QE venture market
protecting brands
qatar success story
intellectual property
MAY 2012 www.privatesectorqatar.com/en
market research
taxation
CONTENTS May 2012
Investment 30 LENDING A HAND
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Aparna Shivpuri Arya caught up with Colin Milton, Deputy Director, Listings Department, Qatar Exchange, to know about their latest initiative, QE Venture Market, for SMEs.
Business Growth 32 BEYOND THE DROP The Qatar National Vision 2030 aims at enhancing the role of the private sector in the economy. Howard Kitson, Country Head, Mashreq-Qatar tell us about the country’s efforts to promote SMEs as part of the national vision.
SME Toolkit News
SMEs
10 UPDATES
22 WALK THE TALK: PROMOTING SMEs
Get to know about the latest events and happenings in Qatar that will have an impact on SMEs and large enterprises.
Mouyaed Makhlouf, Regional Director, MENA, IFC talks to Private Sector about their work in the region and what programmes they have to encourage SMEs.
Entrepreneurs 34 REWARDING SUCCESS Enterprise Qatar (EQ) hosted the EO Majlis and the Ernest & Young Entrepreneur Award 2011. We bring you highlights of both these events.
Business setup 36 KNOW YOUR NEIGHBOURHOOD
Shelf Life
Management
14 Products
26 WHAT IS YOUR STYLE?
Take a look at the new launches that make your work life easier. It’s not like you need an excuse!
Elias Mazzawi, Managing Director, EMS MENA, highlights the important points for managing an SME.
Before setting up a business, it is important to match your expectations with what the demands of the targeted market are. Bedaya Centre tells us how to go about with your market research.
Human Resource SMEs
Success Story
16 THE ONE STOP SHOP
28 MAKING EXCELLENCE A HABIT
Qatar Development Bank (QDB) launched it’s SME Toolkit to help and promote entrepreneurs and startups in Qatar. We bring you a snapshot of the event.
Sheikh Naif Bin-Ali-Al-Thani, Chairman, National Group, talks to us about his journey and what are his plans for the future.
38 GET READY FOR THE MARKET How do you know that your CV caters to the expectations of the job market? Elsbeth Blekkenhorst and Danielle Maynard-Duttenhofer, Founders, Global Women Qatar, explain to us how to get our CV in order for the Qatar market.
36
Legal 40 PROTECTING WHAT’S YOURS In the last decade, Qatar has made real progress towards putting in place regulations for intellectual property. David Harper, Associate, Clyde &Co, explains to us the importance of Trademarks for business.
Marketing 42 ON YOUR MARKS Following up our previous article on Trademarks, Mark Hill and Fiona Robertson, Media Lawyers, therightslawyers, talk about creating and protecting brands.
42 Tax 44 GET THE NUMBERS RIGHT What does the new tax law (Law No.21 of 2009) mean for SMEs? Paul Smith, Partner, Price WaterHouse Cooper, answers some of the key questions.
Country Update 48 ECONOMIC LANDSCAPE Qatar has prospered in the last several years and held its own during the tumultuous times in the region. We take a look at consumer confidence in the country.
48
About town 52 Fostering inclusive development Qatar recently hosted the UNCTAD XIII, where discussions were held on various aspects of development. Private Sector brings you the highlights from the international event.
Industry Watch 54 WINDS OF CHANGE The Arab Spring has affected a lot of economies in the region but has also given rise to the entrepreneurial spirit of the region.
Publisher Dominic De Sousa Group COO Nadeem Hood Managing Director Richard Judd richard@cpidubai.com +971 4 440 9126 EDITORIAL
EDITORIAL
Editor - English Aparna Shivpuri Arya aparna@cpidubai.com +971 440 9133 Editor - Arabic Basel Al Bannoud basel@cpidubai.com +971 440 9140
Join the ride
Contributing Editors Mike Byrne mikeb@cpidubai.com +971 440 9105 ADVERTISING
April was a busy month for us, with events galore and the usual editorial deadlines. But we are here again, with another issue, filled with interesting discussions and informative articles on various aspects of doing business in Qatar.
Commercial Director Chris Stevenson chris@cpidubai.com +971 4 440 9138 Sales Director Francis Morgan francis@cpidubai.com +971 4 440 9163 CIRCULATION Database and Circulation Manager Rajeesh M rajeesh@cpidubai.com +971 4 440 9147 OPERATIONS AND DESIGN Operations Director James Rawlins jamesr@cpidubai.com +971 4 440 9108 Production Manager James P Tharian james@cpidubai.com +971 4 440 9146 Art Director Kamil Roxas kamil@cpidubai.com +971 4 440 9112 Head of Design Fahed Sabbagh fahed@cpidubai.com +971 4 440 9148 Photographer Cris Mejorada cris@cpidubai.com +971 4 440 9108 DIGITAL SERVICES www.smeadvisor.com Digital Services Manager Tristan Troy Maagma Web Developers Jerus King Bation Erik Briones Jefferson de Joya Louie Alma online@cpidubai.com +971 4 440 9100 Published by
Last month, QDB launched its SME Toolkit, supported by IFC and powered by IBM. It was an engaging event with panel discussions and presentations. The event was packed with enthusiastic entrepreneurs and businessmen, wanting to know how they can leverage from the toolkit. We had even set up laptops outside for people to get a feel of the toolkit. The panel discussion had experts from all fields, who gave advice on how to start and manage a business. With 90% of enterprises in the region being SMEs, there couldn’t be a better time to start this initiative. The toolkit provides information right from the business idea to the management stage. The other big event last month was of course the UNCTAD XIII and the World Investment Forum. The theme of the thirteenth session was Development-centred globalisation: Towards inclusive and sustainable growth and development. This fits perfectly with Qatar’s vision and the country was also handed over the presidency of UNCTAD for the next four years- a first for the Arab region! Keeping up with the theme, we saw panel discussions on women development, technology, international trade, investment and much more. Moving on, we also got talking to the Chairman of the National Group to know about his journey and what is his mantra for success. We also bring you a detailed article on the taxation system in Qatar and what do SMEs need to take notice of. Carrying forward our agenda to support SMEs, we met up with Qatar Exchange to know about their new initiative for SMEs. And if you are looking for a job and a little lost on how to prepare your CV, don’t forget to read our article by Global Women Qatar. Like I said earlier, there will never be a better time to be an entrepreneur or startup in Qatar. So jump on the bandwagon ! We hope you will enjoy the read and soon we’ll be expanding our team! You’ll get to meet them in our next issue. So keep reading!
Aparna Shivpuri Arya, Editor (English), Private Sector Qatar 1013 Centre Road, New Castle County, Wilmington, Delaware, USA
Branch Office PO Box 13700 Dubai, UAE Tel: +971 4 440 9100 Fax: +971 4 447 2409
Printed by
Al Warq Printing Press, Qatar
Distributed by
Dar Al Sharq Distribution © Copyright 2012 CPI All rights reserved While the publishers have made every effort to ensure the accuracy of all information in this magazine, they will not be held responsible for any errors therein.
Talk to us: E-mail: aparna@cpidubai.com Twitter: @PrivateSectorQA Facebook: www.facebook.com/PrivateSectorQatar LinkedIn group: Private Sector Qatar
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advisory Board Ms. Amal Al-Mannai
Dr. Hessa Al Jaber
Ms. Al-Mannai is the Executive Director of the Social Development Center (SDC).
Dr. Jaber is the Secretary General of ictQATAR.
Gail Gosse
Hamad Mohammed Al-Kuwari
Gail Gosse, is the Dean of the School of Business at College of North Atlantic-Qatar.
Hamad AL-Kuwari is the Managing Director of Qatar Science & Technology Park.
Professor Nitham M. Hindi
George M. White, Ph.D.
Professor Nitham M. Hindi, is the Dean of College of Business and Economics at the Qatar University.
Dr. White is Associate Teaching Professor of Entrepreneurship at Carnegie Mellon University-Qatar.
Abdulaziz N. Al-Khalifa
Hamad Al Abdan Al-Marri
Mr. Al-Khalifa is the Executive Director, Strategic Planning and Control at Qatar Development Bank (QDB).
Eng. Hamad Mohamed Al Abdan is the Chief Business Operation Officer at Enterprise Qatar.
Raed Al-Emadi
Bassam Salman
Mr. Al-Emadi is the Deputy CEO, Silatech.
Mr. Salman is Executive Assistant, Qatar Chamber of Commerce & Industry.
For more information, please visit www.privatesectorqatar.com/en
News
13 major Qatar plastic companies participate in NPE 2012 USA
Under the auspices & organisation of TASDEER, the exporting arm of Qatar Development Bank (QDB), 13 major Qatar companies took part in the exhibition “Plastic Industry 2012” in the United States, Conference Center in Orlando, Florida, from 1-5 April. The Bank through TASDEER bore all expenses and the financial cost to all 13 companies, under the QDB pavilion. Commenting on this occasion, Mr. Mansoor Bin Ibrahim Al-Mahmoud, CEO of QDB said that the participation of 13 Qatari companies representing different sectors of the plastics industries, reflect the importance of this sector to the national economy diversified away from energy products.
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Meanwhile, Mr. Hassan Khalifa Al Mansouri – Executive Director of Tasdeer – Qatar Export Development Agency at Qatar Development Bank said that NPE 2012 is one of the most important events dedicated to the plastic industry and is aimed at discovering new plastic manufacturing technologies. He went on say that the event offers unrivalled process innovations to help automotive component manufacturers’ rise up to face the modern day challenges that lie ahead of them. He assured that NPE 2012 featured the full stream of assembly technology products for all manufacturing processes. Apart from this, it is the center for business networking, the source of knowledge, the
meeting place for industrialists to share ideas and comments as well as a stage for the newcomers from Qatar’s academic institutions to debut their performances in technologies. “The main objective of these companies from Qatar in the NPE 2012 was to develop the nation’s manufacturing industry with special attention given to the Small and Medium Industry (SMIs) to further develop and keep ahead with the competitive environment. The event showcased latest innovation and products for related industry which attracted thousands of visitors from different parts of the worlds,” Al Mansouri added.
News
Qatar’s GDP set to grow QNB Group has updated its forecasts for the Qatari economy for the period 2012-13, based on the recent release of full year 2011 GDP data by Qatar Statistics Authority. The update includes various oil price scenarios. Nominal GDP is forecast to surge by 19.8% in 2012 and rise by a further 5.4% in 2013 to QR 798bn as the nonhydrocarbons sector takes over from hydrocarbons sector as the main driver of growth. The baseline forecasts assume that oil prices will average USD 120 per barrel in both 2012 and 2013. Qatari crude oil prices have averaged USD 119/barrel for the first quarter of 2012, with an average of USD 125/barrel in March 2012. Given recent oil price volatility, it is important to consider the impact on our forecasts of various oil price scenarios. If the oil price in 2013 were to fall below to USD 110/barrel, then GDP would
contract by 1.3%. Conversely, if oil prices rose from USD 120/barrel in 2012 to USD 130/barrel in 2013, then Qatar’s nominal GDP would grow by about 12.2%, more than double the baseline growth forecast, which assumes prices average USD 120/barrel in 2012-13.
5.6% 19.8%
798 756 42%
631 41%
In its baseline scenario, QNB Group expects that hydrocarbon GDP will represent 59% of total GDP in 2012, compared to 58% in 2011 due to higher prices and increases in output. In 2013, the share of hydrocarbon GDP will fall back to 58% as QNB Group expects hydrocarbon prices and production to level off while the non-hydrocarbon sector grows strongly. In the non-hydrocarbon sector, QNB Group forecasts growth of 15.4% in 2012 and 8.9% in 2013, with the corresponding values of QR308bn and QR333bn.
42%
58% 59%
58%
The sectors with the highest contribution to nonhydrocarbon GDP are financial services, representing 26% in 2012, followed by government services and manufacturing, both with 22%. QNB Group expects government services to grow by
37% in 2012 reaching QR 67bn, mainly due to salary increases for Qatari government employees. Based on QNB Group’s baseline forecasts for 2012 and 2013, GDP per capita will be USD 112,929 and USD 114,340 respectively, which will rank Qatar as the richest country in the world.
Challenge of inclusive growth ahead of UNCTAD XIII The United Nations Development Programme (UNDP) has highlighted inclusive growth as a challenge to equitable globalisation, ahead of the thirteenth session of the United Nations Conference on Trade and Development (UNCTAD XIII). As the host and President of UNCTAD, Qatar has the opportunity over the
next four years to ensure that human development indicators of developing countries are converging faster with those of the industrialized world. Ahead of UNCTAD XIII, the UNDP Administrator Helen Clark sent a message to the conference stating,
“Economic growth needs to be inclusive and equitable to enhance resilience to crises and reduce poverty and inequality. Growth needs to occur in the sectors where the world’s poor are trying to make their living, like agriculture, and employment creation needs to fit the definition of decent work.”
May 2012
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News
Business funding clinics Bedaya Center for Entrepreneurship and Career Development successfully ran their first business funding clinic at their premises in Katara. The clinics target entrepreneurs at all stages of their business, whether they just have an idea and require feedback or are at a more mature stage of their business and require advice on funding and setting up their company. The clinics are one to one sessions where entrepreneurs can: • Discuss their business confidentially • Ascertain whether they are ready to go through the investment process • Get advice on how to get investment ready • Find out about additional support available
In their first week they met with nine entrepreneurs who were a combination of established and first time entrepreneurs. Their businesses covered a range of areas including technologies, lifestyle, retail, construction and marketing. Although the entrepreneurs had many questions on the legal requirements to setup a company in Qatar as well as funding options available, the majority of them used the sessions as a sounding board for their business idea, discussing whether their proposition is business viable in the region. At the end of each session, the advisor sets out an action plan with the entrepreneur which includes identifying improvement areas either for the individual
Save the date!
12
(presentation skills, communication skills, Investment awareness and readiness and so forth) or their business (build the business model, conduct market analysis and so forth). In some cases businesses would be at an investment funding stage and we would then shortlist them to pitch in front of investors in our business funding events. Out of the nine people they met, three of them have been shortlisted to pitch. The business funding clinics are free sessions run on Monday mornings between 8 AM and 12:30 PM and Tuesday afternoons between 4 PM and 6 PM at thirty minute slots per session. To book slots please email business advisor Yasmeen Hasan at Yasmeen@bedaya.qa.
May-June 2012
Date
Event
Location
7-8 May
2nd Annual MEP Summit and Awards
Intercontinental Hotel, Doha
10 May
Made in Italy 2012
Doha Exhibition Center
10-16 May
SPE International Production and Operations Conference and Exhibition (POCE)
Qatar National Convention Centre (QNCC), Doha
21-22 May
Qatar Construction Logistics
TBA
22-24 May
International Exhibition of Toys
Doha Exhibition Center
23-25 May
Cityscape Qatar
Qatar International Exhibition Centre
24-26 May
Mother, Baby and Kids Show
Doha Exhibition Center
27-30 May
FTTx Summit Middle East
Oryx Rotana Hotel, Doha
28-29 May
The 2nd Middle East SME Forum 2012
Grand Hyatt, Doha
2 June
"HYA" Abaya Exhibition June 2012
Doha Exhibition Centre
3-7 June
World Stadium Congress 2012
TBA
May 2012
shelf life
An exceptional series Canon Middle East unveiled the latest range of versatile, stylish and easy-to-use PowerShot A series models designed to help users capture impressive images and HD movies – anytime, anywhere. Each model combines Canon’s leading lens technology, a slim and stylish design and a range of stand-out technologies that make taking photos and recording HD movies easier than ever before. The new models feature a 28mm wide-angle lens that help to capture more of the scene, from group gatherings to eye-catching landscapes, while the 5x optical zoom on the PowerShot A810, PowerShot A1300, PowerShot A2300, PowerShot A2400 IS and PowerShot A3400 IS lets users get closer to a distant subject. For zooming in even further and capturing more, the PowerShot A4000 IS features a powerful 8x optical zoom in a
Ice cream sandwich in your pocket slim, compact body. By detecting motion and merging multiple images into one blur free image, Digital IS mode featured in the PowerShot A810, PowerShot A1300 and PowerShot A2300 minimises blur for sharp, clear shots.
HTC released their latest device the HTC One X into the Middle East market earlier this month. The first device from this manufacturer that comes with the long-awaited Android 4.0 (Ice Cream Sandwich).
For even more advanced stabilisation, the PowerShot A2400 IS, PowerShot A3400 IS and PowerShot A4000 IS feature an optical Image Stabiliser with Intelligent IS technology.
The HTC One X is powered by a 1.5 GHz Nvidia Tegra 3 chipset with 1GB of RAM and 32GB of internal storage. It fashions a beautiful 4.7 inch multitouch screen protected with Corning Gorilla Glass, and a pixel resolution of 720x1280.
Be everywhere Motorola Solutions, Inc. announced the availability in Europe, Middle East and Africa region of the rugged DS3500-ER series of extended range scanners offering the flexibility to easily scan and capture barcode information from both near and extended distances for warehouse management and other applications in the harshest industrial environments. The rugged DS3500-ER can be used both indoors and outdoors for asset management, inventory management, picking, traceability, shipping and
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May 2012
receiving applications in warehouses, distribution centers, manufacturing plants or warehousestyle retail stores. Designed for scan-intensive industrial applications, the ergonomic DS3500-ER series is available either corded or in a Bluetooth cordless version with FIPS 140-2 validation enabling greater worker mobility and enhanced security.
The phone comes with an 8 MP camera that allows you to shoot High Definition videos at 30 frames per second and take great quality still photos at the same time, along with geo-tagging, face and smile detection. The audio features of the device are powered by Beats Audio for the ultimate listening experience. HTC also packed this phone with many other features like NFC, GPS, Radio and lots more. And they’re releasing it into the Middle East market with a wide variety of accessories.
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SME Toolkit
the one stop shop In April, Qatar Development Bank (QDB) and IFC launched the SME Toolkit Qatar – an online platform to support and promote the private sector in Qatar.
A
ccording to Abdulaziz Al Khalifa, Executive Director of Strategic Development and Planning, “The SME Toolkit is the single-window solution to access information about initiating, managing and developing enterprises.” At a workshop attended by more than 100 people, QDB unveiled the localised and freely-available version of IFC’s SME Toolkit web platform in Qatar in both English and Arabic. The SME Toolkit Qatar offers entrepreneurs free,
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May 2012
online, and around-the-clock access to expert information, interactive tools and educational resources to help them implement sound business management practices, access finance, and enter new markets. Available at qatar.smetoolkit.org, the SME Toolkit Qatar supports the efforts of the Qatari government’s National Vision 2030 to enable the private sector and enhance the contribution of the private sector, especially outside of the hydrocarbon sector. Speaking at the launch ceremony, QDB’s CEO Mr. Mansoor E. Al Mahmoud said, “We are delighted to launch the Qatari version
of SME toolkit in cooperation with IFC and support from IBM. SMEs all over the world and, particularly in developing economies, face challenges to access relevant information to make sound business decisions. We envisage that this toolkit will serve as online onestop shop for private sector enterprises and entrepreneurs in Qatar to access relevant, up-to-date information to start, manage and grow their businesses.” He added “This Toolkit, which is customised with locally relevant content to serve the needs and requirements of Qatari private sector enterprises, will be implemented through various Qatari institutions and organisations engaged in the development and promotion of private sector SMEs in Qatar. This toolkit is yet another milestone for all of us, as part of
SME Toolkit
our commitment to promote the private sector ecosystem in the country” The Global version of IFC’s SME Toolkit was launched in 2002 and is available in 32 countries and 18 languages. Its various websites worldwide receive a combined five million unique visitors annually. In many places it is the largest online business support resource in the local language. “Smaller businesses are a vital part of all economies in this region,” said Mouayed Makhlouf, IFC Regional Director for the Middle East and North Africa. “This toolkit will give them the support and knowhow they need to grow and create jobs, helping drive economic growth.”According to Mouayed, only 15 % of SMEs in the region have access to finance and IFC aims to provide financing and advisory services through the toolkit. In 2006, IFC partnered with IBM to strengthen and expand the SME Toolkit’s capabilities. To date, IBM has invested more than USD three million to co-develop the product on an open-source platform, offering innovative and collaborative features. Bashar Kilani, Territory manager, IBM, spoke about the role of IBM in promoting SMEs “SMEs are one of the fastest-growing segments we work with. We are very keen to help SMEs to become larger companies. IBM has invested a lot in the know-how available in this toolkit. The SME toolkit is available to many companies around the world and we will continue to improve and contribute to the toolkit.” IBM has also set up its office in Doha in April 2012. Moving forward, in order to understand the challenges entrepreneurs face in Qatar and how the SME Toolkit can fill that gap, Maha al Essa, one of the co-founders, 974Design, presented her case. She talked about her experience as an entrepreneur in Qatar and what were the challenges and lessons learnt. 974Design was established in 2010 by three Qatari women to provide the local market with a new approach to design.
The important step in their lives came when they faced the question of what they wanted to do in life. Maha said that a quote by Richard Branson- “A business has to be involving, it has to be fun and it has to exercise your creative instincts,” helped them decide that they wanted to venture into the field of design. They prepared their business plans by attending workshops that helped them develop a good business plan and pooled their funds to finance the idea. Talking about why they decided to be entrepreneurs, Maha was quick to point out that it was about risk and self expression. They wanted to challenge themselves to be the best in the Qatari market and at the same time wanted to do something that they were passionate about. But it wasn’t all a bed of roses and the team faced challenges in penetrating the Qatari market and to get people to trust a local agency in comparison to big international organisations. However they overcame the challenge. “As a startup we relied a lot on two main things word of mouth, getting projects and meeting potential clients through our friends and family and social media, We believed it was an important aspect in growing our company, sharing our thoughts, ideas and work with people around the world,” said Maha. Another tactic that they used, was to ask people around them, with experience, who
have taken risks in their own field, what sort of solutions did they come to, how can it be applied to their situation and field. Maha did have a word of advice for all the entrepreneurs and startups present in the audience. “Always document everything you do, even after meeting send an e-mail to your clients recapping what was agreed on in the meeting. Because throughout a project you may never know what happens, project managers tend to change, team members tend to change.” When asked what would have helped, Maha was quick to reply that some legal help would have done them good. They did not know what kind of contracts should they sign, what elements should be included and so forth. Keeping all these challenges and questions in view, it was the perfect time to introduce the SME Toolkit. Amna Al-Sultan, from QDB took the stage to take the audience through the various aspects of the toolkit. Demo laptops were placed in the foyer, for the audience to get a feel of the toolkit themselves. As pointed out earlier, the toolkit is a one stop shop, a hub for information to help entrepreneurs who want to start their business or want to expand. The toolkit currently provides international and local content relevant to the Qatari market. It offers online training, interactive tools, resources (external links) to entrepreneurs and startups.
May 2012
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SME Toolkit
“We believe the toolkit is useful for every business throughout the business life cycle. The first phase is developing the idea- the entrepreneur needs information on the market. There is market overview which gives information on the different sectors of the economy, such as publications, reports, links and profile of each sector to find information on the current status of the sector and the prospect in the near future,” explained Amna.
Abdulaziz Khalifa, QDB, Mouyaed Makhlouf, IFC, Sammi Fakhoury, Al Tamimi & Co, The panel discussion started with Abdulaziz highlighting the importance of the SME sector. “SMEs are very important for Qatar but their contribution to GDP is quite low, so we do understand that there is a problem. We do not have a proper ecosystem to help SMEs in Qatar,” Abdulaziz added.
The toolkit provides information on how to write a business plan. It also provides information on the next phase of business – implementing and setup. “If you go to legal and insurance and click on incorporation you will find all information on pre registration, registration, business structure, how to establish and close a business in different sector and a step by step guide on registering a company in Qatar,” said Amna. There is also a section on human resource to get information on hiring and recruiting local and foreign employees.
Talking about the legal framework, Sami said that pledge of movable asset is a very important aspect which needs to be solved, through an asset register providing the banks with the right security for financing. Munther highlighted how SDC has a number of programmes to support entrepreneurs and SMEs and have had a few successful case studies. It has training programmes, established in collaboration with ILO to educate the entrepreneurs and impart skills to manage. “Being a successful entrepreneur is not an easy job and is a combination of experience with skill. So get enough training, be committed, have a good business plan, study the best practices and lastly always keep risk management in mind,” Munther advised.
User can also find downloadable excel worksheets, where they can plug in the numbers and get result instantly. To grow and run your business, there is no better way than giving your business visibility and help you match with other businesses. Also, entrepreneurs can register their business in the toolkit’s business directory, which will allow them to access special content which will be available soon. The SME toolkit is available in both, English and Arabic. Also, the toolkit can be accessed through the mobile phone. This is just the first phase and new features will be added- blog, quizzes, calendar of events, expert opinion, training courses-all of which will be announced soon- so stay tuned! Since the evening was all about promoting and encouraging entrepreneurs, there was an expert panel discussion, on the various aspects of being an entrepreneur in Qatar. The panel included, Andre Van Zijl, QNB, Munther Al Dawood, SDC, Raed Al Emadi, Silatech,
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May 2012
Talking from experience, Andre said that it is difficult because banks have their own lending policies. A lot needs to be done before SMEs come to the bank and ask for support. From a banking perspective, he suggested that we should always go back to the basics, do the basic financial analysis. It is important to realise that as we approach World Cup 2022, it is time to support the sub contractors and SMEs. Andre highlighted the importance of networking. “It is very important to connect with people. When you are starting a new business, it always helps to know people.”
Mansoor Bin Ibrahim Al-Mahmoud, CEO, QDB, gives the welcome speech
We have to diversify the economy, and then we have to support the SMEs. All the institutions on the table are trying their best to develop an ecosystem and there is a need to diversify the economy.” Mouyaed continued on that point and said that about 90% of the businesses globally are SMEs and contribute 50% of employment and access to finance is an issue. But he encouraged the audience to not give up, do the research, study the market and there are enough success stories “Look at Aramex- small company from Jordan, which is global now. If one can do it, many can do it too,” he added.
Raed said that the Arab spring has brought about more entrepreneurs in the region because the risk-taking spirit has kicked in. He used the example of Tunisia where successful businesses have managed to survive the turmoil. According to him everybody is looking at SMEs as solution for job creation. Raed also cautioned that to be successful, you need to pick your partner carefully. When things are fine, it’s okay, but just as other commitments, when things are down, you need a technically sound partner, they are legally aware and financially secure. Abdulaziz summed up the panel discussion by highlighting that most of the advice given by the panellist can be adhered to just by using the SME Toolkit!
SME Toolkit
Participants networking
Mr. Basher Kilani, Territory Manager, IBM Middle East
Maha Al-Essa, one of the co-founders, 974Design, talks about her entrepreneurial experience
Panel discussion
Participants exploring QDB’s SME Toolkit
May 2012
19
SME Toolkit
Abdulaziz Khalifa, QDB
Munther Al Dawood, SDC
Time for audience prizes
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May 2012
Raed Al-Emadi, Siltatech
Mouyaed Makhlouf, IFC
Andre van Zijl, QNB
Sami Fakhoury, Al-Tamimi & Co
Amna Al-Sultan presents the SME toolkit
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SMEs
Walk the talk promoting SMEs
International Finance Corporation (IFC), the private sector arm of the World Bank, has been actively working on promoting SMEs globally as well as in the MENA region. Private Sector got talking to Mouyaed Makhlouf, Regional Director, MENA, IFC, about the role of IFC and how SMEs can make use of the SME Toolkit. How is the private sector important for an economy? And within the private sector, what is the role of SMEs? The private sector plays a critical role in development and growth. It provides about 90% of jobs worldwide. The role of SMEs in promoting economic growth and spurring job creation is becoming more prominent now than ever. Many countries are recognising the importance of this sector in the context of the current global economic slowdown and rising unemployment. To give a few examples from across the globe, SMEs contribute to: • 48% of GDP and 54% of employment in the United States • 60% of GDP and 83% of employment in China;
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• And the numbers are as high as 86% of GDP and 95% of employment in Chile
brought renewed attention to the consequences of youth unemployment.
A recent study by the World Bank shows that SMEs are the biggest contributors to employment across 99 developing countries surveyed. This study also shows that SMEs account for over 80% of net job creation and 67% of employment in developing countries.
The public sector can no longer be the main provider of jobs in the region – promoting private sector led growth is critical
In MENA, SMEs represent between 80 to 95% of all local enterprises, and account for up to around 40% of all private sector employment. Supporting the SMEs is hence an integral part of the growth and jobs equation in the region. What is the role of IFC, its investments and advisory services in SME promotion? Recent events have deepened the development challenges in the region and
IFC is helping SMEs through its investment and advisory services.IFC investment services address market failures to finance SMEs through: • Debt and equity investments in SME- focused banks • Risk-sharing facilities to encourage SME lending • Trade lines to finance capital equipment and inventory imports and exports • Mobilisation of private funding, equity and debt guarantees • Build leasing and franchising • Equity investments through private equity funds
SMEs
IFC advisory services provides training and tools to help SMEs improve strategy, products, marketing, sales culture and delivery channels, credit-risk management, information technology and governance. IFC advisory works with governments to improve the business climate and remove the obstacles that prevent small firms from joining the formal sector where research shows grow more and hire more people. The SME Toolkit, an innovation of IFC, helps over five million users a year across 32 countries, in 18 languages, to learn and implement sustainable business management practices and increase their capacity, access to finance and new markets. Through a network of global partners and local distribution partners, localised SME Toolkit platforms provides SMEs with online and mobile phone access to key business management information (news, how to articles), interactive tools, business forms in accounting and finance, marketing and sales, legal and human resources, business directory and so forth . A strategic partner since 2006, IBM strengthens and expands the Toolkit’s technical capabilities. IFC’s Business Edge classroom business training workshops have been delivered to more than 150,000 people across Asia, Africa, the Middle East and Latin America. Tell us a bit more about IFC’s programme in the Middle East and North Africa IFC has been playing a key role in the region. IFC’s immediate focus has been to restore confidence in the private sector, which is the critical engine of economic growth and job creation. We have committed over USD 2.4billion (including mobilisation) since January 2011, boosting investors’ confidence and demonstrating that the region has a long term potential. Assuming the political situation stabilises and new governments are supportive of private sector development, we expect to invest up to USD 6 billion, including USD 2 billion in mobilisation, in the Middle East and North Africa over the next three to four years.
A recent study by the World Bank shows that SMEs are the biggest contributors to employment across 99 developing countries surveyed. This study also shows that SMEs account for over 80% of net job creation and 67% of employment in developing countries.
IFC has signed several significant transactions recently including a loan to support the construction sector in Iraq (Lafarge), a transaction to improve access to high-quality generic medicine (Hikma), and one to help increase access to finance for small and medium enterprises (BankMuscat) Our advisory work is fully integrated into many of its investments and initiatives. Advisory services are helping companies improve their corporate governance, advice on public-private partnerships in infrastructure, help smaller businesses access credit, and improve the regulatory framework for private education. FC works to make business more inclusive to women and youth — especially through access to finance, education, MSME and Business Edge training programmes. An integral part of IFC’s strategy over the last five years has also been to develop Regional Champion investors in the GCC and mobilise them to enter developing markets in the region and outside. IFC, working with partners, has launched four initiatives to help the region : • S mall and Medium Enterprise Facility - joint with IBRD, EIB, & KfW – Approximately USD 550 million facility was created to help financial institutions increase access to finance small and medium enterprises (SMEs) through a combination of investments and advisory services • Education for Employment (e4e) – a joint initiative with the IsDB - In April
2011, IFC and the Islamic Development Bank launched the e4e initiative for Arab Youth.It aims to bring public and private partners together to improve the quality and relevance of the skills students bring into the workforce in order to increase their chances of employment. It is also helping demonstrate the viability of private sector investment in the employment-driven education sector. Jordan and Tunisia are the initial target countries; Country road maps completed • Arab Financing Facility for Infrastructure (AFFI) - joint initiative by IFC, IsDB & IBRD Its aim is to provide financing and advisory assistance for infrastructure PPPs, crossborder infrastructure projects, and other innovative infrastructure plans with the potential for regional impact. The facility includes several components, including an investment vehicle and a technical assistance fund. The facility includes several components, including a private investment vehicle, a joint IBRD, IFC, IsDB technical assistance facility (TAF), a public sector window for financing by IBRD, and a Policy Forum which supports policy work in the region. and. • MENA Fund- It will initially channel USD 300-USD 500 million towards minority equity investments in diverse sectors in the Middle East and North Africa.The fund aims to restore investor confidence in the region, spur the return of foreign direct investment, and increase access to finance for smaller businesses, education and infrastructure sectors. The fund will be managed by the Asset Management Company. IFC will provide up to 20% of its total commitments.
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SMEs
We would like to know more about the SME Toolkit The SME Toolkit offers business forms, how-to articles, community features and much more to help entrepreneurs, small and medium enterprises in emerging markets grow and succeed. The SME Toolkit (www.smetoolkit.org), an innovation of IFC, helps entrepreneurs and small and medium enterprises (SMEs) in emerging markets learn and implement sustainable business management practices and increase their productivity, their capacity, as well as improve their access to finance and new markets. Through a network of global partners and local distribution partners, the Toolkit provides entrepreneurs and SMEs with online and mobile phone access to key business management information, interactive tools, and educational resources. Localised SME Toolkit sites include hundreds of free business forms, tools, and how-toarticles, in addition to a global business directory, multilingual community forums, and a host of other interactive features, as per the
Mouyaed Makhlouf
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May 2012
choice of the local distribution partner. Core content areas include: accounting & finance, human resources, international business, legal & insurance, marketing & sales, operations, and technology. In 2006, IFC partnered with IBM to strengthen and expand the Toolkit’s capabilities. To date, IBM has invested extensive resources to build the technology platform, continue to develop a suite of collaborative features and innovative solutions to leverage the latest technologies to provide relevant support to entrepreneurs and SMEs worldwide. How has the SME Toolkit done in the region? In the MENA region, local distribution partners are financial institutions that have a vested interest in becoming THE partner of growth of emerging entrepreneurs and SMEs, often as they develop SME Banking departments or deal through SME Banking Banks, like QDB does in Qatar for example. They provide the localised SME Toolkit in their market, as part of their overall non-financial services, to differentiate themselves, reduce risk and enable emerging entrepreneurs and SMEs to become more “bankable”, grow and expand. They do this in partnership with key local stakeholders relevant and providing support to SMEs (from Ministries, to chambers of commerce, including local business experts, business services providers, etc), aiming at building progressively an ecosystem or one stop shop information platform where local SMEs and entrepreneurs can find relevant resources for better managing their business. Current partners in MENA include Riyad Bank in KSA, AlexBank in Egypt, and now Qatar Development Bank, whose ambitious plan for private sector development in Qatar through development of local entrepreneurs and SMEs led to the development of an SME Toolkit Qatar
platform, among other non-financial services that QDB offer in Qatar. In Asia, it is used by Dialog Telecom, the leading Telecom Operator in Sri Lanka trained over 10,000 retailers and distributors with SME Toolkit, enabling those to create over 3,250 new jobs, contributing to a revenue increase of 40% and 90% of those companies expanded their business significantly. In India, ICICI Bank, one of the largest SME Bank in the world reaches over one million visitors a year through its SME Toolkit India, providing over 4,000 tenders regularly refreshed, enlisting over 500,000 businesses, and holding regular live chats with key industry experts, contributing to increased access to finance and markets to its users. So the SME Toolkit has been working its way through in helping SMEs grow in all parts of the world.
About Mr. Mouayed Makhlouf is the Director of the Middle East and North Africa region. He is responsible for IFC’s investments and advisory programs in more than 20 countries, which aim to support economic development across the region through private sector development. Prior to this appointment, he was Manager, Financial Markets for the Middle East and North Africa. During that time, he helped implement regional industry strategies for IFC’s investment and advisory services arms managing a portfolio of about $1.7 billion. He joined IFC in 1998 in the Central Asia, Middle East and Northern Africa department based in Washington DC. There, he worked on multiple large transaction including major restructuring of the cement sector in Pakistan as well as supervising projects across the region. Mouayed holds a Master of Science in Finance degree from George Washington University in Washington, DC. For more information about the work being done by IFC, please visit www.ifc.org
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management
WHAT’S YOUR STYLE?
We all know that SMEs are the engine for growth and an important part of the economy. However, while setting up shop is one thing, it is another to manage it. Elias Mazzawi, Managing Director, EMS MENA, talks to us about managing an SME.
“I
t is what you do and the way that you do it - that’s what gets results.”
A slight variation on the lyrics of the 1939 tune – but that is forgivable. The song was not composed with business management in mind - but is nonetheless a reminder of a truth: how we manage our businesses is perhaps the single biggest determinant of how successful our businesses are. No where is this truer than in the entrepreneurial SME. Fellow entrepreneurs will tell you that their key challenge is to find the tools for translating the skills, energy and dedication of the core leadership team into a high performing organisation. The correlation between the extent to which this is achieved and the level of success of the business is direct. In other words, it is crucial. Three lessons from experience: 1. Make the transition from directly controlling and managing everything - to empowering the wider team. It is the first step in building a ‘virtuous spiral’. 2. Understand and actively invest in associated skill-building, so that your organisation can
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May 2012
accept the empowerment you are offering. 3. Build simple, workable management processes and reporting – and use them. Allow everyone to understand the cause and effect. Command and control doesn’t help In many entrepreneurial SMEs, the core team is very actively involved in the minutiae of the business. Entrepreneurs are passionate about what they are building and managing. They drive it. This hands-on ‘micro’ approach is in part the very reason for initial success. But it needs to be used to just the right extent, at just the right time, in just the right way on just the right things. Otherwise, at some point this heavy ‘micro’ involvement can begin to limit potential for success. The challenge is to recognise when the time is right to make the transition – and to have in place the tools and techniques to make it. Take the example below. Extreme perhaps, but something I saw recently – and it certainly illustrates the point. • Management set a rule that cars should be washed at a specific time on a specific day.
• This was followed -- to the letter. • In the middle of a sandstorm, a car was being washed. Consider the implications: • It’s a waste of effort. The car will be just as dirty again in just a few minutes. • It’s de-motivating. Consider the employee’s perspective – washing a car in a sandstorm is unlikely to deliver job satisfaction. • It could destroy value. There is a high chance that the paintwork on the car would be scratched as sand gets into the cleaning cloth. • It discourages initiative from the workforce. Noone considered the changed circumstances. At the simplest level, the car washer could have been doing something more productive - perhaps something that there isn’t time for in the normal day-to-day routine. But there was clearly no mechanism to encourage or allow this. Extrapolate from this to less extreme but more complicated day-to-day and strategic business situations - how much initiative and talent is being ignored, and what value could it deliver for the business? This common management approach very soon sets a low ceiling for quality, initiative, growth and improvement - at the
management
Entrepreneurs are passionate about what they are building and managing. They drive it. This hands-on ‘micro’ approach is in part the very reason for initial success. level at which the already time-challenged and stretched core team can be involved actively in the day to day minutiae. The first challenge is to be willing to empower employees.
Add in an element of celebrating (rewarding) successes and it becomes a very powerful way to manage the business.
Train, develop, motivate It’s all very well to say “I will empower the team” – but the team needs to be in a position to accept that empowerment. That requires two things: • Relevant and appropriate skills and capabilities. • A heightened sense of responsibility and duty to the company and to its customers. Training is critical in technical skills, in decision making, in understanding the range of possible actions, and consequences.The region is investing in this -- with substantially increased budgets for training and development. It will be key to enhanced future success. That training must be supported by a corporate culture that fosters learning, allows questioning, rewards success and learns from failure. Management processes, practices and systems must foster this. Cause and effect management approach So now, it’s all very well to say “I will take the right steps to empower the business and I will take the right steps to enhance skills, capabilities and attitude - but there needs to be a ‘glue’ to hold this together, to make activity ‘pull in the same direction’. A balanced scorecard approach, pragmatically designed and implemented, fits the bill. The approach is not new – it has been around since the 1990s. Most recognise it as a scorecard covering a range of perspectives financial, customer, internal processes, learning and innovation (these vary from company to company). That is important -- keeping a balance measure.
effect map can make a very big difference. Using this approach to plan and manage on a daily, weekly, monthly and annual basis works. Providing it is implemented pragmatically and not over-analytically.
Elias Mazzawi
However, far more important in this environment is the underlying principle of cause and effect underpinning the scorecard. • Defining the outcomes wanted across the four dimensions is a hugely valuable exercise. • Drawing the cause and effect map to achieve those outcomes is a massive benefit – explicitly stating the steps and actions (causes) that influence results (effect) – creating a shared understanding of these priorities and actions across the organisation – which is then ‘armed’ to pull collectively in the same, right direction. • Defining the metrics that show progress towards the goals focuses attention. • Ensuring that the metrics are things that the team’s actions can influence ensures understanding of the actions that make a difference. • Linking those metrics to departmental objectives – and cascading those to personal objectives focuses the team’s attention on taking those actions. It doesn’t need to be ‘heavy-duty’ – a simple spreadsheet based on a shared cause and
So what should you do differently tomorrow? 1. As a small business leader, don’t keep all the pressure responsibility accountability to yourself. Share it with the team. The business will benefit – provided you set up the environment for success. 2. Instead of making the decisions yourself, consult. Instead of controlling everything very tightly, support. 3. Take advantage of the training and development opportunities available. 4. Put in place a simple, pragmatic, actionable cause and effect management and reporting approach – and use it. Put these three things in place and the benefits are significant. It becomes substantially easier to manage the business, which at the same time becomes a more successful business. There is no magic to make all this happen overnight -- but there are many tried and tested techniques. It is worth the effort.
About Elias Mazzawi is Managing Director of EMS-MENA. EMS (itself an SME) works exclusively with mid-size enterprises in the Middle East, driving higher performance in operations, sales and strategy. The EMS approach is distinctively tailored to the needs of mid-size enterprises.There is a focus on quick wins delivered through short, intense and highly focused project bursts of just a couple of weeks. This is Supported by light touch involvement of a day or two a month over a longer period -- to ensure that the change ‘sticks’. For more information, please visit www.ems-mena.com
May 2012
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success stories
Making excellence a habit National Group is a cluster of business houses, located in Qatar, with regional offices in many cities of the region. Sheikh Naif Bin-Ali AlThani, Chairman, National Group, talks to Aparna Shivpuri Arya about his journey and what has been his mantra for success Please tell us about yourself and how did it all begin. The first organisation of the group was founded in 1964. The National Contracting and Trading, an ‘A’ grade contractor in Qatar is the first and foremost member in the Group, followed by various divisions specialising in engineering and construction. In 2008 we, planned to enter manufacturing sector and we initiated the ‘Qatar National Aluminium Panel Co’ (Q-NAP) and within a short period of establishment we are catering to the needs of the Aluminium Cladding industry in Qatar, covering lion’s share of the local market . Now, we are concentrating on finding an overseas market. The National Oil & Gas Services is the Oil & Gas Services division of the Group established in 2008 and provides services to Oil &Gas sector in the local market. In association with a group of reputed overseas organisations we are providing Plant Safety Warning System Services, materials, equipments and maintenance. With a vision of reducing our dependency on imports, as a responsible
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May 2012
citizen of the Nation our decision is to concentrate more on manufacturing sector. In this regard, National Group is promoting two more building material manufacturing factories in the state of Qatar. Ground preparations are underway and both the facilities will be operational in the fourth quarter of 2012. Our family is in the field of business in local market for last four decades. Apart from what I learned during my education, working with my father as his assistant was the beginning. Practical knowledge from that experience, is the cornerstone of growth and development of National Group. How did you come up with the idea to set up your business? What inspired you? Heritage of ‘Arabic Culture’ itself is about business and trade. My involvement with my
father’s business after my studies paved the way to establish my own business. My habit of closely watching the pulse of local industry, learning the trends of the same provided me with information about market requirements, and sparked the idea behind my own establishments. As a local entrepreneur, growth potential of Qatar and nearby markets is the real inspiration behind those ventures. How did you set up your business? I visualised the business setup by coordinating expert human resource available within the Group. Execution of the plan was done by a project team under a senior manager; the development was often reviewed by me. Funding for major establishment is secured in partnership with Qatar Development Bank (QDB).
With a vision of reducing our dependency on imports, as a responsible citizen of the Nation our decision is to concentrate more on manufacturing sector.
success stories
What challenges did you face and how did you solve them? As long as the establishment is new , marketing is the initial challenge which any institution may find. Breaking the market with a new brand of product is not easy as long as there are recognised brands are already present in. In addition, getting expert human resource in reasonable pay scale is another task which any organisation may face. Intense pre-launch marketing, exhibitions, promotions and introducing technologicallyadvanced products, best service options are the major tactics we use to break into a market with a new brand. Recruiting of a few highly skilled experts in the industry is the initial task we may undertake and a team of qualified but less experienced personnel will be created. As an employer we are providing the team with best available industrial training to ensure it meets or exceeds industry standards. What help or facilities would you have liked? As a local entrepreneur, we do require best services at gateways of the country (ports) to avoid any unnecessary delays in imports and exports. Development of more primary industries (to avail primary raw materials), better infrastructure, establishment of FreeTrade Zones and so forth. In addition, for manufacturing industries, we would appreciate subsidies from government for exports and incentives against the local business against the volume of business done and the quantity of products manufactured. It will always encourage the existing entrepreneur and pave way for new industrialists. What are your ambitions and growth plans? How do you plan to achieve them? We are aiming at developing the National Group as a conglomerate with presence all over the GCC. We aim to achieve a billion
Sheikh Naif Bin-Ali Al-Thani
In addition, for manufacturing industries, we would appreciate subsidies from government for exports and incentives against the local business against the volume of business done and the quantity of products manufactured
Riyals turnover for the Group in the shortrun. Our goal is to become an icon of private sector manufacturing in the State of Qatar, in a short while. National Group is promoting two more manufacturing companies in the state of Qatar and these facilities are scheduled to commence operation by the fourth quarter of 2012. In order to exploit the expected boom in the construction sector of Qatar we are in discussions with a few of renowned engineering & constructions firms in the world to facilitate large scale investment in the sector, as a joint venture. What is your entrepreneurship and management style? As a keen entrepreneur and manager I am
bringing business ideas, shaping it and passing them over to a team of experts to get it established. I supervise the establishment of the team whenever required. I am always involved in the business by reviewing the progress and setting strategies for the entities and their Management Team, assisting them with their requirements to achieve the goals which we set. As an industrialist I do believe in excellence. An anecdote which leads my ambition to excellence is a saying of the philosopher Aristotle: ‘We are what we repeatedly do. Excellence, therefore, is not an act but a habit.’ We at National Group are on the way of excellence to inspire others to follow.
May 2012
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Investment
Lending
a hand
In January this year, Qatar Exchange announced the formation of Qatar’s new SME Market, the QE Venture Market. Aparna Shivpuri Arya caught up with Colin Milton, Deputy Director, Listing Department, Qatar Exchange, to know more about the initiative and how it will help the SMEs.
Q
atar Exchange recognises the importance of the SME sector for the foundation of successful economies, contributing to employment opportunities, wealth creation and increased output. The Qatar Exchange (QE) therefore developed QE Venture Market with the objective of supporting the growth of SMEs and positioning itself at the centre of the government’s ongoing support for this important sector which is a key element in ‘Vision 2030’.
SME financing “menu”. It will not be the right solution for all SMEs but as a way of raising risk capital as opposed to, for example, further debt or founder loans we believe that QE Venture Market will provide a valuable financing alternative.
Unlike the existing Main Market, which was designed for larger companies with established track records, QE Venture Market was designed with smaller companies in mind with a more flexible disclosure and corporate governance regime. The characteristics of the market reflect the objectives of allowing SMEs to list and raise capital more easily and cheaply and with less stringent requirements than would be the case on the main market whilst also retaining the trust of the investor base through a structured regulatory framework.
We hope that through market participants we will be able to create a prosperous and vibrant market that supports the growth of SMEs in Qatar. With the addition of the QE Venture Market to our product suite we are providing young and entrepreneurial companies a customised route to market to ensure they have access to the necessary funds to contribute to Qatar’s economy.
Why is QE developing an SME Market? SMEs around the world are key to growth and prosperity of an economy. Having a dedicated route to market for SMEs is seen as an important financing alternative for this sector and we envisage this solution will be a useful part of the
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Qatar has already taken a pro-active approach to the development of the sector through many initiatives, such as Enterprise Qatar domestically and Silatech across the GCC/MENA region, Al Dhameen, and of course organisations such as QCCI. The initiative complements National Vision 2030 and is a direct result of the Supreme Council decision last year to setup and SME Market.
Why did QE not just lower the criteria for the main market? Our analysis suggests that having a dedicated market reflects international best practice. The ‘network effect’ is strong and for SMEs, having a high profile platform alongside its peer group where they are not competing for attention with the largest listed companies is a significant benefit. A dedicated market allows us to tailor the marketplace for the investor base to develop around SMEs which requires a different risk appetite to that for the main market. Why should SMEs consider a listing on QEVM? The rationale for listing is varied but a listing for an SME can be thought to provide the following key benefits (i) diversifying an SME’s sources of funding away from founding shareholders and or bank financing (ii) offering liquidity to financial, family or minority shareholders (perhaps in the context of succession planning) (iii) offering visibility, status and valuation through raised awareness of the brand; comparisons with listed peer group and
Our analysis suggests that having a dedicated market reflects international best practice. The ‘network effect’ is strong and for SMEs, having a high profile platform alongside its peer group where they are not competing for attention with the largest listed companies is a significant benefit
Investment
valuation pick-up (public companies by virtue of transparency are more highly valued than private companies) and (iv) perhaps fulfilling part of a corporate strategic objective. We expect that entrepreneurial SMEs who are looking to grow will benefit from a strong ‘network effect’ in joining the community of companies listed on the main market and the QE Venture Market which after all represent some of the most progressive companies and best management teams in Qatar. Over and above the normal benefits of listing are there additional advantages to the QEVM? Indeed, in particular we believe the QEVM provides (i) a dedicated entry route to public markets that would in other circumstances not be available (ii) a universe of peer group companies which can be beneficial to investor following, research coverage and ultimately maximisation of valuation (iii) flexibility to develop a regulatory structure best suited to small and mid-cap companies and (iv) flexibility to develop a lower cost pricing structure for small and mid-cap companies. In addition, unlike the more established markets of AIM, Alternext, GEM and Catalist we plan to take a more pro-active approach to the development of our SMEs. SMEs often need help in, for example, terms of business systems and process, business facilitation, board and governance structure. We plan to enlist the help of partners in Qatar who will be available to the SMEs in developing these areas of their business.
Colin Milton
There still seems to be a lot to do so isn’t it too early to launch? We acknowledge that the larger ecosystem needs further development but at the same time the technical and regulatory infrastructure is in place so we can accept companies. The development of the eco-system is always a long-term undertaking but we have taken the view that on balance providing the platform and in parallel working with market participants to develop the eco-system is preferable to waiting and restricting choice for SMEs. You refer to the ecosystem; what do you mean by this? The technical and regulatory structures are in some respects the easiest to put in place. When we talk about the eco-system we mean developing the network of banks and brokers; lawyers and accountants and other market professionals who will be necessary to support the market. The rationale for each will be different but in the end all market participants will need to be incentivized to develop the market. What are the key features of the Rules published by QFMA? As a market for SMEs the Rules incorporate relaxed entry criteria notably a one year track record (rather than three from the Main Market); a free float requirement of 10% (rather than 20% normally) and a minimum subscribed capital base of QR 5 million (rather than QR 40 million normally). The judgment is that these criteria will accommodate SMEs but still provide the necessary trust element to encourage investors whilst acknowledging the risk element involved in investing in small companies. What about ongoing disclosure? Companies in the QE Venture Market will be required to follow a periodic and ongoing disclosure regime which is similar to that for the main market including quarterly reporting and the announcement of material price sensitive information. This transparency should help to ensure that investors are not misinformed regarding material changes to the companies’ business and therefore their prospects.
All applicants are required to have a Listing Advisor on an ongoing basis; won’t that be expensive? The Listing Advisor is an important part of the “trust” relationship between issuer and investor. We recognise that SMEs will need ongoing guidance as to the Rules and it is the Listing Advisor’s job to ensure proper practice and disclosure is being adhered to. Without this investors will be less inclined to participate in the marketplace. The cost will be a topic for bilateral discussions between an issuer and the Listing Advisor. However, the monetary cost should be balanced with the benefits of increased trust in the market, increased investor following and a reduced cost of capital. The Rules have now been published so when do you expect your first listing? We have already begun the process of talking to some of the key participants in the SME space and envisage hvolding further workshops on an ongoing basis. We cannot predict when the market will have its first listing as it is conditional on a large number of external factors including company preparation time, regulatory approvals and market conditions to name but a few but the whole financial community will be working toward a successful market as soon as possible. Will this be just for Qatari companies? No. Whilst Qatari companies will likely be the mainstay of our market, the rules allow for foreign companies to list (without a dual listing in their home market as is the case for the Main Market) so we aim to encourage companies from the GCC and MENA to look at the QE Venture Market to satisfy their funding needs. Finally, where can the Listing Rules for the Market be found and where should companies go to seek further information? The relevant Rules can be found on the QFMA website under the “The QFMA Offering and Listing Rulebook of Securities of the Second Market”. In addition there is a dedicated website for the QE Venture Market www.qe.com.qa/qeventuremarket. Details of the listing criteria and process can be found on the information portal as well as contact points for further questions.
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Finance
Beyond the drop
Outlined by His Highness The Emir, Sheikh Hamad Bin Khalifa Al Thani, the strategic objectives of Qatar National Vision (QNV) 2030 for economic diversification in the country are aimed at enhancing the scope and role of the private sector in the country’s economic development. Howard Kitson, Country Head, Mashreq-Qatar, tells us about the country’s efforts to promote SMEs as part of the national vision.
Q
NV 2030 aims to create employment opportunities for the national work force that go beyond the still dominating hydrocarbon-based economy of today. Creating employment has been recognised as critical for the long term stability of the economy as well as the overall harmony in the community.
rather crucial aspect of funding projects in this realm. “We need to arm these businesses with flexibility and provide credit facilities with managed exposure for them to grow to be fruitful assets to the economy. A joint programme on the lines of the Al Dhameen programme that we share with Qatar Development Bank extends the scope of this financing. This we hope will alleviate some of the upfront overheads such as licensing costs,” says Howard.
Pushing the envelope remains to be a key strength in Qatar, taking the concept of what defines an SME to another level. Qatar’s Finance Minister Yousef Kamal recently announced Qatar’s investment of USD 1 billion in overseas small enterprises. The Supreme Council for Economic Affairs and Investment is mulling a plan to establish a dedicated legal entity with the scope of investing in small enterprises abroad. This would probably add to the existing line-up of international acquisitions, such as Harrods, Sainsbury’s and Barclay’s. Hardly small enterprises one would think.
By providing fertile ground for the development of the necessary policies and regulatory framework, also the Qatar National Development Strategy (NDS) 2011-2016, published by Qatar’s General Secretariat of Development Planning, aspires to further facilitate the integration of small and medium enterprises (Small and Medium Enterprises).
If we limit the definition of SMEs to start-ups or companies having a turnover of up to QAR 50 million per annum, the absence of bankruptcy laws, the length of visas afforded for potential migrant employees and majority-stake of the sponsorship will continue to be challenging. On a positive front, an area where an increasing number of banks and Mashreq-Qatar in particular have been making significant contributions to is the
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The development of SMEs in Qatar today is rising at a fast pace. Qatar Exchange recently announced that it will host an SME market providing the required technical and regulatory infrastructure. These will only drive the momentum of Qatar’s vital SME sector and draw foreign and domestic investors. Various organisations such as Qatar Development Bank, Silatech, Enterprise Qatar or the Social Development
Center have also made inroads in laying the foundation stones to enable the growth of SMEs. The launch of the SME Evolution Programme, a free web-based training programme by Enterprise Qatar is particularly interesting, providing young entrepreneurs the backing of a network of likeminded individuals across the region. Qatar’s efforts pertaining to SMEs are the way to the future for banks, an example that should be replicated across the Middle East. A recent survey conducted by The World Bank shows that the share of SME lending is abysmal. At only 8 % in the Middle East and North Africa (MENA), and a paltry 2 % in the GCC the share of SME lending in total bank lending has been giving reason for concern. Traditionally SMEs are associated with high credit risk; given Qatar’s crowded banking market, it is inevitable that commercial banks move from their so far niche specialisation to also serve SMEs and work in partnership in addressing any legal and regulatory barriers. The approach to SMEs is clearly very different to retail banking and wealth management services that currently dominate Qatar’s banking landscape. There is no singular formula to serve SMEs, but banks must constantly be innovative in finding ways to manage both costs and credit risk and at the same time screen clients prior to acquiring them. Tools such as credit scoring will allow the banks to better serve their clients and adapt their portfolios accordingly. An analysis of the market as well as an inward look at one’s own business model including that of the client are paramount in giving a more focussed execution capability in credit risk management. This will prepare banks with risks associated with SME clients processing their relatively smaller transactions at lower cost and offer the clients better service quality.
About Mashreq is one of the region’s leading financial institutions and the region. Founded in 1967 as Bank of Oman, the bank has played a pioneering role in the industry, particularly in retail banking.As a leading financial Institution in Qatar, Mashreq aims to be world class in every facet of its business; including its social responsibility to the community it serves.
http://www.PrivateSectorQatar.com/en
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business setup
Know your neighbourhood
Before you set up a business, it is most important to know what the market wants and whether you can tailor your product or service to that particular market. Bedaya Centre explains the concept of market research to us and how is it beneficial for a startup or SME.
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ow does one define market research? There are many ideas out there, but how do you distinguish the good ones from the not so good? A good idea is one that you will be able to turn into a viable business and usually has to tick the three boxes:
• Is there a need for it in the market? • Is it technically feasible? • Is it commercially feasible? If you said yes to all three, then you are on to something good. The process you use to answer the questions above is your market research. Therefore, market research is used to discover what people need. This process involves gathering and analysing data about a specific product or service as well as the current environment where it will be deployed. The first steps Every entrepreneur believes their idea will be money- generating, and successful. You would not be an entrepreneur if you didn’t have this passion and conviction. However, this leads many entrepreneurs to go straight
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into execution phase only to realise that after spending all their time, energy and capital that the business just didn’t work. By conducting market research you gain understanding about your potential customers, the environment and economy you are working in as well as your competitors thus allowing you to position your business more effectively and increasing your chance of success. When conducting market research you are effectively taking the first steps in discovering whether your business idea is economically viable. This process of discovery is done through a series of quantitative (how, when, what) and qualitative (why and how) questions on the four most important focus areas. Know your product: The product is effectively the “Idea” that made you want to start your business, because you believed you had something the rest of us wanted. It’s the service you provide, the item that you sell or a combination of both. At this stage, your product is still in the design phase and before you spend your capital on development you should be able to answer the following: • How does it work • What value does it add?
• W hat customer needs does it address? • How much will it cost? • How long does it take to build and deploy? Know your customer: This essentially answers the questions “Is there a market for your product?” and “who would your target market be?” It’s easier to sell when you know who to sell to. Therefore, before launching your product you should go through an exercise of identifying the following: • What is your customer base, based on demographics, income and so forth? • Where are they located? • When do they buy? • Why do they buy? • How can you reach them? • What are their buying habits? This will enable you to position your product better by specifically targeting a segment of the market that needs or wants your product. You will also have enough knowledge about the type of customers you have and will then be able to create marketing campaigns that specifically target them. Know your competitor: One of the most important steps in market research is to know
business setup
The product is effectively the “Idea” that made you want to start your business, because you believed you had something the rest of us wanted. It’s the service you provide, the item that you sell or a combination of both. your competitors and what are they offering. Very few businesses start as unique or market leaders. However, for the rest there are at least a few competitors already in the market with similar offerings. The main questions to answer are: • Who are your competitors? • How many competitors do you have? • What are their Unique Selling Points (USPs)? • What is their pricing model? • What additional services do they provide? • Why would their customers come to you? Know your environment: Surveying the market before deployment and launch helps entrepreneurs by providing them with valuable data on the current landscape which can then be used by decision makers when designing their product and services in order to meet the demands and needs of their customers. By addressing the following you will be better positioned to have a successful business: • How stable is the economy in your area? • What is the current rate that SMEs are growing by? The how Market research can be done in a number of different ways. The most popular way to start is through extensive Internet research. The internet offers you valuable information on your competitors, their value proposition and current market conditions. Other methods include customer surveys, mystery shopping, working with focus groups, and actual testing of prototypes in the market Although there are a number of companies who specialise in market research they can be very costly and can take a huge cut out of your budget. Its best to do as much research using your own resources, this not only saves you money but also helps you in gaining hands-on knowledge regarding the market, your customers and your competitors. When conducting your own research you should focus on both indirect and direct research. Direct research covers all the information that
is already available in the market and ranges from company or product specific to country specific. You can obtain this information through government reports, business surveys, your competitor’s business financial reports, industry magazines and information provided by municipalities and government agencies. Indirect market research requires more in-depth analysis and research work. This is where you discover your customers’ buying habits and their appetite for your product by observing them, conducting surveys, talking to focus groups and testing your prototype. You will usually need a team of people who can help you with this part of the research. As you will be collecting a lot of data and you need to analyse the numbers properly in order to help you predict your business success. As mentioned conducting your own market research can save you money but at some point you might need to rely on experts and consultants to work on a certain section of your research or to provide feedback on what you have already completed. Most entrepreneurs will start their market research using online services. Unfortunately many of the current services offer information on European/American industries and demographics. However, Qatar Development Bank has recently deployed their SME Toolkit which provides sector-specific information for the Qatari market covering different industries such as tourism, health and education. The toolkit also provides a list of resources per sector including market studies and impact reports as well as information on legal requirements and registration for companies in Qatar. The tool is a very valuable resource for entrepreneurs who want to setup companies in Qatar as it offers specific country information. The tool can be accessed online through QDB’s company website.
In addition to the toolkit, there are a number of good sites that offer comprehensive business information that can be used for market research and will provide you with in-depth information on current market conditions and your competitors. There are also a number of free and paid sites that help prepare your surveys and analyse your results. The most popular being http://www.surveymonkey.com that offers readymade survey templates as well as the option of sending your surveys to a specific targeted audience. Your survey results will offer you information on your customers and your product. Finally, never underestimate the power of social media when conducting market research. This is an excellent medium for reaching out to large group of people at the same time. You can use this as a testing ground for your product, assess your customers’ needs and build on their feedback. It’s also been proven that through social media, customers feel they have an influence on the business and become part of the initial design of the product. This overall feeling of involvement is an excellent start to having a relationship with potential customers. The when Market research in an ongoing process, you use it to assess the viability of your business before starting and you use it constantly once your business is up and running. Since buying habits and trends are not static, the constant change of people’s needs and the increasing use of innovation and technology means your product and services have to change to meet future demands. Make market research your mantra to ensure continuous business success at all stages of your business.
About The Bedaya Center is a partnership between Silatech and Qatar Development Bank. With the tag line “for entrepreneurship and career development” it has a prime focus to encourage young Arabs set up their own businesses and look to the many opportunities presented by the World Cup 2022.
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Entrepreneurs
rewarding success Enterprise Qatar was part of two events last month to encourage and recognise entrepreneurs in Qatar. Private Sector brings you a snapshot of these events.
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The second day was open to the public and focused on the attributes of the successful entrepreneur, with the speakers drawing from their own personal experiences.
Hosted by the EO chapter of Qatar, the event brought together over 60 entrepreneurs from around the Gulf region to gain unique insights from some of the world’s leading figures in entrepreneurship and innovation and learn about Qatar’s efforts to support the next generations of business owners.
The lectures were concluded with a panel session discussing the role of education in supporting entrepreneurship. Moderated by analyst and consultant Taufiq Rahim the panel drew on an exciting mix of speakers including Tracy Pryce, principle of learning and development at Enterprise Qatar (EQ) being diamond sponsor for EO Majlis, Dr. Sheikha Al Misnad, President of Qatar University, global thinker on innovation Charles Leadbeater, US entrepreneur and writer Ben Casnocha and Bedaya Centre Manager Saleh Al Khuleifi,.
O Majlis, the first regional learning event hosted by Entrepreneur’s Organisation, and sponsored by Enterprise Qatar, brought to a close two days of inspiring talks that brought together some of the region’s most successful entrepreneurs to boost enterprise creation in Qatar.
Participants heard from leading experts in entrepreneurship and business practices including Verne Harnish, Ben Casnocha and Charles Leadbeater. Hassan Al-Thawadi, CEO of the 2022 Qatar World Cup bid, talked to the group about the challenges his team faced and how they were turned into opportunities for the history-changing campaign.
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The programme ended with a lunch meeting with Carnegie Mellon University business students, where EO members talked about their personal journeys and shared advice. Khalifa Al-Misnad, Qatari entrepreneur and President of EO Qatar expressed his delight that the event had made a positive impact.
He summarised, “EO Majlis achieved the goal we set when starting out; chiefly to provide a boost to the community of individuals and organisations working hard to support SME’s in Qatar and the region and encourage entrepreneurial culture. We brought to Qatar some of the world’s leading entrepreneurs and global thinkers, and we had many enriching exchanges. We ensured the second day was open to the public so that the speakers’ wealth of knowledge and experience could be shared with aspiring entrepreneurs from local universities. This is the first in what we hope will be a long line of successful and inspiring EO Majlis events”. EO Learning Chair and Event Organiser Mohamed Jaidah thanked Enterprise Qatar for partnering as diamond sponsor, and Standard Chartered Bank as platinum sponsor. Ms. Noora Al Mannai, CEO, Enterprise Qatar said, “Our focus at Enterprise Qatar is to develop and encourage a culture of business innovation, entrepreneurship, risk-taking and creativity. As we do this, we recognise the potential of a flourishing SME sector to provide the economic diversity that this
Entrepreneurs
country seeks in order to strengthen its economy and so what we seek to do is create the perfect ‘ecosystem’ to enable the SME sector to achieve its potential.” Charles Carlson, CEO of Standard Chartered Bank, Qatar, said, “We are very pleased to be involved in this event which has been very fruitful so far. We look forward to working closely with EO Majlis in the future and participate in the growth of the SME market in Qatar together with partners such as Enterprise Qatar (EQ)”. The other event, Ernst & Young Entrepreneur of the Year Award 2011 (EOY 2011) was recently announced in Doha at a Gala dinner hosted by Enterprise Qatar and Ernst & Young at The RitzCarlton hotel. The EOY Awards 2011 were held for the very first time in Qatar under the patronage of HE Sheikh Jassim Bin Abdul Aziz Al Thani, Minister of Business and Trade. The award, which is key in the discovery and promotion of talented entrepreneurs, was presented to Ashraf Abu Issa, Chairman of Abu Issa Holding, by Sheikh Mohammed Bin Abdul Rahman Al Thani, Head of Enterprise Qatar Executive Committee and Board Member of Qatar’s SME Authority, Noora Al Mannai, CEO of Enterprise Qatar (EQ), Abdulaziz Al-Sowailim, Chairman and CEO of Ernst & Young MENA and Firas Qoussous, Managing Partner of Ernst & Young Qatar. Abu Issa won the highly esteemed award for establishing one of Qatar’s key retail empires and setting unique an exemplar for business in his industry. Ernst & Young’s Entrepreneur of the Year recognises outstanding entrepreneurs for their vision, innovation, courage, and leadership in building and growing successful businesses that influence the way we live, the products and services we depend on, and the economic vibrancy of our local communities and global markets. Seven visionary entrepreneurs representing six companies were shortlisted as finalists for the Ernst & Young Entrepreneur Of The Year Qatar 2011 Award, including the winner Ashraf Abu Issa in addition to Omran Al-Kuwari of GreenGulf Inc, Zeyad Al Jaidah & Abdulla Alansari of Techno Q, Abdulaziz M. Aldelaimi of National Petroleum
Ernst & Young Entrepreneur of the Year Award 2011
Services, Mohammed Al Emadi of Al Emadi Enterprises and Jassim Al-Mansoori of iHorizons. The judges’ committee comprised a league of highly recognised figures in Qatar; H.E. Sheikh Dr. Abdullah Al-Thani, President of Hamad Bin Khalifa University; H.E. Dr. Hessa Al-Jaber, Secretary General of ictQatar; Mr. Saad Sherida Al Kaabi, Director, Oil and Gas Ventures of Qatar Petroleum, and Mr. David Norwood, Vice President of ExxonMobil – Qatar. Ernst & Young has been running the competition for over 25 years globally but this is the first year that Qatar has hosted this business award programme, which is considered to be the most prestigious for entrepreneurs. Sheikh Mohammed Bin Abdul Rahman Al Thani, Head of Enterprise Qatar Executive Committee and Board Member of Qatar’s SME Authority said, “First of all, we would like to congratulate Ashraf Abu Issa on a brilliant job done with Abu Issa Holding and thank Ernst &Young for bringing this opportunity to Qatar and recognising the great achievement of the entrepreneurs and their contribution to the growth of the economy.” Economic growth is one of the main pillars for the development of any society, and Enterprise Qatar (EQ) has been established to help, support and create an enterprise culture across Qatar and enable SMEs to growth, develop and thrive; added Sheikh Mohammed Bin Abdul Rahman Al Thani. Noora Al Mannai, Enterprise Qatar (EQ) CEO, said, “Enterprise Qatar (EQ) is mandated with supporting entrepreneurs, potential entrepreneurs,
start-ups and SMEs owing to the crucial role they play in today`s economies, fuelling growth, creating jobs and building communities. This is the first time that this prestigious competition has taken place in Qatar, which is testament to the country’s rapid development and flourishing economy, and we, at Enterprise Qatar, are honoured to be involved in such a globally recognized and remarkable initiative”. Al Mannai concluded by encouraging any Qatar-based entrepreneurs to approach Enterprise Qatar for support and advice in taking their creative ideas and innovations forwards. Abdulaziz Al-Sowailim, Chairman and CEO of Ernst & Young MENA, said, “It gave me immense pride that we were able to bring our Entrepreneur of the Year Programme to Qatar and all of our finalists were deserving of the accolade. They have worked tirelessly to build their businesses and I was delighted to be part of the ceremony to celebrate their achievements. My congratulations of course go to Ashraf Abu Issa who will now go on to represent the State of Qatar at our World Entrepreneur of the Year Award in Monte Carlo in June and I wish him every success there. I now look forward to next year when we hope the stories of this year’s finalists inspire even more entrants to our program.” Ashraf Abu Issa will officially represent the State of Qatar in the Global World Entrepreneur Hall of Fame to compete for the title of Ernst & Young Entrepreneur of the Year in Monte Carlo between 7th and 10th of June 2012.
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human resource
Get ready for the market
and kkenhorst Elsbeth Ble ard-Duttenhofer ayn Danielle M
How do you know that your CV caters to the expectations and requirements of the job market in Qatar? Is there a specific format? Elsbeth Blekkenhorst and Danielle Maynard-Duttenhofer, Founders, Global Women Qatar, tell us how to get our CV in order for the Qatar market.
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t Global Women Qatar we receive CVs on a daily basis, from candidates from different cultures and educational backgrounds. Not every CV looks the same. We noticed that different nationalities mould their CVs into different formats. But what does the Qatari market want to see in your CV?
Before you start writing your CV think about what kind of role you are exactly looking for, which you feel you would like to do and what you are good at and then make sure your CV reflects this. You do want to create a positive impression about yourself. • C Vs give basic information – your education, work experience, skills and achievements. • Cover letters explain why you want the job and what makes you the right person for it. State your motivation and suitability in a positive way. CV tips • The presentation of your CV is vital. Keep it simple. You want your achievements to stand out. • Be consistent in the usage of letter font that is clear and easy to read, such as Arial. • Stick to preferably two pages and mention the most relevant and important information. Potential employers are not interested in you having won a line-dance competition when you were sixteen! • At the top of your CV start with your name and contact details. Make sure you include your date of birth. In Qatar it is also very important to include a professional picture of yourself.
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• M ake sure you include information in the following order – relevant jobs and work experience, achievements, education, qualifications, and interests that help prove you’ve got the right skills and experience for the job. • The following information should not be included – information on your children, state of health, or reasons why you left other jobs. • If you apply for different kind of jobs make sure you change your CV for each job you apply for. Carefully look at the job description and emphasise the skills or experience mentioned. • If you’re asked for referees, include a past employer, a university teacher or a sports coach. Before you add the referees to your CV make sure to ask that person if they will give you a reference. If you haven’t asked write “References available on request” at the end of your CV. • Read over your CV a few times and make sure there are no spelling mistakes. CV language • Keep sentences factual, to the point, sharp and positive. For example “Conducted training for senior management” or “Gained valuable experience in HR consultancy and business development”. • Make sure your CV is always up to date. • Use bullet points to list your skills, work experience and achievements in recent jobs. • Keep your CV positive and make sure to highlight your achievements. • Make sure the information in your CV is correct and right else you’ll get caught during your interview. After submitting your CV to an employment
agency, follow up to ensure that they have received it. Do call and speak to a consultant. You will then have the opportunity to properly discuss your background and aspirations. You might want to make a career change which is not mentioned in your CV. Discuss what kinds of opportunities are out there in the market. You might be happily surprised and ready for that change. Qatar offers you many different opportunities you would not have had in your home country or in the country where you lived before moving to Qatar. Make sure you stay in contact with the employment agency where you submitted your CV. If you directly submitted your CV with a company, like through their Website try to find out who the responsible person is who could help you further in the process. Although experience has taught us that it is hard to find out who the right person to speak to is. Further on, in Qatar it is very important to know the right people, the people in your network and personal and professional relationships that you have built. This is because many roles in Qatar are not advertised but created when a specific candidate profile is presented to the business.
About Global Women Qatar was established in January 2012 as Qatar’s first employment agency to focus exclusively on the recruitment of women who already reside in Qatar. We are a very dynamic, rapidly growing employment agency with both local and expatriate women in our database. Our candidates come from different educational backgrounds with a variety of qualifications and skills such as HR, Learning & Development, Sales & Marketing, PR & Communications, Finance, Accountancy, Project Management, Healthcare, IT and PA/Secretarial. We chose to focus on women as women in Qatar are one of the important pillars of Qatar’s National Development Programme (2011 – 2016) and Qatar’s National Vision 2030 and they are very eager to work and to further grow their careers.
Legal
Protecting what’s yours Before the turn of the millennium, Qatar had very few regulations in force that allowed intellectual property rights to be protected. In the last decade, Qatar has made real progress towards enacting legislation and implementing practices to enable rights holders to protect their intellectual property in Qatar. David Harper, Associate, Clyde & Co, explains to us the importance of Trademarks.
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ince 2002, new laws with respect to trademarks, registered designs and patents have been passed. During this time, Qatar has also acceded to various international treaties, including the Berne Convention, the Paris Convention, the Patent Co-operation Treaty, the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty. While these steps are a marked improvement, they hopefully only mark the first of a long line of reforms in the field of intellectual property for Qatar. As Qatar seeks to further diversify its economy as part of its National Vision 2030, it will move away from its traditional reliance on oil and gas towards a knowledge-based economy. As part of this reform, further changes will hopefully be made to Qatar’s existing intellectual property laws and practice to provide additional comfort to potential investors and international rights holders that their valuable assets may be effectively protected in Qatar. A brief note on some of the key provisions of each of the current laws and practice follows: Law No. 9 of 2002 Law no. 9 of 2002 pertaining to Trademarks, Commercial Indications, Trade Names, Geographical Indications, and Industrial Designs and Models was issued on 8 June 2002. To
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date, the Implementing Regulations to this law have yet to be drafted. Trademarks The existing trade marks law and registration procedures in Qatar are adequate for providing national and international brand owners a base level of protection for their trade marks in Qatar. The current law forms an essential part of the legal framework that encourages brand owners protect their trade marks as a first step to commercializing their brands through the sale or licensing of branded products and services in Qatar. Qatar Airways and Al Jazeera are shining examples of how the current framework in Qatar has enabled two local businesses to protect and foster their intellectual rights in Qatar, before building up an international reputation by using and protecting their brands abroad. Further reforms are necessary, however, in order to provide brand owners with an even greater level of comfort for protecting their brands in Qatar. Currently, trade marks are classified in
Qatar with respect to an earlier version of the Nice Classification (which is an international system for classifying goods and services). In an effort to bring its practices further in line with current international standards, Qatar would be wise to adopt a more recent edition of the Nice Classification. Qatar currently classifies trade marks according to the 42 classes of the 7th Edition of the Nice Classification, which entered into force on 1 January 1997. In the 15 years since then, three subsequent editions have been implemented, with the 10th Edition entering into force on 1 January 2012. International brand owners are used to classifying their trade marks under the 9th or 10th Editions of the Nice Classification – which both have 45 classes. On this basis, there is some disconnect between Qatar and the majority of the international community with respect to the way in which it classifies trade marks, and will hopefully address this issue in the next round of reforms.
Qatar Airways and Al Jazeera are shining examples of how the current framework in Qatar has enabled two local businesses to protect and foster their intellectual rights in Qatar, before building up an international reputation by using and protecting their brands abroad.
Legal
David Harper
In addition, if the Implementing Regulations were issued to supplement the existing law, then this would help to clarify boarder measures, opposition procedures and documentary requirements (especially with respect to foreign applicants). Industrial designs To date, the Implementing Regulations to this law have yet to be drafted and a receiving office for design applications has yet to be set up. Therefore, it is not currently possible to obtain registered protection for industrial designs in Qatar. Traditionally, designs have been protected by way of cautionary notices published in local newspapers. While such cautionary notices serve to put third parties on notice of an applicant’s rights in the design, a cautionary notice is not as effective as a registration, as it does not afford rights holders with the same level of protection. Arguably, the publication of a cautionary notice would help to deter third party infringers and could be of assistance in an infringement case. However, as a cautionary notice does not afford the right holder with any formal degree of registered protection for its design, the publication of the design could provide a third party with the means to develop a similar design that narrowly avoids the scope of the design contained in the cautionary notice. In this way, the publication of a design in a cautionary notice could actually be detrimental to the rights holder. Patents Qatar enacted a Patent Law in 2006 (pursuant to Decree No. 30 of 2006). This law envisaged a
patent office being set up within the Ministry of Economy, with filing and examination procedures being dealt with pursuant to Implementing Regulations.
Copyright In 2002, the law of Protection of Copyright and Neighboring Rights was passed. However, Implementing Regulations have yet to be issued.
However, no Implementing Regulations have been issued and the patent office is not yet functional. Accordingly, it is not currently possible to file a patent application in Qatar.
Law No. 7 of 2002 protects original literary and artistic works including computer programmes and databases which are creative in the selection and arrangement of their subject matter. Qatar is a member of the Berne Convention, and protection under the copyright law extends to works covered by international agreements.
GCC patent protection in Qatar Many patent applicants seek to obtain protection for their technology in Qatar by filing for patents with the GCC Patent Office in Riyadh. The GCC Patent Law operates on the premise that patents granted by the GCC Patent Office apply in all GCC states, with enforcement of GCC patents being the responsibility of each individual GCC state. Qatar ratified the GCC Patent Law and Regulations in 1996. The ratifying legislation specifically gave force of law in Qatar to the system operated by the GCC Patent Office. However, this legislation does not deal with the enforcement of GCC patents. As a result, at present, there is no clear regime for enforcing patents granted by the GCC Patent Office in Qatar. Patent Convention Treaty (PCT) Qatar recently acceded to the Patent Convention Treaty (PCT), with effect from 3 August 2011. Rights owners with an interest in Qatar may look forward to making use of the international system offered by the PCT in order to obtain protection in Qatar more efficiently and effectively than is available under the current system. However, the introduction of the PCT in Qatar will not give rise to any immediate change in practice. Until the Patent Office starts to accept patent applications and the Implementing Regulations are issued, it will not be possible to file a patent application in Qatar.It is hoped that Qatar’s accession to the PCT will result in a clear regime for securing and enforcing patent rights in Qatar. In the meantime, the only option for those seeking to secure patent protection in Qatar remains to file for protection through the GCC Patent Office, taking into account the potential enforcement difficulties of this option.
Interestingly, under this law, works of national folklore is deemed to be public property of the State, which is charged with its protection by ‘all legal means’ and shall act as the author of works of national folklore. The way forward In the last decade, Qatar has made rapid progress in enhancing its intellectual property laws. While there is room for further reform, the steps already taken cannot be overstated. Intellectual property laws are just one factor contributing to gaining and enhancing the business confidence of major international companies in the retail sector. Business confidence in the retail sector is crucial to Qatar’s long term economic success.
About David is an intellectual property solicitor in Clyde & Co. David holds a Bachelor of Laws degree and a Bachelor of Arts degree from the University of Otago, New Zealand. David is admitted as a barrister and solicitor to the High Court of New Zealand. He joined Clyde & Co in 2008 and specialises in intellectual property law, dealing with contentious and non contentious matters. Prior to joining Clyde & Co, David worked in a dedicated intellectual property team within a large commercial firm in New Zealand. If you would like further information please contact David Harper at david.harper@clydeco.com.qa.
Note: Qatari Laws (save for those issued the Qatar Financial Centre to regulate internal business) are issued in Arabic and there are no official translations, therefore for the purposes of drafting this article we have used our own translations and interpreted the same in the context of Qatari regulation and current market practice.
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marketing
ON YOUR MARKS!
In the previous article, we discussed the legalities of trademarks. Now, Mark Hill and Fiona Robertson, media lawyers, the rightslawyers, take a look at how brands are created, and can be protected through trademarks.
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marketing professional that we know, once told us that a brand name has a personality. Even now, after all these years, we still think that he was right. That is why trademarks are one of the most important elements of a business. It is the brand that defines the image of the product or service that you are selling and it is the brand that identifies the package of things which your brand represents. And when you look at the number of brands in this region, branding is becoming ever more important in the marketing game. Brands are wonderful but it is very hard for us when we watch people throwing their money away by starting to use a brand that someone else can claim right on. We think there must be very few things more
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upsetting than having to change a brand after investing in a large marketing spend! Or by spending money promoting a brand but not protecting it – imagine how you would feel if someone else was benefiting from the reputation you were building through a brand and there was nothing you could do to stop them! The only way of ensuring that you can continue to use your brand in the future and that you can stop other people from you using it too, is by developing it yourself and then registering it as soon as you can.
Developing the brand If you are a clever multitasker, you will probably take on the task of designing your brand and logo yourself, but not all of us are that creative. So we usually have to go and find someone to create that brand and logo for us. If you do this, you need to be careful when putting together the terms that will cover the creation of the brand and logo. Firstly, be sure that the rights to the materials that are created are assigned to your company under a contract that is signed by both parties.
The way trademarks work around the world, including the Middle East, is that they are registered in one or more of the established 45 classes of goods and services – these classes list every type of product or service you can think of.
marketing
Mark Hill
Too many people omit this vital step yet without it, the person or company that creates the materials will retain ownership of the materials. Simply paying for them under a purchase order will not assign those rights. Secondly, you might want to consider contractually restricting your designer from creating any logo that is similar in design to yours for a set period (or forever if they will agree to that). Whilst this will not stop anyone from copying it, it will contractually allow you to stop the designer from (even inadvertently) taking too much inspiration from your design when creating new ones. Make sure that your contract contains adequate scope for you to approve designs as you go. Some designers will want to charge extra for a re-design and this can end up becoming a costly exercise. Which brands should you protect? If you look around at the various trademarks that you come across in a day (remember everyone who sells any kind of product or service uses some kind of trademark), you will see that sometimes they are words only (like for example our brand “therightslawyers”). A registration for these words will mean that no one else could use the mark which includes or is similar to the words “therightslawyers”. You’ll see stylised versions of brands – a registration for this protects the actual way the words are depicted and gives different protection than for the words alone. The final alternative would be a logo, for example the McDonalds “M”, the Starbucks logo with the green circle and so on.
Where? Ok, so next we figure out where you want your brand to be protected and a good starting point is where you sell or plan to sell your products and services. What we usually advise clients is to think about their major brands and your target countries for say the first 9-12 months – that is what you should seek to protect by trade mark registration now. The reason for this is simply that the trade marks process can take a while, particularly if you are doing a number of applications at once.
Fiona Robertson
Always use a trademark as an adjective and never as a noun i.e. talk about a Rolls Royce car rather than a Rolls Royce On timing, even in the fastest jurisdictions around the world and even assuming there are no problems as part of the application process, you will still be looking at six months as a minimum from the date of application. Ultimately, it will come down to a costbenefits analysis – where do you want to spend your money? Which goods and services? So once you know which brands and where, then we need to figure out what for. The way trademarks work around the world, including the Middle East, is that they are registered in one or more of the established 45 classes of goods and services – these classes list every type of product or service you can think of. Basically, whatever business you are in will fall into one or other of the classes. Remember though that you will not get protection for everything simply by submitting an application, you need to be very specific about what you want protection for. That’s why you get different companies using what looks like the same mark but for very different goods or services – POLO is owned separately as a car, a fashion brand and a sweet! Looking after your brands It also never ceases to amaze us how careless some people can be with their
brands! Remember that these things are assets and they need to be looked after just as you would look after a car, a piece of furniture, a bit of machinery and so on. So what about some tips on how to use them properly? 1. Always use a trademark exactly as it is registered; 2. Always use a trademark as an adjective and never as a noun i.e. talk about a Rolls Royce car rather than a Rolls Royce; 3. Ensure that the trademark stands out from other written material in order to give emphasis to the trademark; and 4. Use the TM and ® symbols properly – TM can be used in relation to an unregistered trademark whereas ® must only be used in relation to registered trade marks.
About therightslawyers is the first and only boutique TMT (Technology Media and Telecommunications) firm set up in the Middle East to cater exclusively for the creative industries, businesses that are driven by or reliant on intellectual property rights (including brand and other IP rights owners, companies facing counterfeiting and IP infringement issues, franchise operations, pharmaceutical and biotech companies, and technology, IT and telecommunications Industries. For more information, please visit www.therightslawyers.com
May 2012
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tax
get the numbers right
The new tax law (Law No. 21 of 2009) was introduced with effect from 1 January 2010 and the executive regulations for the law were effective from 1 July 2011. Considerable guidance is now available on what impact the law has for large businesses, but if you run an SME in Qatar then what does it mean for you? Paul Smith, Partner, Price WaterHouse Cooper, answers some of the key questions that SME’s operating in Qatar may have about their tax compliance obligations.
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here are two main tax compliance requirements that you may have when you commence a business in Qatar:
• Register with the tax authorities, the Public Revenues and Taxes Department (PRTD) • Apply for a tax card The tax law says that if you are a taxpayer and you are carrying on a business activity in Qatar then you should register with the PRTD and submit an application for a tax card within 30 days of obtaining commercial registration or the first day of realisation of income from the activity, whichever happens earlier. In practice it is prudent to act within 30 days of obtaining commercial registration even if there may be a delay before you receive your first income from the activity. There are penalties for failure to register and apply for a tax card. A taxpayer is defined as “a natural or legal person subject to tax under the provisions of the law.” This means all individuals and corporate bodies carrying out a business activity or with a
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source of income in Qatar are taxpayers, unless they are covered by exemptions. A tax card is usually issued to a taxpayer that is either resident or has a permanent establishment (basically a fixed place of business) in Qatar. The process of obtaining the tax card tends to be quicker for entities that also have a commercial registration. Your first accounting period will start at the beginning of the tax year (i.e. 1 January) or at the commencement of activities in Qatar. The duration of the first period must be a minimum of 6 months and a maximum of 18 months. Thereafter, each period will be 12 months in duration. The default tax year end date is 31 December; however an application may be made to the PRTD to seek approval for a different year-end date. This can be done at the same time as the registration with the PRTD and the application for a tax card. Registration with the PRTD and the application for a tax card should be done by submitting a
request on Form No. 1 – Registration which can be downloaded from the website of the Ministry of Economy and Finance (www.mof.gov.qa/english/tax/index17.html). Moving forward to Corporate Income Tax (CIT) compliance obligations, businesses wholly or partially foreign (non-GCC) owned are subject to corporate income tax (normally at 10% of net profits) if they derive income from sources in Qatar. The compliance obligations for such entities and for many tax exempt entities are as follows: File a CIT return If you are subject to tax in Qatar then you are required to submit a CIT declaration to the PRTD within four months of the end of your accounting period (e.g. by 30 April 2012 for an accounting period that ends on 31 December 2011). It is permitted to submit an application to the PRTD to extend the filing deadline based on reasonable grounds. An application for an extension should be made 30 days prior to the expiry of the filing deadline.
tax Sales Legal
Pay any CIT liability (if applicable) The tax required to be paid is based on your submitted tax return. You should send a payment order with the CIT declaration. Comply with audit and accounting requirements: A. You will be required to submit audited financial statements signed by a locally registered auditor together with the tax declaration to the PRTD if: • the capital of your taxable entity in Qatar exceed QAR100,000 (approximately USD 27,300); or • the annual taxable income of your entity exceeds QAR 100,000; or • in the case of a branch, if the head office is situated outside of Qatar. The tax law requires accounts to be prepared in accordance with International Financial Reporting Standards (IFRS); however you may make an application to the PRTD to use another accounting method. B. There is also a requirement that your tax return is co-signed by a registered auditor. This means that in practice the audit is normally carried out by the same firm that prepares the tax return. C. You will also be required to keep and maintain records and documentation pertaining to your Qatar activities in the State for a period of ten years following the end of the taxable year to which the records and documentation relate. There are penalties for failure to meet these compliance requirements. So what about Withholding Tax (WHT) compliance obligations? It does exist, if you make certain payments to non-residents (unless you are an entity registered in the Qatar Financial Centre). The new tax law introduced a requirement for all entities registered in Qatar or with a permanent establishment in Qatar to withhold a percentage of certain payments made to non-residents that do not have a permanent establishment in Qatar. This means that although the withholding tax liability falls on the non-resident with activities in Qatar without a permanent establishment, the withholding tax compliance requirement is borne by the Qatar entity.
Moving forward to Corporate Income Tax (CIT) compliance obligations, businesses wholly or partially foreign (non-GCC) owned are subject to corporate income tax (normally at 10% of net profits) if they derive income from sources in Qatar.
Circular No. 3/2011 confirmed that the requirement to withhold applies to all entities registered in the State of Qatar including government bodies, public authorities and corporations. Entities registered in the Qatar Financial Centre do not have to withhold. The applicable WHT rates are shown in Table 1 Table 1: Applicable WHT Rates
Payment
Royalties and technical fees (i.e. payment is for managerial, consulting or technical services) Interest, commissions, brokerage fees, director’s fees, attendance fees and payments for any other services carried out wholly or partly in Qatar
Withholding tax on gross payment
5%
7%
There are also other compliance regulations such as: Notification obligation You will be required to notify the PRTD of any contracts you enter into if certain conditions are satisfied. • For contracts concluded with nonresidents who do not have a PE in Qatar, the PRTD must be notified whatever the value of the contract. A copy of the contract must also be submitted if its value exceeds QAR 100,000. • For contracts concluded with residents or non-residents who have a PE in Qatar, the PRTD must be notified if the contract exceeds the following thresholds: - Contract of services if it equals or exceeds QAR 200,000. - Contracts of construction, supply of goods and provision of services if they equal or exceed QAR 500,000.
WHT applies on such payments to both external parties or to related parties. There is no WHT on payments for goods. If you are making relevant payments to nonresidents without a permanent establishment in Qatar then your full compliance responsibilities are as follows: • Withhold tax, account for it and remit it to the PRTD before the 16th of the month following the month during which the payment was made. • Complete a WHT statement setting out the payment and recipient’s details and submit it to the PRTD in a prescribed format along with evidence of the WHT payments. • Issue and deliver a WHT certificate to the recipient.
Paul Smith
May 2012
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tax Table 2: Retention Requirement Category
Status of recipient a) Payments to companies resident in Qatar
1
b) Payments to Qatari/GCC nationals resident in Qatar carrying out activities in their own name (i.e. sole proprietorships) a) Branches of foreign entities registered in Qatar, the activities of which are not restricted to a fixed period, contract, or project
2
3
b) Branches of foreign entities registered in Qatar with activities limited to a contract, project, or a fixed period of at least one year
Final contract payment should be made upon the presentation of a valid tax card issued by the PRTD. A tax assessment or no objection certificate issued by the PRTD is not required.
Final payment should be made upon the presentation of a valid tax card issued by the PRTD. A tax assessment or no objection certificate issued by the PRTD is not required. The higher of the final contract payment or 3% of the contract value (excluding value of supplies and work performed outside Qatar) should be retained until the branch produces a no objection certificate issued by the PRTD. Interim contract payments can be made in full if a tax card is presented.
c) Non-residents with no commercial registration in Qatar or non-resident entities registered for a contract, project or activity of less than one year
Payments would be subject to withholding tax. Taxpayers who have a permanent establishment in Qatar should submit an application to the PRTD to claim a refund of the tax withheld if appropriate.
Taxpayers registered under Qatar Financial Centre (“QFC”)
Contractual payments should be made upon submission of a valid certificate issued by the relevant QFC authority confirming that the entity is registered in the QFC.
Retention requirement If you are a Qatar resident entity then you may have a requirement to retain a proportion of payments made to residents or non-residents who have a PE in Qatar. Depending on the circumstances of the recipient, you may not have to retain or if you have already retained amounts then they can be released once either a valid tax card or tax clearance certificate issued by the PRTD has been presented. The “retention rules” are outlined in Circular No. 2/2011 which was issued by the Ministry of Economy and Finance on 12 June 2011. The precise operation of the retention rules depends on the status of the recipient of the payment as shown in “Table 2.” Even if your business is wholly owned by Qatari or GCC nationals you may have CIT and WHT compliance obligations depending on the nature of your activities. CIT compliance The tax law states that taxpayers carrying out a tax exempt activity shall submit a tax return accompanied by audited financial statements. This is the same information that a taxable entity is required to submit. Circular No. 4/2011 dated 7 August 2011 confirms that companies and permanent establishments wholly owned by Qatari/GCC nationals are required to file
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CIT returns (accompanied by audited financial statements) if they meet one of these conditions: • Share capital equal to or more than QAR two million, OR • Gross revenue equal to or more than QAR ten million WHT compliance Regardless of your ownership, if you are registered in the State of Qatar then you will have a WHT compliance obligation if you make certain
payments to non-residents that do not have a permanent establishment in Qatar. See above for further details on WHT. If you fail to comply with any of the requirements then you could be subject to penalties as mentioned in “Table 3.” In limited circumstances the penalties can be remitted or reduced. However, the provisions of the law do not apply to the following: • Private associations and foundations and private foundations of public interest. • Not-for-profit bodies. • Salaries, wages, and allowances. • Gross income from legacies and inheritances. • Qatar Financial Centre entities. The only exception to this is the withholding obligation which applies to all bodies other than those registered in the Qatar Financial Centre.
About Paul joined PwC Qatar in September 2010. Prior to moving to PwC Qatar, he worked for over 5 years for KPMG Aberdeen in the UK. During his time at KPMG he worked on corporate tax compliance for many companies operating in the North Sea Oil & Gas sector. In Qatar, Paul has provided tax compliance and consultancy services for clients operating in a range of industries including financial services, oil and gas, manufacturing, construction and telecommunications. Paul can be contacted at paul.smith@qa.pwc.com
Table 3: Penalties for withholding tax Compliance obligation
Penalty for failing to comply (QAR)
Register with the PRTD and apply for a tax card
5,000
File a CIT return within 4 months of the end of the accounting period
100 per day (capped to a maximum of 36,000)
Pay any CIT liability within 4 months of the end of the accounting period
1.5% of the amount of tax due per month (or partmonth) of delay (capped to the amount of tax due)
Prepare audited financial statements (required if the capital or annual taxable income exceeds QAR 100,000 or if the head office is situated outside Qatar)
15,000
Maintain local accounting records (records must be kept in Qatar for 10 years)
15,000
Deduct withholding tax from certain payments made to non-residents and remit tax to the PRTD by the 16th of the month following the month in which the payment to the non-resident is made
100% of tax not withheld in addition to withholding tax due
Retain a proportion of payments made to residents and permanent establishments of non-residents
No formal penalty
Notify the PRTD of contracts entered into if certain conditions are satisfied (see below).
country update
Economic landscape
Qatar has prospered in the last several years with continued high real GDP growth in 2011. Even though there has been a global slowdown and the region has been gripped with the Arab spring, Qatar has been able to protect its economy and consumers.
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he highest population growth in the world was experienced by the four Gulf countries of Qatar, UAE, Kuwait and Bahrain between 2005 and 2010. Their small indigenous populations, combined with energy wealth, have drawn an influx of foreign labour and developed an attractive consumer market. However, this has led to an economic dependency on expatriates, as demonstrated by the global economic downturn of 2008-2009, which hit local businesses and drove away potential consumers. Qatar led the population growth worldwide over 2005-2010, with its population expanding by 91.7%, followed by the UAE (82.0%), Kuwait (52.4%) and Bahrain (36.6%). These states have become attractive markets, with businesses gaining access to a spread of consumers, from blue-collar workers to top-tier executives. Per capita disposable income is forecast to increase at an average annual rate of 3.6% from 2012-2020 in real terms.
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Consumer confidence has declined in Qatar from levels before the 2008-2009 global economic slow down. Despite having one of the highest GDPs per capita in the world at QR332,423 (USD 91,325) in 2011, consumer expenditure per capita was relatively low at QR49,898 (USD13,708) due to the large amounts of wealth being funneled into government expenditure and the country’s sovereign wealth fund. However, per capita consumer expenditure will grow as the economy diversifies into high-tech and other industries, and it is forecast to steadily increase to QR65,959 (USD18,121) by 2020 in real terms. In 2011, 62.0% of consumer expenditure was spent on discretionary items (which is everything except spending on food, non-alcoholic beverages and housing), up slightly from 61.6% in 2005. Annual per capita disposable income stood at QR62,768 (USD17,244) in 2011, ranking it third in the MENA region. After a 4.9% real decline in per capita annual disposable income from 20052009, growth improved from 2009-2010 at a real rate of 6.3%, and it is forecast to increase at a real average annual rate of 3.8% from 2011-2020. The savings ratio has increased
from 14.6% of disposable income in 2006 to 16.5% in 2011. Qatar is heavily urbanised, with 95.9% of the population living in cities in 2011. This provides easy distribution and service provision for companies that want to sell cars, electronics and communications technologies to the country’s affluent citizens. Wealthy expatriates and visitors from neighbouring countries may present an even greater opportunity for retailers of luxury goods, especially in Doha, which is a prime destination for shopping due to its many malls. In common with other markets in the Middle East and North Africa, Qatar has a young population compared to OECD countries. Generation X (those aged 27-39 in 2011) are by far the biggest consumer group in 2011, totaling 705,300 or 37.2% of the population. They will continue to be the largest group by 2020, when they will comprise 36.5% of the population. They will continue to drive demand for imports, along with baby boomers (those aged 40-60 in 2011), who are set to rise from 23.2% of the population in 2011 to 29.0% in 2020. This increase is expected to increase demand for leisure and health care services by 2020.
Partnership opportunities Private Sector (Al Kitaa Al Khass) is an Arabic and English magazine, presented and supported by Qatar Development Bank (QDB) and published by CPI. It is aimed at business owners and senior executives in the private sector in Qatar. Armed with practical advice, it highlights key issues for the business community. The driving force for regional economies is the private sector – a catalyst for growth, development and job creation. With the world’s spotlight on Qatar’s development activities and the buzz being created around 2022, this sector is going to grow by leaps and bounds. That’s great news if you’re targeting the private sector, which spans across almost all industry verticals, but the problem you face is identifying the most dynamic and competitive companies amongst a sea of competitors. A key answer for the past half decade has been CPI’s UAE-based magazine SME Advisor Middle East, which has delivered valuable business information to leading SMEs across the region, helping them develop their businesses, putting them in touch with valued partners and fuelling growth even in a stalled global economy.
Now, with the support of QDB as our presenting partner, we have launched the same business values, tailor-made for Qatar in the form of the brand Private Sector. This will encompass magazine, events, online and several other initiatives to drive Qatari entrepreneurship and the private sector. This is your chance! This is a market you cannot afford to miss. This is a market that you can reach in an intelligent, focused way, working with the expert team that brought you SME Advisor Middle East and has now launched Private Sector magazine in Qatar.
For more information about advertising and other partnership opportunities, please visit www.privatesectorqatar.com/en For marketing ideas and opportunities, please contact richard@cpidubai.com
country update
The risks of inflation are modest but have risen after the government introduced a permanent increase in public sector wages. Prices are forecast to 4.1% in 2012.
Table1: Population growth
Population, Millions
Kuwait
United Arab Emirates
10
Qatar
Bahrain
8 6 4 2 0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Source: Euromonitor International from national statistics/UN Economic prospects Qatar was ranked as the most competitive economy in the Middle East and North Africa (MENA) in the World Economic Forum’s 2011 Global Competitiveness Index (GCI). Real GDP growth
Other goods & services Housing
20000
Food and non-alcoholic beverages
15000
10000
5000
0
2000
2005
2010
2015
2020
Source: Euromonitor International from National statistical offices/OECD/Eurostat Note: (1) Data for all years is in fixed constant US$; 2015 and 2020 data refer to forecasts. (2) Other goods and services refers to consumer expenditure on Alcoholic Beverages and Tobacco, Clothing and Footwear, Household Goods and Services, Health Goods and Medical Services, Transport, Communications, Leisure and Recreation, Education, Hotels and Catering and Miscellaneous Goods and Services
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was high, at 18.7% from 2010-2011, making it the second highest growth rate worldwide. Per capita income in 2012 is expected to be nearly USD110,000. The non-energy sector grew by 9.5% in 2011; the slowest pace in five years. This was offset by a rapid increase in exports of Liquefied Natural Gas (LNG). Growth of real GDP will moderate in 2012 with real GDP increasing by 6.0% owing to an anticipated drop in energy prices and the completion of several energy projects. Qatar has so far avoided the political turmoil seen in other Arab states in 2011 and maintains a high level of security, bolstering the confidence of individuals and companies looking to do business there. It is considered to have one of the best economic environments in the region. Real GDP growth was high, at 18.7% from 2010-2011, making it the second highest growth rate worldwide. Although Qatar has made some progress in diversifying the economy, GDP growth has largely come from the petroleum and gas sectors, as GDP from mining and quarrying of energy producing materials accounted for 58.1% of total GDP in 2011. However, real GDP growth is expected to cool to 6.0% in 2012 as the economy remains vulnerable to fluctuations in energy prices and global demand, and as several energy projects complete. The economy has suffered from inflationary instability, as high levels of inflation above 10.0% from 2006-2008 were followed by deflation from 2009-2010 when the real estate market plunged. However, the economy will experience a more predictable inflation rate forecast to stabilise at 4.0% in 2012.
Qatar’s real estate market is recovering after a period of sluggish growth. Many projects were delayed during the global financial crisis. Afterwards, rents and property valuations fell by 25-30% but have begun to rebound. Expatriate demand for housing finance is also rising. Qatar’s successful bid to host the 2022 FIFA World Cup will boost infrastructural spending even more over the next decade; including several stadiums and an underground rail system in Doha. In 2011 the Qatari Finance Minister said that infrastructure spending would total USD150 billion from 2011-2016, with most of it to be invested in sectors that are unrelated to oil. Qatar saw its total population increase by more than 15% per year between 2003 and 2008. This huge influx, coupled with the country’s swelling coffers, is driving public spending on infrastructure. Current projects involving water, power and transport are valued at USD 203 billion. On balance, Qatar’s winning bid for the 2022 FIFA World Cup and the country’s vast oil and gas wealth will continue to push infrastructural spending which will further stimulate its economy and attract foreign direct investment (FDI) inflows. As a result of the increase in government spending overall consumer expenditure is expected to grow by 3.7% in real value terms by 2013. Hence Qatar, as per the World Economic Forum’s 2011-2012 Global Competitiveness Index (GCI), is expected to maintain its high ranking as the most competitive economy in the Middle East and North Africa.
About Euromonitor International is the world’s leading provider of global business intelligence and strategic market analysis. We have 40 years’ experience of publishing market reports, business reference books, bespoke consulting projects and integrated online database Passport. Our research offers insight into industries, countries and consumers. We deliver quality information solutions to support strategic business planning. Euromonitor International is headquartered in London, with regional offices in Bangalore, Cape Town, Chicago, Dubai, Santiago de Chile, Shanghai, Singapore, Sydney, Tokyo and Vilnius and has a network of over 800 analysts worldwide.
About town
While the value of cross-border direct investment has grown substantially in the past decade, international investors have reason to be concerned about the impact of recent developments and policies on the free flow of international investment. “Investment underpins economic growth and has shared value for companies and governments alike,” said Peter Brabeck-Letmathe, Chairman of the Board for Nestle. “It allows companies to establish themselves in global markets and creates ties between domestic and foreign companies, allowing them to expand their activities and create new jobs.”
Fostering inclusive development The thirteenth session of the United Nations Conference on Trade and Development (UNCTAD XIII) was held from 21 to 26 April 2012 at the Qatar National Convention Centre. Private Sector brings you a snapshot of the exciting discussions.
E
stablished in 1964, UNCTAD promotes the development-friendly integration of developing countries into the world economy. UNCTAD has progressively evolved into an authoritative knowledge-based institution whose work aims to help shape current policy debates and thinking on development, with a particular focus on ensuring that domestic policies and international action are mutually supportive in bringing about sustainable development.
The World Investment Forum (WIF) was also held as part of the UNCTAD XIII from 21-23 April. The Forum witnessed the launch of revised Guidelines for International Investment , by the
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International Chamber of Commerce (ICC) to adapt to new challenges of the international investment environment and to further promote investment as a driver of economic growth.
The aim is for the Guidelines to facilitate crossborder investment for investors and governments, as well as to harness the vast potential of crossborder investment for stimulating balanced global growth. Trade and investment have the potential to reinvigorate the global economy during the present economic crisis, particularly by driving sustainable growth in developing countries. There has been a sharp increase, since the original Guidelines were drafted in 1972, in international investment inflows to, and outflows from, developing and transition economies. In 2010, these accounted for 52% of the total investment inflows and 29% of total investment outflows. Global inward investment flows now approach USD 1.2 trillion and sales of affiliates worldwide are just under USD 30 trillion, far in excess of world trade flows. There are also more than 2,800 bilateral investment treaties, many of them south-south.
High level discussion on women in development
About Sales Legal town
Another highlight of the conference was that HE Dr Hamad bin Abdulaziz Al Kawari, Minister of Culture, Arts and Heritage, was elected President of the Conference of UNCTAD XIII. Qatar has officially taken over the presidency of UNCTAD for the next four years, becoming the country in the Arab region to preside over the organisation since its inception in 1964. Emphasising on the role of women in the present day world, there was also a panel discussion the development of women. Her Excellency, Sheikha Al Mayyasa bint Hamad bin Khalifa Al-Thani, who inaugurated the high-level event, said that under the leadership of Her Highness is Sheikha Moza bint Nasser on this issue “Qatar will spare no effort in helping more women to achieve this goal.” His Excellency Dr. Hamad bin Abdulaziz Al-Kawari, Qatar’s Minister of Culture, Arts and Heritage, in his role as President of the Conference, who opened the event said that, “We believe that development is only meaningful where there is a role for women.” He added, “Without the involvement of women, development would be a lame duck.” Sheikha Al Mayyasa acknowledged the “special importance” that the issue of women has for the work of UNCTAD. She added that the leadership in Qatar also sees it as a “cornerstone of development”.
export locally produced goods and materials is an imperative concern that needs to be addressed.
thanked UNCTAD for choosing to host its conference in Doha.
In his conclusion, Pascal Lamy called for private sector driven processes to shape trade policies, the reduction of bureaucracy as an obstacle to free-trade, and the efficient administration of trade through national development policies.
He said, “We believe education, research and innovation are key drivers for the diversification of Qatar’s economy into a knowledge-base”.
While talking about development, technology cannot be ignored. An innovation and technology day was held to discuss the importance of technology and innovation for achieving faster economic growth and advancing sustainable human development. The session also explored how policies could be improved to make innovation and technology a more powerful lever for development. In his opening remarks, His Excellency Dr. Supachai Panitchpakdi, Secretary-General of UNCTAD, said; “It is a pleasure to be hosting the first ever innovation and technology day during an UNCTAD ministerial meeting. This has been made possible by the Qatar Foundation and we hope this is the first step towards an ongoing partnership.” Dr. Tidu Maini, Executive Chairman of Qatar Science and Technology Park, and Science and Technology Advisor to the Qatar Foundation,
In her keynote speech, Her Excellency Ms. Tarja Karina Halonen, Former President of the Republic of Finland, said the transformation that has taken place in Qatar over the last 20 years is “amazing”. As part of the conference, TASDEER in collaboration with UNCTAD organised a workshop on Generalized System of Preferences (GSP). The workshop was chaired by Mr Hassan Khalifa Al Mansoori, Executive Director, TASDEER. The workshop was focused on enabling participants reach reliable information on the aspects of GSP schemes of European Union, Canada and Turkey. It included coverage on various topics, such as product coverage, GSP rates, origin criteria, consignment conditions and documentary evidence. The workshop included presentations by Mr Taisuke, ITO and Ms Michiko Hayashi from UNCTAD. The UNCTAD XIII reinforced the importance of holistic and sustainable development of the region and the world that must be at the centre of the globalisation process.
The Director General of the World Trade Organisation, Pascal Lamy, outlined the necessary steps to facilitate greater inter-Arab region trade. The event brought together leading economists and prominent members of the region’s business community to consider what lessons had been learned from the Arab Spring. The Director General acknowledged the “timeliness” and “critical nature” of the discussion. He said: “The Arab Spring reminds us of one fundamental economic viable – unemployment remains a major social, economic and political challenge”. Noting that Arab states have “lagged behind” the rest of the world in employment levels for the last two decades, he said the lack of capacity to
TASDEER workshop on Generalised System of Preferences (GSP)
May 2012
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industry watch
winds of change
The Arab Spring has negatively affected the economies of many Arab countries, while also inspiring citizens to actively participate in bringing about social change and community development. Social entrepreneurship is often suggested as a way to combat unemployment and engage citizens in improving their local communities, both of which are urgently needed in the post-Arab Spring era.
U
sing data from an online survey carried out by Bayt.com and YouGov Siraj with more than 12,000 residents of 18 Arab countries, Stanford University’s Programme on Arab Reform and Democracy finds that despite the many institutional and structural obstacles social entrepreneurs face, there is a strong foundation for social entrepreneurship in the Arab region. Key findings include: • T here is a strong interest in volunteerism —more than one in four respondents region wide is currently active in some form of volunteering — indicating a greater involvement in social causes, a pathway towards social entrepreneurship. • In every country surveyed a large proportion of respondents indicated that if given the choice they would prefer to be self-employed or own a business. While many cited the greater independence it would offer, other business owners started their initiatives out of economic necessity not opportunity. • Roughly half of respondents across the region are at least somewhat familiar with the term entrepreneurship — in both its business and social senses —indicating growing awareness of this emergent sector. • A significant proportion of respondents expressed interest in entrepreneurship as a
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profession pointing to a high potential for growth in this sector. • The majority of respondents in every country stated that their personal economic situation has deteriorated as a result of the Arab Spring, suggesting that social entrepreneurship may emerge as an alternative sector for the region’s unemployed youth. • Across the region, the majority of respondents believe that young people are more interested in improving their communities and contributing to the long-term development of their societies after the revolutions. These changing attitudes and practices suggest the emergence of a new generation of social entrepreneurs across the Arab region.
In light of the opportunities suggested above, the survey revealed significant structural and cultural barriers in place that prevent the ecosystem of entrepreneurship from fully thriving in the region. Overall respondents indicated very high rates of failure of new businesses and NGOs. Lack of finance remains the largest challenge to starting a business, while bureaucratic hurdles such as legal registration and interference from authorities were cited by those operating in the NGO sector. The paper proposes the following recommendations to address these challenges and further encourage social entrepreneurship: • Increase the number of social entrepreneur incubators and support local organisations in incubating entrepreneurship; • Assist local organisations in reforming the legal and regulatory framework; • Use media tools to educate Arab societies about entrepreneurship; • Introduce entrepreneurial education in schools and universities; • Encourage partnerships between the public, private and NGO communities in Arab countries that identify, support, and celebrate entrepreneurs across the region; • Widen participation in initiatives run by the international development community to involve multiple stakeholders, with an emphasis on women and those from disadvantaged backgrounds; • Enhance the social accountability of social entrepreneurs’ projects.
Respondents interested in Private Sector, by country (%) Total Bahrain Lebanon Jordan Syria Kuwait Egypt Saudi Arabia UAE Morocco Oman Tunisia Qatar Algeria
0
10
20
30
40
50
60
70
80
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