Overseas Market Profiles

Major Economic Indicators

Source: IMF, EIU
* IMF estimate
^ January-August

Recent Developments

• Oil and gas are Qatar’s major exports and drivers for economic growth. With various gas projects completed in recent years, Qatar has been able to maintain double-digit economic growth despite the financial tsunami.
• Consumer price inflation was running high in 2008, at 15%, but it declined to -7.4% in the third quarter in 2009, largely due to lower commodity prices after the financial tsunami.
• Despite a shrinkage in global trade, Hong Kong’s exports to Qatar rose by 5.6% year-on-year (YoY) in 2009.

Current Economic Situation

Qatar has been able to maintain fast economic growth over the past few years, thanks to high oil and gas prices, as well as rapid gas capacity expansion. Qatar’s liquefied natural gas (LNG) production has been surging since 2003, from about 13 million tonnes per year (t/y) to 32 million t/y in 2008. It is expected to rise to 77 million t/y in 2011. As more gas projects are to become operational in the coming two years, and commodity prices may edge higher in face of a global recovery, the country is expected continue its strong growth in the next few years. Owing to high levels of construction activities, Qatar’s population is expected to grow, as foreign workers come to participate in the country’s projects. Consumer demand will in turn be given a boost.

Qatar uses its surplus accumulated from oil and gas wealth to establish the Qatar Investment Authority (QIA). The Sovereign Wealth Fund Institute estimates that the QIA has assets worth US$65 billion. The QIA and its subsidiaries invest in leading companies in many sectors, such as hotels, in the hope that their experience can help lift Qatari standards, and diversify the economy.

Qatar’s media sector is in a leadership position in the Gulf. Al Jazeera, a news network based in Doha, is renowned for its broadcasting independence. The broadcaster has centres in Doha, Kuala Lumpur, London and Washington DC, making it a Middle Eastern broadcaster with a global reach.

Trade Policy

Qatar is a member of the World Trade Organisation (WTO), and maintains a liberal trade regime.

Importers, who must be Qataris, or companies that are wholly owned by Qataris, have to register with the Qatar Chamber of Commerce. Non-Qataris are barred from engaging in distribution activities in Qatar.

Qatar maintains a strong tie with other fellow members of the GCC (which consists of Saudi Arabia, Kuwait, Oman, the UAE, Bahrain and Qatar). In November 1999, the GCC agreed to form a customs union, which took effect from January 2003 to zero-rate the goods traded within the GCC. To qualify for zero-tariff, such goods must be accompanied by a certificate of origin (CO) by the chambers of commerce in the GCC. Under the accord, goods imported into the GCC area can be freely transported subsequently throughout the region without paying additional tariffs. On the other hand, the accord establishes a single external tariff of 5% applying to 1,500 imported items from non-member countries. As a result, Qatar’s customs duty is calculated on the CIF value at the rate of 5% for most Hong Kong products. It also provides a list of items that can be imported duty-free.

Qatar also offers custom-duty exemptions to the following products:

• Food products such as grains, livestock, tea, coffee, sugar, rice, infant milk and other essential consumer items;
• Equipment, materials and other supplies belonging to government entities or state companies;
• Personal effects and used household appliances and furniture belonging to foreign employees arriving in Qatar for the purpose of residence.

Imports are valued at an ad valorem basis, based on the CIF value. When only the FOB price is available, duty is based on the 15% on the FOB price.

Customs duty exemptions are not normally granted. But government policies allow exemptions to Qatari joint ventures which the foreign party has made a substantial investment. In recent years, blanket duty exemptions for construction materials and equipment imports have been granted to major contractors working on infrastructure projects.

Qatar’s currency, the Riyal, is pegged to the US dollars at 3.64. Qatar, along with Saudi Arabia, Bahrain and Kuwait, remain committed to setting up the Gulf Monetary Union, and aims at creating a single currency among the four GCC members.

Hong Kong's Trade with Qatar

Hong Kong's total exports to Qatar grew by 5.6% year-on-year (YoY) to US$48.8 million in 2009, after surging by 31.1% for 2008. Major export items in 2009 included telecommunication equipment and parts (US$21.5 million, 44.1% of total, +28.2% YoY), watches and clocks (US$7.8 million, 15.9% of total, +11.6% YoY), and jewellery (US$3.1, 6.4% of total, -35.8% YoY).

On the other hand, Hong Kong's imports from Qatar dropped by 42.1% YoY to US$13.5 million in 2009, after rising by 18.9% in 2008. Of the major imports, polymers of ethylene in primary forms topped the list (US$12 million, 88.8% of total, -42.1% YoY), followed by jewellery (US$848,000, 6.3% of total, +278.7% YoY).

Source: Census & Statistics Department, Hong Kong

^ Since offshore trade has not been recorded by ordinary trade figures, these numbers do not necessarily reflect the export business managed by Hong Kong companies