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Manufacturing Sector Profile

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The abundance of competitively priced energy makes Qatar the natural choice for energy-intensive heavy industry. As a result, the major sectors within Qatar’s Industrial mix currently include large-scale fertiliser production (feeding directly from the processed LNG), Steel production, and Petrochemicals. A large-scale aluminium plant has also begun production in recent years.

Qatar has also begun moving downstream into the manufacture of more refined and finished goods, particularly by SMEs. Qatar Intermediate Industries Holding Company (Qatar Holding), a subsidiary of Qatar Petroleum, was established by the Emir in 2005 with the mandate to set up, either alone or in partnership with local businesses, downstream “intermediate” industries. The organisation focuses primarily on industries that use Qatar’s heavy industry output – steel, petrochemicals and fertiliser – as inputs. Qatar Holding encourages private sector partners to establish joint ventures with foreign companies in order to benefit from necessary technological and marketing expertise, and if required, financing capability.

A light industries zone at Mesaieed Industrial City (MIC) is further supporting the growth of the downstream industrial sector. Whilst MIC is also home to a number of the heavy industries, including Qatar Aluminium and Qatar Steel, as at April 2011, 86 factories were in light industries. As Qatar heads towards the FIFA 2022 World Cup there is an expectation that the light industries sector in MIC will grow, for example to satisfy the demand for building materials such as Asphalt and concrete blocks.

Qatar Automotive Gateway (Qatar Ag) was launched in 2011 and demonstrates the country’s move toward more technical manufacturing. Qatar Ag is focused on achieving projects that leverage Qatar’s industrial and financial strengths, such as aluminium components, Lithium-ion battery materials, lightweight advanced materials, and specialized automotive assembly. In January 2012, for example, Qatar Ag entered into a memorandum of understanding to establish a partnership in Qatar with Prodrive – a leading carbon composite producer and supplier to the automotive industry.

According to QNB Capital’s September 2011 publication, ‘Qatar – Economic Insight’, 8% of Qatar’s labour force is employed in the manufacturing sector and in 2010 this sector accounted for 22% of Qatar’s non-oil and gas GDP (11% of GDP in including Oil and gas).

The manufacturing sector has maintained a fairly consistent contribution of between 17%-24% of non-oil and gas sectors to Qatar’s GDP between 2006 and 2010, as the rate of growth is broadly consistent with the growth of the wider economy.

manufacturingGDP.png

Source: QNS and QNB Capital analysis

Qatar Development Bank (QDB) provides start-up funding for the following activities in the manufacturing sector:

  • Construction of a factory.
  • Installation of business-related machinery, equipment and other fixed assets.
  • A working capital facility before the beginning of the production process.

For existing businesses QDB provides funding for costs involved in business expansion such as relocation of a factory and installation of new machinery to increase production.

The Al-Dhameen guarantee program allows manufacturers to fund the purchase of tangible fixed assets and intangible assets and provides working capital.

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