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Ease of Doing Business in Qatar Research Paper

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Updated: Jan 21st, 2020

The World Bank created an index that determines the ease of investing in different countries across the globe. In ranking countries, the ease of doing business index considers numerous factors, such as starting a business, dealing with construction permits, registering properties, enforcing contracts, getting credit, paying taxes, trading across borders, and resolving insolvency.

Countries having higher rankings are better placed for conducting business operations, as their policies and regulations protect property rights of business people. Qatar’s economy has different business regulations, and their enforcement that makes it suitable for doing business as compared to other nations.

With ranks of 39, 38, and 36 out of 185 economies in 2010, 2011 and 2012 respectively, Qatar’s business environment remains one of the productive regions for investment in the Arab World (Doing Business in Qatar n.d.). Notably, the 2011 International Monetary Fund report indicated Qatar as having the highest GDP per capita in the Arab peninsula.

Qatar’s business environment has witnessed drastic changes in the ways in which it handles business ventures. In analyzing how entrepreneurial opportunities have changed in Qatar since 2004 to date, the report compares the aforementioned economic sub-indices as per the 2004 World Bank report on Ease Of Doing Business and the 2010, 2011, and 2012 reports. Further, the discourse discusses the fluctuations in key economic indicators of Qatar, such as unemployment rates, Gross Domestic Product (GDP), the Consumer Price Index (CPI), and inflation.

Even though these indicators provide insufficient details on reform guidance and efficiency of regulations across different nations, their focus on regulatory environment for business provide benchmarks for determining the ease of doing business in a given country. Entrepreneurs have been going over numerous bureaucratic and legal hurdles to start a business in Qatar.

The many hurdles that existed in 2004 have been simplified and streamlined to offer a more business-friendly process. For instance, the cost, time, and procedures for commencing a business reduced tremendously during this period. Reserving a unique name for a company with up to 50 employees at the Ministry of Business and Trade takes less than one day with a cost of QAR 1,000.

By 2011, the entire process of checking name availability, name reservation, and processing of payment were conducted online (Qatar: Data n.d.). This is a key improvement in a process, which used to take close to one week using the manual option. A company with a start-up capital of 10 times the Qatar’s economy per capita GNI takes one day to acquire approval of articles of association from the Department of Commercial Companies Inspection.

This department confirms if the document’s provisions are in line with or adhere to laws and regulations of the land. At this stage, firms pay QAR 1,500 to be issued with the Bank Certificate (Qatar: Data n.d.). Qatar has gone ahead to merge many procedures that existed back in 2004 to a single unit to reduce the time limit for starting a business.

Notably, the number of days required to start a business reduced from 49 days in 2004 to 14 calendar days. At the same time, the average cost dropped to 41% of income per capita from 86% in 2004. Just like Bahrain, Qatar improved the ease of starting a business during the 2011/2012 financial year by reducing the number of stop shops, and went on to simplify post-registration requirements at the municipal and district council levels (Doing Business in Qatar 2012, 2012).

Prior to 2004, starting business in Qatar was extremely difficult, just like in most of the economies. Over the years, policymakers have carried out major overhaul in order to ease the process of starting a business in the formal sector. Entrepreneurs, especially women in Qatar had been facing more hurdles in securing permits to launch businesses given the cultural beliefs in the Islamic country.

However, the government involvement has seen many women entrepreneurs start their own business. In 2009/2010, Qatar was among the 42 economies that reformed their registration formalities to woo more investors. Reforms like putting registration procedures online, having a one-stop-shop and having no minimum capital for entrepreneurs make it easy to start a business in the 186 economies.

While most Middle East countries have many red tapes and regulations on staring businesses, this is not the case in Qatar since it has liberal rules in the business environment. In registering a company, opening of a bank account and depositing the minimum capital takes one day with no cost, and after passing through a one-stop shop at the Ministry of Business and Trade, the Ministry of Justice takes only a day to authenticate the article of association (Starting a Business in Qatar n.d.).

The cost has also reduced to QAR 24 for the first two shareholders and QAR 9 for each additional shareholder. Registering with the Chamber of Commerce and Industry and the Commercial Registry, obtaining the signage and trade licenses from Doha Municipality and registering for taxes and acquiring a Tax Identification Number (TIN) take one day each.

Notably, the first two procedures occur simultaneously to reduce time wastage that had been the case in the past. At a cost of QAR 150 and duration of two days, entrepreneurs receive the company seals (Starting a Business in Qatar n.d.). The period between 2004 and 2010 has witnessed great reforms in starting a business in this Arabic nation. Subsequent improvements have also come up in the following years, with 2011 marking the end to filing of similar information with different government agencies.

Markedly, the changes in using single interfaces in Qatar business registration process does not only save money and time, but also enhance transparency. The simplified registration formalities in Qatar reformed business entry in 2010, such that in 2011 and 2012, the country recorded a tripled number of new businesses. According to economic watch, the period between 2004 and 2012 saw Qatar record an annual increase in the GDP from $46 billion US Dollars to $185 billion US Dollars.

The Real GDP Growth for Qatar 10 years ago stood at 6.30%, but in 2009, the value hiked to 17.70% (Qatar – All Economic Indicators 2013). During the same period, the Consumer Price Index (CPI) moved from 2.30% to 15.10%. In terms of unemployment rate, Qatar has the lowest rate in the Middle East at 0.4% by 2011 and 0.5% as at 2012. Unemployment rate is the population of a country that is actively seeking for jobs dived by the total labour force.

In 2001, the country recorded the all-time highest unemployment rate of 3.9%, and after instituting new policies in the business environment, many entrepreneurs began to invest in Qatar. In dealing with construction permits, Qatar accepts planning permission from architects only on Thursdays, Tuesdays, and Sundays. The cost of acquiring this certificate has remained at QAR 100 since 1998 (Doing Business in Qatar – World Bank Group n.d.).

However, he completion time has been reduced to 3 days; this is in comparison to one week in 2004, where the government possessed all lands in Doha, and only lets out to private citizens. In constructing warehouses, entrepreneurs meet different agencies from the initial stage of obtaining a planning certificate to the final stage of obtaining telephone connection.

The introduction of new agencies helps in reducing the processing time for applications and implementation of different services within the warehouse. With well-orchestrated building laws, Qatar has laid adequate standards and building practices that aim at protecting the public. The whole procedure takes approximately 90 days; this is after implementing new regulations of revamping the construction formalities.

In 2011, Qatar topped the all the 188 economies in terms of minimal costs of acquiring construction permits; it had 0.8% cost of income per capita. This ensured low cost for builders and regulators, thus expanding the construction industry to a GDP of 11% in 2010 from 6.3% in 2004. A close comparison to Peru on the economic indicators, the global financial recession of 2009 slowed down the overall economic growth.

However, the country made a strong comeback such that by the 4th quarter of 2011, houses in San Juan de Lurigancho district in Lima went up by 19.9% from the previous year given that it had higher effective demand (Alcazar & Andrade 2008). Even though the district is of low socioeconomic status, the Peru’s GDP growth of 6.3% by 2012 has kept the district in an upward growth.

Markedly, in the third quarter of 2013, the GDP hiked to 4.4% as compared to a similar quarter of the preceding financial year. A study on the employment rate shows slight decrease after the global financial meltdown, from 8.4% in 2009 to 7.5% in 2012. However, the inflation rate has been above 3.2% in 2011 and 2012. The above statistics of economic indicators prove that Peru remains one of the fastest-growing economies in South America.

In San Juan de Lurigancho, there is great income inequality and disparity. A relation on the average family income per capita reveals that the district of San Juan de Lurigancho has the lowest value among the 43 districts of the Metropolitan of Lima, at $192. A district like Puente Piedra has $179, Miraflores has $384, and San Isidro has the highest family income per capita of $423 (Alcazar & Andrade 2008).

The process of accessing credit in Qatar has changed since 2004; the country stands out for its regulations in the use of movable collaterals and use of modern secured transaction system. Notably, has moved to join the ranks of the US, Malaysia, South Africa, and Singapore in improving legal rights of lenders and borrowers. In 2004, Qatar had not accepted the use of inventories and accounts receivables as collateral.

However, it took a drastic move in 2007 to allow small and medium-sized companies to use them as security for loans. In South Asia, Qatar is among the 8 economies that have ease access to credit by availing credit information through public credit registries. Even though the 2009 global financial meltdown adversely affected most economies in terms of loan acquisition and repayment, Qatar took a positive turn in this aspect given the ease in information sharing among creditors.

Notably, Organisation for Economic Co-operation and Development (OECD) members in high-income economies recorded an increase in credit information coverage from 54% to 67% in 2010 and 2011 respectively (Starting a business in Qatar n.d.). During the same period, Qatar worked hard to institute secure transaction legislations. In addition, the country reduced the total cost of enforcing collateral and the percentage of income per capita, as well as the duration required to seize and sell collaterals to one week.

This move improved the legal rights of creditors, as they feel protected. Evidently, this nation in the Arab Peninsula has attempted to allow practices that support access to credit, such as allowing general description of collateral, maintaining of a unified registry, distributing credit information to all stakeholders, and allowing collateral description. These processes have created a levelled-playground for all firms, both small and large, to access credit.

From 2004, Qatar has initiated policies that aim at protecting investors’ interests in order to attract more investors. The petroleum-rich country took strong position in handling insider trading and dilution of share value as ways of increasing its strength in protecting potential investors. However, the moves by Qatar do not match Bangladesh, China and Pakistan’s moves in protecting investors.

The three economies have remained at the forefront since 2004 to date in defining clear duties for directors and offering more information disclosure. Therefore, Qatar still has to improve its laws that regulate investor protections. Nonetheless, it is worth noting that minimal changes in protection of investors made most companies to go public, and even increased the number of companies trading at the Doha security market.

Qatar is in the right path of protecting investors in order to increase their confidence; it has allowed rescission of prejudicial related-party transactions, regulated approval of related-party transactions, defined clear duties for directors, and allowed access to all corporate materials during trials. In 2012, Qatar recorded high number of investors into the petroleum industry and the sporting activities due to its impressive attempts to create an investor-friendly business environment.

In declaring insolvency in Ancient Rome, one was being cut into pieces; however, Qatar has reviewed its bankruptcy laws to make it more attractive to defaulters. The reforms in the judicial system have resulted in creation of special courts that handle bankruptcy cases. Business people have to follow clearly defined procedures to close their businesses.

In bid to create a favourable business environment, Qatar just like Peru and China reviewed their total cost of closing businesses, as well as the period and procedures that entrepreneurs have to follow. Qatar economic changes overtime has brought more confidence in investors and other players in the economy, such that it has recorded positive results on key economic indicators since the review of the laws that have been hampering business operations.

With increasing ease of doing business in Qatar, economists forecast the unemployment rate to decrease further to 0.3% basing on the argument that the growing economy will absorb more workers. With the hosting of the World Cup in 2022 in the offing, key investors in sport facilities, hotel and restaurant, construction, communication and transport are streaming into the country, implying growth in the economy.

In 2004, households’ consumption was at QAR 20,166 million, which represented 17.5% of the total GDP, and in 2010, households consumption increased to QAR 68,758 Million, a value that represented 1.8% of the total GDP.

List of References

Alcazar, L., & Andrade, R 2008, Quality of Life in Urban Neighborhoods in Metropolitan Lima, Peru, Wikiprogress. Web.

Doing Business in Qatar n.d., HSBC Global Connections. Web.

., Doing business, Web.

Doing Business in Qatar 2012 2012, QNB Group. Web.

Qatar – All Economic Indicators 2013, Quandl. Web.

: Data, The World Bank. Web.

., Doing Business – World Bank Group. Web.

Starting a business in Qatar. Web.

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IvyPanda. 2020. "Ease of Doing Business in Qatar." January 21, 2020. https://ivypanda.com/essays/ease-of-doing-business-in-qatar/.

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