our very signifi cant involvement in many of Qatar’s major infrastructural projects. More generally, successful nations need successful institutions: successful at home and successful internationally. That’s where we can contribute most.”

The Sukuk was a fi rst for the UK but it was not a fi rst for Barwa Bank. The bank had been involved in a number of high profi le Sukuk issues including for the Republic of Turkey, Saudi Arabia’s Islamic Development Bank, the Government of Dubai and Qatar’s massive $4bn Sukuk.

New sovereign Sukuk are becoming ever more common in the marketplace with both Hong Kong and Sharjah issuing record breaking Sukuk in recent months. In the case of Hong Kong, its maiden Sukuk for $1bn was oversubscribed 4.7 times while Sharjah’s Sukuk was oversubscribed 10 times. Sheikh Mohammad’s advice to prospective issuers is clear: “Give some thought to a Sukuk issuance. In doing so, you will open up a very large of pool of Islamic liquidity, a pool that represents an alternative source of funding that is currently unavailable to you in that it cannot hold conventionally-structured assets. The overall cost of fi nance will be as competitive as a conventional bond issue. The recent UK Government Sukuk was priced on the yield curve for UK Gilts with no ‘Islamic premium’. Capital markets origination is an intellectual capital business and our success depends upon the quality of the team that we are able to put in front of a potential issuer and the integrity of advice that we are able to deliver … our proven track-record creates a powerful credential and gives confi dence to prospective issuers.”

The Barwa Bank Group is very proud of the fact that it is Qatar’s fastest growing Shari’ah compliant bank. This in itself is no mean achievement in an industry that sees many banks from the big end of town trying to muscle in on juicy transactions. It is not unusual to see Citi, HSBC and Standard Chartered appearing on the prospectus documents of new Islamic debt market instruments. It is equally common these days to see the region’s conventional banking giants join in too, with the like of NBAD making its weighty presence known wherever it can.

So it must have been with some relish that the team at Barwa Bank announced fi nancial results for the fi rst half of 2014 that hark back to the good

old days before the global fi nancial crisis (see box). A quick look at Barwa Bank’s recent activity shows a bank that is fi ne-tuning its operations to take advantage of new markets and new technologies as it races to stay ahead of the pack.

Recent months have seen the bank launch a new mobile banking application for its customers as part of the bank’s investment in digital channels and services, allowing its customers to manage account information anytime, anywhere. This is clearly no passing fad, as Sheikh Mohammad points out, “All banks appreciate the potential around technology, though it is probably fair to say that the Islamic banks have been slower to respond to the opportunity than our conventional competitors. The central and most obvious way in which technology is changing lives is in the ability to manage relationships remotely be it through increasingly sophisticated, functionally-rich websites and more recently, mobile banking through tablets and mobile phones. That technology, and progress in data-mining, also allows us to be far more focused and intimate with our customers in the way in which we communicate with them and, more specifi cally, the ideas and opportunities that we are able to bring to their attention.”

The bank has also made sure that it plays a leading position in niche, but growth, areas of the market such as Islamic wealth management. Shari’ah compliant wealth management is a notoriously underserved sector and one that Barwa Bank takes very seriously. “Islamic wealth management has very signifi cant potential,” says Sheikh Mohammad. “The stock of global fi nancial assets is estimated at more than $200tn. total Islamic fi nancial aggregates are forecast to break the $2tn threshold this year. By inference, the vast majority of Muslims worldwide hold most of their wealth in conventional form and an institution that can deliver sophisticated Shari’ah compliant product that offers attractive return, fl exibility and convenience will fi nd a very receptive market.”

In many ways what Sheikh Mohammed is summing up is the conundrum that faces any fi nance house that attempts to offer a comprehensive suite of Shari’ah compliant wealth management products. “Identifying suitable investment opportunities and structuring them in a format acceptable to our customers is not without its challenges but we see this as a major area of growth in the years ahead, not least because the success of our economy over the last few years has created large numbers of people who have accumulated capital and wish to both preserve and grow it. Through our

wholly owned investment banking boutique, the First Investor, we are able to structure distinctive investment opportunities that we offer on an exclusive basis to the bank’s private banking customers,” says Sheikh Mohammed.

But how practical it is for an Islamic wealth manager to offer a range of products that pass the Shari’ah test? Barwa Bank believes that is has the problem solved: “Examples would include our medium-term, closed end real-estate funds that offer both income across the life of the fund and the possibility of upside through capital gain at termination. We offer both domestic and international opportunities. Good examples might include our Education Fund and our UK income fund. We also offer access to the regional securities markets through our GCC Equity Opportunities Fund which invests in Shari’ah compliant quoted companies and is currently outperforming industry indices and benchmarks.”

Naturally enough, only a small fraction of Qatar’s residents are likely to want or need wealth management services of any sort. So, what part can individual fi nance industry participants in the GCC play in helping to modernise the way of life of ordinary Arabs across the Middle East? Sheikh Mohammed sees a big role for banks: “I think there are two areas where the fi nance industry has a critical role: home-ownership is a universal aspiration worldwide but is invariably dependent upon the development of a long-term mortgage market. Progress is being made in this area but we have a long way to go in terms of making affordable, long-term fi nance broadly available. The other area is the establishment of a long-term savings culture and a private pensions industry. State pension schemes are developing rapidly but global market experience is that they are most effective when complemented by private provision, whether through workplace schemes or on a ‘portable’ basis. Banks can take the lead in both.”

It is very clear that Barwa Bank is only at the very start of a long growth trajectory and that this will encompass both domestic and international moves. The bank took the plunge and in recent months opened a representative offi ce in the Dubai International Financial Centre. Khalid Al Subeai, acting CEO said, “This is the fi rst time Barwa Bank has opened an offi ce overseas and is testament to our commitment to developing the Shari’ah compliant fi nancial market outside as well as within Qatar.”

But the bank is not likely to take its eye off the domestic prize, which is shaping up to be huge indeed. The GCC as a whole is seeing unprecedented levels of construction and growth with many of the projects being undertaken dwarfi ng corresponding projects in previous decades. Some nations are building enormous ports and airports and some are readying themselves for major sporting competitions. Qatar is doing all of the above and the project-fi nancing menu for the next decade or more is tempting indeed.

The last word goes to Sheikh Mohammad: “Our fi rst priority is to maximise the potential presented by our domestic franchise as Qatar embarks on the next wave of infrastructural development. Over the next decade we will see the realisation of major plans for transport, electricity generation, desalination, education, health and, more broadly, Qatar’s transition to a more balanced, diversifi ed economy. We are determined to play a leading role in that development and I see this as our primary engine-of-growth over the next 3-5 years. We also have high expectations for the continuing development of our Islamic capital markets business, domestically, regionally and internationally.”

Banking has become an increasingly competitive in-dustry and one in which only the strong survive. Just ask the survivors of late Banco Espírito Santo. The Islamic banking sec-tor is possibly more competi-tive still and it takes brains as well as a positive balance sheet to thrive.

To the outside observer, Qatar Central Bank’s decision in 2011, forcing conven-tional banks to close their Islamic banking

windows, looked like a windfall opportunity for the existing Islamic banks in the country. But this conceals the fact that the Islamic banking space has become increasingly competitive domestically, re-gionally and globally. It is a sector that is becoming progressively more integrated with the rest of the fi nancial services spectrum and this means that the pressure to perform on Islamic banks is as great, if not greater, than their conventional counterparts.

Islamic banking technically started in Qatar in 1983 with the establishment of Qatar Islamic Bank, but it was not until 2005 that the market really opened up and conventional banks were allowed by the Qatar Central Bank (QCB) to offer Shari’ah compliant fi nance products to clients through Islamic windows. However, in a surprise move by the QCB these windows were closed back in February 2011, prompting several conventional banks such as HSBC to shut shop on their Islamic businesses in Qatar.

Off the back of QCB’s ban, the country’s fully-fl edged Islamic banks surged as expectations rose about the possibility of attracting money that was leaving the defunct windows. Great news for Qatar’s big four full-fl edged Islamic banks – Qatar Islamic Bank, Masraf Al Rayan, Qatar International Islamic Bank and Barwa Bank.

Three years on and despite the effect of the window closures having now faded, the big four are standing fi rm having added 57.5bn riyals of assets to their balance sheets, with the youngest of the four – Barwa Bank – proving its mettle both at home and abroad.

To many investors in the UK and Europe the name of Barwa Bank will already be familiar as one of the leading players behind the UK’s recent headline-grabbing Sukuk issue. Her Majesty’s Treasury was delighted that the nation’s inaugural £200m sovereign Sukuk, maturing in July 2019, had been sold to investors based in the UK and in the major hubs for Islamic fi nance around the world so successfully.

The Sukuk saw strong demand, with orders totalling £2.3bn, in large due to the work of the lead arranger and managers, allocations were made to a wide range of investors including sovereign wealth funds, central banks and domestic and international fi nancial institutions. Investors from the major centres for Islamic fi nance in the Middle East, Asia and Britain were all represented in the fi nal allocation. Barwa Bank was the only Qatari bank selected and the only wholly Shari’ah compliant mandated bank on the panel. The UK’s own cabal of Islamic banks were reported to be peeved that they were not invited to the table, but with the offer more than 11 times oversubscribed it is not likely that the Treasury will be losing much sleep over their complaints.

“We were delighted to be appointed for this prestigious transaction alongside major international and regional banks. Securing a mandate like this one is the clearest statement of our credibility, track record, solid relationships and delivery. We are very ambitious and have proven that we have the energy, enthusiasm and capabilities to be part of this process,” said Sheikh Mohammad Bin Hamad Bin Jassim Al Thani, chairman and managing director of Barwa Bank.

But this was clearly more than simply an Islamic debt capital markets deal for the bank. It was also about Barwa Bank contributing to the

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LOOKING at the profi t growth of Barwa Bank over recent years, results that might justifi ably be termed stellar, could tend to suggest that the ascent of Qatar’s economy was largely the cause. But

this would be misleading. At a time when banks across the globe are slashing headcounts and coming to grips with stringent new Basel III capital adequacy standards, Barwa Bank has manoeuvred itself into lucrative business niches and expanded its franchise geographically to take advantage of opportunities as they have arisen.

The bank’s history is short indeed. The bank was incorporated as a Qatari Private Shareholding Company in January 2008 and in December 2012, the Ministry of Business and Trade approved conversion of the bank to a Qatari Shareholding Company. Barwa Bank secured its banking license from Qatar Central Bank in

February 2009 and started operations in July 2009. As the chart shows, it has come a long way in a short time.

The bank is 18.67 per cent owned by General Retirement and Social Insurance Authority, 18.67 per cent by Military Pension Fund (Qatar) and 12.13 per cent by Qatar Holding, the investment arm of Qatar Investment Authority, the sovereign wealth fund of Qatar. The balance of the share register is privately held, owned by several individuals and corporate entities.

The group is justifi ably proud of the fact that it is Qatar’s fastest growing Shari’ah compliant banking service provider. Its recent 35 per cent profi t lift for the fi rst six months of the year to $113m will

have hearted its shareholders no end. The balance sheet recorded signifi cant growth with an increase in total assets of 28 per cent to reach $9.77bn compared to the second quarter of 2013.

Sheikh Mohammad Bin Hamad Bin Jassim Al Thani, chairman of Barwa Bank Group said, “We were able to strengthen our presence in the Qatari market signifi cantly and took part in many important deals during the fi rst half of this year which refl ected positively on the fi nancial performance of the Group. We are keen to continue this positive performance in greater pace throughout the remainder of this year, and hope to contribute more to the Qatari banking sector and increase value to our key stakeholders.”

Ethical, sustainable, progressivePAUL MCNAMARA BUSINESS REPORTER

Sheikh Mohammad Bin Hamad Bin Jassim Al Thani, chairman and managing director of Barwa Bank and the company’s HQ

The Barwa Bank Group is very proud of the fact that it is Qatar’s fastest growing Shari’ah compliant bank. This is itself no mean achievement in an industry that sees many banks from the big end of town trying to muscle in on juicy transactions.

‘‘

‘‘

A rising tide lifts all boats

QATAR 9 December 20146 World Business Times is a leading global provider of business intelligence and insight

Fast changing face of Qatar banking

Getting to grips with the Qatari market is not something that can be achieved on a fly-in visit. It takes time, patience and a bit of effort. The rewards for those who are patient can be immense. Pamula MacRan reports

BEFORE the global fi nancial crisis it seemed as if every bank in the Gulf experienced year after year of record breaking profi ts. Then it all came to a halt with a screech and the return to the good old days has been a long time coming. But after fi ve tough years it looks

as if the good times are fi nally back, if QIB’s recent performance is anything to go by. The bank reported a 16 per cent leap in profi ts for the fi rst nine months of 2014 when compared to the same period last year. QIB’s profi t reached $310m for the fi rst 9 months of 2014 with total

assets up 29 per cent during the same period.QIB’s story is not a long one, established

in 1982 as the fi rst Islamic bank in Qatar it has developed a reputation as something of a pioneer of Islamic banking in both the domestic and regional markets. The bank is rated ‘A’ by Fitch and ‘A-’ by Standard & Poor’s and boasts a 36 per cent share of the Islamic banking market in Qatar, which represents a 9 per cent share of Qatar’s banking sector overall. QIB is also active globally with an international presence in the UK, Malaysia, Lebanon and Sudan.

The global fi nancial crisis changed everything, however, and these days

customers and regulators alike are often more concerned about the overall strength of a bank than its headline profi t. Qatar is no exception as banks grapple with stringent new capital adequacy rules under Basel III regulations. Bassel Gamal, group CEO of QIB, sees little cause for concern in Qatar. “Effective beginning 2014, all banks in Qatar including QIB have adopted the Basel III guidelines issued by the Qatar Central Bank. These guidelines now ensure that the capital adequacy framework in Qatar is in line with the latest guidelines to be adopted world-wide and captures key risks inherent to the banking sector. These new guidelines

impose higher capital charges on certain asset classes but at the same time provide additional clarity on defi nition and qualifi cation of various capital items and instruments.”

Of course the shift from Basel II to Basel III is not a one-off event and requires banks to be on their toes to the constantly changing demands on them. Gamal says, “The new guidelines have raised the minimum capital adequacy level from 10 per cent to 12.5 per cent and the level is expected to go higher from 2016 for countercyclical buffers and additional requirements for Domestic Systemically Important Banks. While these requirements strengthen the overall banking sector… we need to be cognisant of these requirements and accordingly align our business and capital plans.”

In large part it is the regulators in each jurisdiction who are the ones wielding the big sticks and making sure that bank depositors and the taxpayer never have to foot the bill when the going gets tough. This can affect all bank products including those as simple as the humble term deposit. In some instances, to meet the Basel III liquidity standards, a depositor must have no legal right to withdraw deposits within the 30-day horizon of the liquidity coverage ratio. The result is the

introduction of term deposits that require a minimum notice period of 31 days before being able to be withdrawn by the depositor. At the other end of the bank product spectrum are contingent convertible (CoCo) bonds and wipe-out bonds aimed both at institutional and retail clients.

How long will it be before QIB and other Qatari banks issue the new type of hybrid securities or CoCo bonds that we are seeing in other markets? “The new QCB guidelines have now clearly defi ned the eligibility criteria for various capital instruments and provided the opportunity for banks to optimise their capital structures through issuance of qualifying hybrid capital instruments including subordinated debt-type instruments, perpetual additional Tier 1 and so on. These instruments will enable banks to strengthen their capital levels and offer additional protection to depositors and creditors and at the same time improve return on equity to common equity shareholders. So in the medium term we expect more Qatari banks to issue these forms of hybrid capital instruments both in domestic and international markets. However, the timing, size and nature of instrument will depend on the specifi c requirements of each institution and prevailing capital market conditions,” says Gamal.

Qatar’s currency, the riyal, is pegged to the dollar and this can be both a blessing and a curse depending on the phase of the credit cycle. The recent prolonged low interest rate environment globally caused by the US Federal Reserve’s quantitative easing programme has been blamed for the creation of asset bubbles in the unlikeliest of places but Qatar has been largely spared. Gamal says, “Even though the Qatari riyal is pegged to the US dollar, the monetary and interest rate policies of Qatar have never mimicked US interest rate levels and are more infl uenced by domestic economic factors including infl ation and credit demand. Interest rate levels in Qatar were historically much higher than international and regional markets and the gap has narrowed in the last couple of years due to strong money supply and surplus liquidity. These lower interest rate levels have resulted in falling profi t rate margins over the last few years through sharper contraction of asset yields compared to cost of funding especially for Islamic banks that have a larger share of low and non-profi t bearing deposits.”

For some observers in the west, banking in the GCC is more about wealth

management than about lowly term deposits and for a good number of banks it is. After all, Qatar has one of the highest GDPs per capita anywhere in the world and this does mean that there is strong demand for wealth management solutions. Banks like QIB have already spotted this niche and are committed to servicing it. “The scale of the wealth management opportunity across GCC markets is enormous… QIB is currently providing investment products and services including a suite of structured products such as International Sukuk Portfolio, Shiraa Fund of Fund, Hemaya and so on in collaboration with our subsidiary QInvest, the investment banking arm of the QIB Group. The offering spans from execution-only type of relationships to full discretionary portfolio management.”

Off the back of the global fi nancial crisis, Islamic banking has seen an impressive boom, which has played a role in QIB’s recent growth. “From 2005 onwards the emphasis in the Islamic banking industry as a whole has been to develop advanced treasury services and innovative asset management and investment banking offerings. The Islamic fi nancial markets are becoming deeper and more liquid with more issuers choosing to tap the Islamic markets as a response to the indisputable demand and renewed investors’ trust following the events that led to the global fi nancial crisis. More and more Islamic fi nancial instruments are being issued, even by sovereigns and conventional institutions. This in turn is leading to increased development in Shari’ah compliant investment vehicles. International private banks are also gradually entering the Islamic fi nance markets, as they understand that this will be important to their competitiveness especially in the GCC region,” says Gamal.

The world’s banks are increasingly being seen as a bellwether for the state of the economy: banks do well when the economy is booming and badly when the economy is tanking. Many of Qatar’s banks are seeing a return to boom times and QIB is no exception. Paul McNamara reports

QDVC is having a busy old time of late. The company came into being in 2007 as a joint venture between Qatari Diar Real Estate Investment Company and VINCI Construction Grands Projets from France. The scope of the company is general contracting and construction work, along with associated services related to large selected design and build public or private projects, where it can add value. QDVC also develops in-house engineering and construction services for mega development projects and attracts the input of local and regional expert resources.

Its list of projects is extensive and includes both domestic and international projects. Within Qatar it is currently working on the New Orbital Highway south west of Doha, awarded by Ashghal (Public Works Authority); the Doha Metro Red Line South comprising the design and construction of underground works below central Doha, including fi ve underground stations,; the Sheraton Park Project in Doha’s Corniche area; and two projects in the new city of Lusail: the Light Railway transit System and four underground car parks. Internationally QDVC is currently building the Dahlak Island Resort in Eritrea and the Golf & Racquet Club in Al Houara, in the outskirts of Tangier, Morocco.

In a nation that is witnessing such in-credible growth it is hardly surprising that the construction sector acts like a magnet to overseas partners wanting a slice of the action. But many of them have failed to do their homework fi rst. QDVC chairman Nasser Al Ansari says, “There is a huge op-portunity for investing in infrastructure in Qatar and these should be explored by com-panies from different parts of the world. But unfortunately, a lot of international compa-nies, when they send people to our country, they send the wrong people who don’t have the necessary knowhow. They don’t know how to explore the country and how to con-nect with the right people so as to form the right perception about what is happening in our country. They come here and they stay in a hotel for three or four days, look around,

meet a few people and then leave.” This is not the sort of strategy that is going to pay dividends for the serious minded player.

Succeeding means doing the right re-search, taking advantage of the right infra-structure, spending suffi cient time and not trying to rush into getting a quick deal. Al Ansari says, “Often they fail to make the right forecasts. There is no proper feasibil-ity study.”

QDVC, as a joint venture company, is a prime example of how doing the right home-work can pay real dividends. “When we put the company together with two huge groups, Qatari Diar on the one hand and VINCI Con-struction Grands Projets on the other, a lot of people thought that it was a quasi-govern-ment initiative and that we would take over by being granted projects because of who we are and what we are. On the contrary, we built the company on sound commercial

merit. We went out to compete and tender and some of these tenders we lost and some of these tenders we won. Today we have un-der management QR20.5bn ($5.65bn US) of projects in the last two years,” says Al An-sari. An impressive achievement.

Al Ansari hopes that this kind of exam-ple can act as a beacon for other fi rms wish-ing to come to Qatar and achieve similar goals. “This set a very simple example to all the large international companies that we are succeeding in Qatar because of how we conduct business, our commitment to trans-parency and that we were willing to spend the past fi ve years to build this company. Because of such hard work we were able to capture signifi cant market share in Qatar.”

Again Al Ansari comes back to the huge importance of preparation in entering the Qatari marketplace. “Taking advantage of opportunities in Qatar is all down to sending the right people with the right work ethic. A lot of companies send people as if they are on a vacation. They see how much they can be entertained. They write back reports to head offi ce and say ‘oh that was fun, we should stay’. In my experience the compa-nies that have been successful are the ones who took this country more seriously. The ones that do not see it as an opportunity to just work in a beautiful and fun resort des-tination. But as an opportunity to participate in building a state-of-the-art nation and then they will get a chance.”

Because of the vast array of develop-ment projects being undertaken in Qatar, the opportunities are thick on the ground in al-most every sector. QDVC’s core focus is on construction and therefore it is not surprising that Al Ansari’s initial thoughts spring to this

sector when outlining where the big oppor-tunities lie. “Support and services to the con-struction industry is an obvious area. There is a real need for professional management of labour communities and staff accommo-dation. Facilities management, operation and maintenance of equipment, supply of equipment, supply of industries and technol-ogies that will make the construction period shorter, engineering of projects, technical knowhow and support.”

QDVC itself has already shown how it has been able to import technology and expertise to help improve processes, which permeate to other fi rms operating in the Qatari engineering sector to save costs and time. Al Ansari says, “One of the things that we brought into Qatar was engineering kno-whow. We are building complex projects be-cause of our engineering knowhow that are coming in under budget. In QDVC we are building the train stations and giving solu-

tions to Qatar Rail, the company behind the new state-of-the-art railway project that will link Qatar internally and with its neighbours, and their acceptance of these solutions led to a cost saving in money and time.” More specifi cally, QDVC aims at recruiting Qa-tari talents, through a dedicated Qatarisation Department created early 2013. The Qatari-sation team is in charge of the recruitment, training, motivation, retention and career development of Qataris within the company. They are committed to encouraging the de-velopment of Qataris to become the future generation of leaders, engineers and skilled professionals. We believe that the success of a Qatarisation strategy depends on a struc-tured, comprehensive and holistic approach. For this reason, we have developed several initiatives that help us recruit and train Qa-tari nationals.

International companies have to link with the right Qatari partners for the real benefi ts to be realised and they have to hire Qataris within their organisations rather than try to build standalone foreign companies within Qatar. The danger is that standalone companies can become dissociated from Qatari society so they cannot fully under-stand the supply chain of opportunities that they can generate from being here in Qatar. “There are a lot of young European couples in Qatar who have come over and set up very successful businesses by integrating into Qa-tari society and understanding where they can help supply the construction industry,” says Al Ansari.

There is a natural cycle in the move-ment of human resources internationally where the clever and the entrepreneurial tend to gravitate toward those areas that are

booming. Hardly surprising, then, that Qa-tar is presently seeing a lot of interest. The tricky bit is fi nding the right people at the right level to talk to. “This is where overseas embassies sometimes go wrong. You can-not refer every entrepreneurial person from Europe to a senior Qatari businessman. He doesn’t have the time. They need to be in contact with young entrepreneurial Qatari men and women,” says Al Ansari. “Today the government has this initiative called En-terprise Qatar which has just merged with Qatar Development Bank. Today anyone wanting to come and set up a business here needs to hear about the success stories and how they tapped in to the Qatari market and also the failure stories so that they can learn what not to do or how to avoid mistakes.”

Al Ansari, however, has a keen interest in importing not just top talent but modern techniques, technology and insight. “Today if you look at our construction industry and how we build projects here, it is not exactly how it has been built somewhere else. Still there are a lot of conventional ways of doing things and somebody could bring knowhow to the industry to make it better in quality, to build it faster, and in engineering terms to use innovative solutions. Come and tell us that you can design buildings that are structurally lighter and cost less and that we can heat and cool better by using better design.”

Like every other senior Qatari business fi gure, however, the notion of nation build-ing is never far from Al Ansari’s mind. “It is not about promoting individuals. It is about promoting Qatar. People need to come and see what the business fl ow is and what the deals on the table are.”

A talent for business

Nasser Al Ansari, Chairman of QDVC

QIB headquarters in Qatar

Alwaseeta’s vision is to become a Middle East leading manufacturer and marketer for intermediate chemical and

non-hydrocarbon products. Committed to nurturing and encouraging innovative sustainable projects as well as

establishing local and international partnerships that will support the expansion of Qatar’s industrial base.

QDVC, as a joint venture company, is a prime example of how doing the right homework can pay real dividends.

www.world-businesstimes.com 7QATAR

Qatar is set for big things: that much is well known. What is less well known is that the nation is undertaking a mammoth project unrivalled before in the history of the Middle East: building a futuristic rail network from the ground up that will define what Qatar looks like for decades to come. It is all in the hands of Qatar Rail. William Malmer reports

Much hinges on Qatar’s National Development Strategy and its smooth implementation. With an economy growing so fast, staying on top of new trends is of paramount importance. Michael Robinson reports

this is Qatar.the land of promising opportunities.

Partner with the leading Islamic bank in Qatarwho knows it inside outDuring the past three decades, our expertise has touched all the economic sectors of Qatar and we have partnered with leading international names in nurturing their investment objectives to reality. Today, with our international presence, a strong domestic foundation and a commendable track record, we are more than ever ready to join hands with your business aspirations in Qatar.

Find out more about QIB by visiting our website www.qib.com.qa or by calling our dedicated line on +974 4402 0888.

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The minister of Development Planning and Statistics is charged with overseeing the oil and gas industry to en-sure that Qatar’s economy is diversifi ed and sustainable, guaranteeing a more prosperous future for its citizens in the coming years. Dr Saleh bin Mohammed Al-Nabit was appointed to head the ministry in June 2013, before which he was secretary-general for the General Secre-tariat for Development Planning.

How far advanced is Qatar in terms of

sustainable development for the National

Development Strategy?

We have been working hard towards making all of our developments sustainable and will provide future generations in Qatar with a good future and style of life. Our main focus is to achieve the goals and aspirations of the National Vision. We review the NDS to make sure that there are no gaps or shortcomings and try to learn from our past experience. We also monitor the implementation of the NDS with all concerned parties, including other ministries and institutions and I think that we are on the right track.

In which areas of sustainable development

does Qatar lead?

Creating sustainable development is always a challenge, especially if you are talking about countries that are

depleting resources. However, Qatar is leading in terms of investing in human capital and human development to become a more effi cient and competitive nation.

What are the biggest challenges you face as a

government department?

The challenges that we face can be resolved in the medium term and we are concerned about the overall population and the composition of the population in terms of nationality, gender and the mix of families and singles. We think this should be adjusted to make sure that we fi nd the right composition that can work for Qatar in the long term.

These are normal challenges that any government faces such as fi nding highly qualifi ed and skilled em-ployees where we want Qataris to be more involved. We have some good short term plans to educate and enhance the capacity of Qatari youngsters.

How do you juggle the conflicting needs of

economic development, human development,

environmental and social development?

The fact is that whenever you increase the exploitation of hydrocarbons, there are inevitably environmental issues. We have already put measures in place to limit harmful chemicals and gases. In the future, air quality will be better because hydrocarbon production will not increase and we are using new techniques to reduce and reuse emissions in different ways.

How comprehensive is the national

development strategy?

I think it is very comprehensive. It is ambitious in terms of the numbers of projects and programmes. We will be working on any improvements needed.

A pivotal strategy for development

The backbone of the nation

Saad Ahmed Al Muhannadi, CEO of Qatar Rail

In which areas of sustainable development

does Qatar lead?

Creating sustainable development is always a challenge, especially if you are talking about countries that are

Dr Saleh bin Mohammed Al-Nabit, Minister of Development Planning and Statistics

THE scale of the undertaking being envisaged by the management team at Qatar Rail is simply enormous and yet the story only began in 2011 when the Qatar Rail Company (QR) was created. The company is the owner and manager of Qatar’s rail network and will be responsible for the design, construction, commissioning, operation and maintenance of the entire rail network and systems.

This involves developing the railway sector regulatory framework, including fare policies, standards forsafety, environment and customer services and integrating railway services with other modes of transport. QR is also in charge of the appointment and oversight of programme management consultants to ensure delivery and performance, enforcement of regulations and standards on rail services operators and cost management.

The man at the helm of Qatar Rail is its CEO Saad Ahmed Al Muhannadi, whose academic background is in electrical engineering, holding a bachelor’s degree and an MBA from the University of Qatar. Al Muhannadi has more than 15 years of practical experience in the areas of public sector services and utilities through his contributions in many major committees of Qatar’s Ministry of Electricity & Water.

The scope of the project

It is clear from the outset that this is no toy railway and no pet project but a major piece of the future infrastructure of the fast growing nation that will see it better connected internally as well as better connected to its near neighbours. The project itself has a number of parts.

“Qatar Rail is developing and implementing three main projects. The fi rst project is the LRT, the light rail project, which is to serve Lusail city. We

have completed all the tunnelling and infrastructure and we are in the fi nal stage for the fi t out, architecture and system. This project has been awarded to Alstom and QVDC as a joint venture. We expect to be in the operational phase by the end of 2018 for the light rail,” says Al Muhannadi.

The Lusail project is a standalone development within Qatar masterminded by QDVC to become a waterfront state-of-the-art city. Located north of Doha, Lusail is tipped to be one of the largest and most elaborate developments undertaken anywhere in the world and extends over 35 square kilometres of land and is scheduled to house approximately 200,000 people. It will encompass not only new residential, commercial and retail opportunities, but a full array of community services, complete with schools, medical facilities, entertainment and shopping centres.

Al Muhannadi says, “The light rail is also connected to and integrated with two metro stations and we are also working on the greater metro project. The Metro will connect the cities in Qatar, the north with the south, the east with the west. Phase 1 is around 80km with 38 stations across three lines; the red line, gold line and green line. We have already awarded seven of the nine main packages and expect to have awarded the others by the end of this year. We are on track and we have completed 15 per cent of the underground work. The metro has both an underground and elevated section. It will be underground within Doha and then elevated outside of Doha.”

Doha Metro consists of four lines and will cover the greater Doha area with connections to town centres and vital commercial and residential areas throughout the city. Taken together there will be around 100 stations built for the

entire Metro Network over a length of approximately 216 km and these will include two major stations built at Msheireb and Education City. The Msheireb station, located in the centre of downtown Doha, will be the hub of the Metro network, being the major interchange station for three of the four lines.

Another core part of the project covers both long distance passenger and freight rail to connect major centres of population and industries in Qatar and to form part in the planned Gulf Cooperation Council railway network linking Qatar, Saudi Arabia, United Arab Emirates, Kuwait, Bahrain and Oman. Naturally, long distance passenger rail lines offer a quick and safe mode of public transport to communities and their citizens because of their segregated right-of-way but equally importantly they help in reducing carbon and other greenhouse gas emissions.

The long distance rail network is planned over a length of approximately 510 km and will be developed in distinct phases to meet commitments made to GCC and domestic passenger and freight demands. The network consists of a freight rail line from Port Mesaieed to Ras Laffan, a mixed passenger and freight rail line from Doha to Saudi Arabia, a high speed passenger rail line from Doha to Bahrain, a mixed passenger and freight rail line from Doha to Dukhan and a mixed passenger and freight rail line from Doha to AlShamal.

“The third project is the regional network and connects Qatar with Saudi Arabia and Bahrain. We will implement stage one to connect Qatar with Saudi Arabia. It is around 145 km of track and will be used for both freight and

passengers. We will be announcing the prequalifi cation for that soon. There is coordination between Qatar and Saudi Arabia and other GCC members to centralise the specifi cations and have one schedule, so we are working with our colleagues from Saudi Arabia. We expect to have this fi nished by the end of 2018 and naturally this will integrate with the progress being made by Saudi Arabia since there is no point in completing it until our neighbours are ready. The Metro should be completed by the end of 2019,” says Al Muhannadi.

Looking to the future

The construction phase and opening of the railway will be undertaken on a staggered basis, with a target date of 2019 for the fi rst elements of Phase 1. The total value of the recent contract awards for Phase 1, the design-and-build phase, is around $11.5bn.

Qatar Rails is leveraging technology as much as possible in order to be able to deliver its own unique vision. Al Muhannadi says, “We are trying to use the world’s best technology and build a world class Metro. The temperature and the atmosphere inside the stations should be friendly and encourage passengers to utilise the Metro fully. For signalling and communications we are using the best technology to make sure that entry and exit from the stations is made easy.”

But it is not just about passenger comfort: it is also about being responsible toward the environment. “Rail, from an environmental point of view, allows you to reduce CO2 emissions and because of

this it helps us to contribute to our National Development Strategy of reduction in car traffi c and reduction of CO2 emissions. From a human capital point of view it opens up a number of opportunities both before and during operations, particularly for Qataris,” says Al Muhannadi.

From an economic point of view Qatar Rail has stipulated that any international contractor should be coupled with a local contractor to form a JV and in practice this means that in each of the development packages awarded to date, the percentage of local contactor input ranges from 20 to 50 per cent and this helps contribute to the local economy.

From a long-term fi nancing perspective, the Ministry of Finance is funding QR but after the rail network goes live, revenues will come largely from ticketing, from retail and also from media since there will be advertising in stations.

There are many stages to go through

yet before the network goes live but already QR has plans in motion to ease the transition to full-blown rail operator. “In the last few months we have been running workshops and getting all the staff together to discuss our strategy and how we shift from a construction company into an operations company and this is the main focus. We want to make sure that we keep QR as a performance driven organisation to deliver on this strategy,” says Al Muhannadi.

Now that much of the hard work has been done, it could be a propitious time for European companies and contractors to get involved in the project as a partner or a supplier. Al Muhannadi concurs and is positively seeking inputs and expertise from a wide variety of sources. He says, “Rail is a newly established industry for Qatar and there are opportunities from A-Z in this sector. We have a lot of consultancies involved and there is an opportunity from the UK for consultancy services for long distance supervision. The two main parts of the main contracts are civil and architecture and we are holding awareness workshops to explain our strategy. Around 50 per cent of the project is MEB and architecture branding. We would also like to see factories established locally to manufacture elements of the network that would require frequent repair, for example replacement track, consumable materials like chairs. We would like to localise this type of procurement. The idea would be to serve QR but also other GCC countries’ rail networks.”

QATAR 9 December 20148 World Business Times is a leading global provider of business intelligence and insight

Qatar’s Communications Regulatory Authority faces no small challenge each day: promoting and safeguarding the rights of telecoms consumers while at the same time creating awareness of the responsibilities of the li-censed service providers within the country.

HOW a nation is regulated can be the make – or break – for overseas investors looking to do business in a country for the fi rst time. In reality there are few areas that could be considered easy to regulate, but the communications sector must be tougher than most. Tougher because it is an area that is constantly changing with technological developments and also because it is such a public domain, open to the scrutiny of many and consequently often in the spotlight.

Setting up a regulatory body within the fast developing state of Qatar to monitor and manage the communications space was very ambitious, but it appears to be paying handsome dividends. The body responsible for the communications space in Qatar is the Communications Regulatory Authority.

The CRA was established in 2014 and regulates the telecommunications and information technology sector, postal services, access to digital media and spectrum. Balancing the rights of consumers

with the needs of service providers is at the heart of everything the CRA does and the man charged with making it all happen is Saleh Al-Kuwari (pictured). The CRA will ultimately be managed by a president, but until a president has been appointed, day-to-day operations of the CRA are being managed by the CRA Sub-Committee with Al-Kuwari as its chairman. In addition to managing the day-to-day operations of the CRA, Al-Kuwari is also responsible for developing the regulatory framework in the telecoms sector in Qatar.

Al-Kuwari’s previous experience includes periods when he was deputy assistant secretary general of the Regulatory Authority division of the Ministry of Information & Communications Technology (ictQATAR) and he has also contributed to the Qatar Electricity and Water Corporation in administrative and IT roles. Al-Kuwari is ably assisted by a management team that includes Dr Pascal Dutru, head of legal for the CRA. Dutru was formerly general counsel of Clear Channel in France and of Alten SA, a listed IT services company.

Although the CRA is a newly-established body, its foundations go back some years. “The need for the CRA was identifi ed back in 2006. We needed a regulatory body in the country for the telecommunications sector so the CRA was established recently to regulate both the telecommunications sector as well as access to digital media within Qatar. We needed an independent body to do this in order to be

in line with international best practice. It had to be a government body to make sure that the telecommunications sector was being regulated to international standards,” says Al-Kuwari.

Prior to its establishment, there had been a movement to change the role of ictQATAR, by the supreme council, into a ministry but in the process it became clear that the role of the regulator could not be undertaken by a ministry. There was a need for a separate body and the decision was taken early on to make it an independent body.

Even so, once established, the CRA was still faced with the same sorts of problems that any newly established regulatory body faces. Al-Kuwari says, “The major challenge we face is that, for the time being, we are a regulatory body in transition. We have a decree establishing the authority but the law that will defi ne everything, including all of our powers and authority, will be in a further telecommunications law that has yet to be issued. So we are working on the new law and will engage our stakeholders to discuss it and develop it. For the present, we are still working under the former telecommunications law, which creates some discrepancies because it was created for the supreme council and not for a regulatory authority.”

The task facing the CRA at present is to try to enhance the current telecoms law and see what is missing and what else needs to be amended to make it timelier and more relevant. At present the CRA lacks real enforcement powers and this is something that is being addressed. Clearly this is the kind of 360 degree review that requires input from all parties. “We need to get our stakeholders to understand what we are

aiming at,” says Dutru. “Our stakeholders are seven licensed service providers, two fi xed and mobile, ooredoo and Vodafone… QNBN is in charge of rolling out ICT infrastructure only, Es’hailSat the satellite service provider and some other satellite service providers. Today these are our major stakeholders.”

Another signifi cant part of CRA’s role is about education. “We need to explain what we are doing, why we are doing it and what is the objective,” says Al-Kuwari. “Shortly after we were created, we issued a policy statement explaining how we are adding to the industry. At the same time we also had a public hearing explaining what we are trying to do. We need to get the stakeholders on board and get them to understand that we are here to help them and also to help Qatar develop outside the oil and gas sector.”

In the meantime, the CRA is pressing ahead as fast as it can. The telecommunications sector strategy for the

nation is complete but the CRA is actively engaged in updating and refi ning it to incorporate access to digital media. “Most regulators around the world are only concerned with regulating networked service providers and if we include access to digital media we need to take into consideration their use by the customer, which is a different mindset, and is why we need to review what we had in mind in order to see where the bottlenecks are and how we will need to intervene. At the end of the day we really need to be focused. We don’t need to issue 1,000 pages of regulation that are useless,” says Al-Kuwari.

The CRA knows that one of the core challenges it faces is winning over the hearts and

minds of industry players, both at home and abroad. “The fi rst thing we did was issue the policy statement. This was the fi rst layer,” Dutru says. “We need to educate and

communicate and this means that we need to change the way that we are working because we were seen previously as a black box. We were receiving information and providing an answer without necessarily explaining properly what was being done. The fi rst step in overcoming this is being more transparent in the process and this is something that we are committed to and we have made another statement around transparency explaining what we will publish and how we will publish.”

The second change facing the authority lies in the way that the CRA develops policies that have grown in the recent past to be much more collaborative. “We have many more one-to-one meetings with stakeholders or with the industry all together in order to communicate our approach. We also know that we need to improve ourselves and so we have established a new internal department for Planning & Quality whose objective is to improve our own practices,” says Dutru.

Naturally, the set-up and establishment

phase of the CRA is only the fi rst step. The really hard work will begin once operations have started fully and the authority can look ahead and plan and ensure that the ICT sector in Qatar assumes a leading role both regionally and globally. What do the next fi ve years hold in store? “What we are looking for is not a volume of regulation: we really want to focus. We want to see that the share of telecoms services within GDP continues to grow. We also want to make sure that customers have a choice and that they receive the service that they want to receive… Choice, diversifi cation and quality of the service. If we achieve that in the coming years then I think that it will have been a success. We are working here for the consumers in Qatar.”

Investment in the ICT sector in Qatar is very important and will add to the consumer experience as well as the economy and the CRA is working to open the door for such innovations by creating a friendly environment for both business and consumers.

One of the major challenges facing the CRA over the next few years will be to try to encourage the same level of competition in the fi xed line sector that it has managed to achieve in the mobile sector. This is the way to ensure that the end user, the consumer is not over-paying for services. “What we have in mind for the future is to build a safety net for consumers so we have worked a lot on a consumer code, advertisement code, consumer protection policy and by the end of the year we will have fi nalised a quality of service framework that outlines minimum service levels for all the service providers. Once again, we are really focusing on the customer benefi ts,” says Al-Kuwari. “The biggest difference from fi ve years ago is that now consumers know their rights in the telecoms sector. We enshrined consumer protection as part of our telecoms law in 2006. Consumers know where to go if they have issues with service providers.”

Choice, diversification and quality of service

Know your rightsThe Qatari Communications Regulatory Authority was established in order to promote and safeguard the rights of telecommunications services consumers within Qatar, while creating awareness on the responsibilities of the licensed service providers.

KARREN PRITCHARD BUSINESS REPORTER

Amel Salem Al-Hanawi, Consumer & Government A�airs Manager

Saleh Al Kuwari, Chairman of CRA Sub Committee

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THE Qatari Communications Services Authority has created a specifi c department for Consumer and Government Affairs, to ensure that telecom services customers are aware of their rights before Qatari service providers and to ensure they are protected.

This key initiative aims to bring the Qatari telecommunications industry to the forefront of customer satisfaction. In order to achieve such ambitious goals the CGA has published the following activities as strategic to meeting its goal of being the customer protection wing of the CRA:

• Developing and managing a complaints solution process which includes a 24 hour complaints hotline;

• Drafting a comprehensive Consumer Protection Policy and monitoring its compliance;

• Issuing a Marketing and Branding

Code and ensuring its adherence by market participants;

• Developing and maintaining the ‘Arsel’ mobile application which is a state-of-the-art complaint and feedback lodging tool for consumers;

• Publishing an online live coverage and network map for Qatar;

• Managing the celebration of the World Consumer Rights day as an event that promotes consumer protection while creating awareness on telecoms rights and responsibilities within Qatar; and

• Conducting and analysing research and annual surveys in the promotion of telecoms consumer protection within Qatar.

The above CGA’s initiatives aim to deliver on the Qatari CRA’s mantra of putting consumers fi rst. They are designed to engage with the public, enhance consumer experience, and make it as easy as possible for telecoms services users within Qatar to fi le a complaint or provide feedback through dedicated phone lines, dedicated fax numbers, online, through the Arsel App and even by visiting the CRA.

Consumers in Qatar are increasingly benefitting from innovative telecommunication services