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Interview with Amwal (Part 1): Qatar's National Vision 2030 Programme and Regional Portfolio Investment Strategies

28 November 2016
Giada Vercelli

The National Vision 2030 is a Qatari government programme focused on diversifying the economy away from hydrocarbons. Similar to other GCC countries, Qatar is working towards a knowledge-based economy through investing in R&D, technology, human development and education. The public and private sector spending needed to achieve this goal has had a fundamental impact on the GCC and international portfolio investment strategies. In a three part series, Talal Samhouri, Head of Asset Management at Amwal LLC discusses with Euromoney’s Giada Vercelli the appetite for international investment from public and private institutions, and what global asset managers and wealth managers are looking for in the GCC.

1. The National Vision 2030 focuses on diversifying the economy away from hydrocarbons. One example includes the $7.5bn Education City project and the Qatar Science and Technology Park, which commissions applied scientific research and turns it into commercialised products. Is there room to grow in spaces such as insurance and pensions, considering that long term institutional investors may also be interested in Qatar 2030 targets?

Amwal: Qatar has been preparing the economy to be a leader for the 21st century. It has decided to shift some state-run health services to the private sector as it seeks to ease the burden on its finances and involve the private sector more in contributing to the economic growth of the country. Currently, Qatar provides free healthcare to its roughly 300,000 citizens. However, Sheikh Tamim has reiterated that Qatar needed to cut wasteful state subsidies and transition from being a nation of "simple social welfare policies" to "a state of action" in the face of low energy prices. As government subsidies are progressively reduced, we envisage more room for private sector participation in insurance and pensions. Especially with the growth of the Qatar Financial Centre, which can and will be the hub for such services in the future, not for only Qatar, but for the region.

2. The implementation of infrastructure projects is creating many jobs and leading to population growth. What are the main economic consequences of this demographic change and how are you adapting your strategy?

Amwal: Though Qatar’s population growth is needed to support its infrastructure projects, it has prompted the country to contend with many new risks, including social environmental strains. Balancing economic growth with social development and environmental protection has been difficult. But with the Government’s different initiatives and increasing private sector involvement, our strategy encompasses increased investment into education, healthcare and real estate, first to accommodate the growing population and at the same time in anticipation of sustainable economic growth. There are some economic difficulties when, or if, a large number of expats suddenly leave Qatar, the economy would be hit by a downturn in productivity – delaying projects – and also by a loss in their spending. This is why the private sector and the Government have been adamant in growing the services and industrial sectors that cater not only for Qatar, but for the region and the world. Environmental issues will continue to be under pressure until the huge infrastructure build out is completed. Only then Qatar can become a regional model for environmental protection.

3. Are these infrastructure projects being awarded to big, state controlled companies or can we count on the involvement of private money? 

Amwal: The government announced plans to invest around $200 billion on infrastructure as part of its Vision 2030 development plan. All the infrastructure projects are handled by The Public Works Authority, Ashghal. This body plays a major role in contributing to the National Vision 2030. It has projects valued at over QR100bn under its wing currently which are to be delivered in the next five to seven years. While a lot of these projects are tendered to state owned companies, Ashghal has also partnered with companies all over the world. A lot of private money is already involved and there is potential for a lot more, with many more projects in the pipeline.

4. Do you see capital expenditure gathering momentum, underpinning the process of diversification and moving towards a sustainable growth model?

Amwal: According to World Bank data, the contribution of natural resources to Qatar’s GDP has decreased from 61.9% in 2005 to 28.2% in 2014. It has consistently been following a downward trend. Like all GCC countries, Qatar has been investing heavily in order to diversify and reduce its economy’s dependence on oil. The government cannot solve the challenge of diversification just by pumping more money into various sectors. Qatar needs to progress to be an open economy and capitalise on harmonising regulations in order to reach a stage of sustainable growth. If Qatar focuses on protecting its internal jobs without being open to hiring more skilled expatriates, it might slow down the process. Private sector jobs can be ensured for the young nationals only if they are taught the necessary technical and professional skills. The Government is taking the right first steps in order to enable that. If certain things are done right, this capital expenditure could move the economy towards a sustainable growth model.

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