Transport and logistics to Qatar
(Last updated: 4 Nov 2011)
Trends and opportunities
The market
Qatar is among the most prosperous countries in the world and is one of the fastest growing economies in the Middle East. The growth in the economy has been fuelled by its large production of oil, liquefied natural gas and condensates, supported by increases in hydrocarbon prices.
In the 2011-12 Qatar budget, infrastructure is the lead sector with 34 per cent of total investments allocated to infrastructure upgrades. The five-year development plan recently announced, also points to strong infrastructure spending in the medium term. The announcement in December 2010 that Qatar is to host the FIFA World Cup 2022 has stimulated private and public infrastructure and industrial projects to the value of more than US$140 billion.
Infrastructure investments are valued at US$80 billion, followed by oil and gas (US$75 billion), real estate (US$55 billion), petrochemicals, and power and water investments valued at US$11 billion. The highest valued project is the Qatar Rail Network Program, valued at US$42.9 billion. Next is Qatar North Gas Field Development (US$20 billion) and the Pearl-Qatar Real Estate development valued at US$14 billion. The New Doha International Airport was the second highest infrastructure project in Qatar at US$7 billion. The Ras Laffan Petrochemical Complex was valued at US$6 billion. Dohaland’s Musheireb project and Lusail Real Estate Development Company’s Lusail City were valued at US$5.5 billion each, whilst Qatar Entertainment City was valued at US$3 billion.
Qatar has enormous potential as a market for Australian products and services and as a source of overseas investment. Despite the challenges involved in establishing strong local relationships and setting up operations, many Australian businesses have successfully established themselves in Qatar with several playing a leading role in major development projects. Some prominent Australian names based in Qatar are: Cox Architecture, GHD, Worley Parsons and Leighton Contracting; and Advanced Rail Group.
Airports
Qatar has one international airport with a New Doha International Airport, NDIA, under construction. It is home of the national carrier, Qatar Airways.
Qatar Airways is one of the fastest growing airlines in the world. It aims to treble its fleet to 120 aircraft by 2015 and to also develop a global cargo. It has placed over $15 billion in aircraft orders.
The current airport has no airline gate facilities with all flights disembarking on the tarmac with passengers bussed to the main terminal. Due to delays of the development of the NDIA, there continues to be upgrades to the existing airport facilities. A new First/Business Class only departures lounge has been added and new buildings to split the arrival and departure facilities are underway. The existing airport’s capacity is 12 million passengers and it has been operating over capacity for several years.
The NDIA project is currently valued at ~US$14 with a first stage anticipated completion date of late 2011 (which is several years behind schedule). Passenger capacity will be 22 million passengers and 750K tonnes of cargo. It includes provision for a rail link to the new metro rail network currently under development. It is expected to expand its capacity to handle 50 million passengers and cargo of two million tonnes.
Ports
Qatar has three main ports including a commercial port in Doha which is being relocated further down the coast to increase capacity and to allow development of the existing port area for real estate projects. The New Doha Port project is the world’s largest greenfield port development and is estimated to cost US$7 billion. The entire project is likely to be completed in 2015 and is to be executed in three phases with the design and consultancy work as well as environmental assessment impacts already completed.
The new port will cover an area measuring 20 sq km and is to be located between Al Wakra and Mesaieed Industrial City. The container handling capacity of the new port after the completion of the first phase will be two million, which is to be upgraded to six million by the end of the construction. There is also a major port at Ras Laffan specifically serving LNG tankers for LNG export and another at Mesaieed.
Roads
With Qatar winning the hosting rights for FIFA 2022, the pressure is now on Public Works Authority (Ashgal) to deliver a state-of-the-art infrastructure. Ashghal has plans to invest $20 billion on new roads and related drainage and infrastructure over the next five years. Major development projects have been planned to address traffic congestion on Doha’s main arterial roads. Some of the work carried out includes road improvement works, construction of temporary and permanent roads and pavements, traffic signs, road markings and surface water drainage.
Ashgal has plans to launch 22 major road projects as part of its five year plan. Some of these projects include:
The ‘Smart Transportation System’ designed to regulate traffic flow. Once completed motorists will be able to commute between Al Khor and the New Doha International Airport within 35 minutes.
Al Muntazah highway is expected to be tendered out soon.
The Arc-Ritz roundabout which would link the proposed Doha Bay underground crossing. Construction of a link road from Landmark Mall to the Industrial Area and a Wakrah bypass.
Phase II and Phase III of the North Road, a 100km stretch of highway that includes bridges that connects to the Qatar-Bahrain Causeway is under design.
Salwa international highway is a 81km stretch with four lane dual carriageways and 10 interchanges which extends from the industrial area to the Saudi border.
According to officials, Qatar has commenced work on the world’s longest marine causeway, Bahrain Friendship Bridge – from Zubarah in west Qatar to Bahrain over a distance of 45km. At a cost estimated at US$13 billion the suspension bridge is planned to have a four-lane highway and freight and high-speed passenger lines.
Rail
The highest valued infrastructure project in Qatar is the Qatar Rail Network Program, developed by the Qatar Railway Development Company (QRDC), valued at $35 billion. The QRDC is a 51:49 joint venture between Qatari Diar (the state-owned property development group) and Deutsche Bhan International.
The Qatar railway project will consist of the Doha Metro system, the long distance high speed rail link, and the freight line.
Doha Metro System – the 354km metro project will incorporate 100 stations, 119km of underground railway in the city centre, 73km of elevated track and 166km of line at grade level. Trains are expected to run at speeds of 80 to 160km per hour.
The long-distance and high-speed trains will connect the northern and western parts of Qatar, providing a fast link to Bahrain and GCC countries. The speed of the trains will be 200km per hour and the journey from Qatar to Brahain will be completed in one and a half hours. The long distance network will cover 473km.
Freight Line – the 340km freight line will connect the industrial areas in Qatar including Ras Laffan, Dukhan and Mesaieed as well as Saudi Arabia and Bahrain. There will be three main terminals. A total of 14 trains and 2,500 wagons are expected to run daily.
West Bay Mover – the West Bay area will have its own integrated light rapid transit system serving the area of Lusail. Qatar has delayed the $3 billion underground rail line due to the cost and complexity of building an 11km underground rail line through Doha’s financial district.
Construction on the railway system is expected to commence in 2012 with key sections of the project to be completed by 2020, two years ahead of the 2022 FIFA World Cup. The project is expected to be completed in its entirety by 2026.
Market drivers
The key drivers of the Qatar economy include:
- Qatar’s 2030 vision and National Master Plan – There continues to be projects initiated to help Qatar reach its stated 2030 vision to diversify the economy and become less reliant on oil and gas. Economic policy is focused on developing Qatar’s non-associated natural gas reserves and increasing private and foreign investment in non-energy sectors.
- FIFA World Cup 2022 – Qatar has major transport, power and infrastructure projects planned as part of its long term strategy and vision for the country. In light of Qatar’s successful bid to host the FIFA World Cup in 2022 it is now estimated that more than $100 billion will be invested overall during the next 10 years. It is projected that in its build-up to the 2022 World Cup Qatar will spend – $48 billion to build air-conditioned stadia, $77 billion on facilities for soccer fans and players from all over the world and $45 billion on developing Lusail City. Qatar has also allocated $50 billion to upgrade its transport infrastructure, including new rail and metro systems.
- Vast financial and oil reserves – Petroleum accounts for more than 70 per cent of total government revenue, more than 60 per cent of gross domestic product and approximately 85 per cent of export earnings. Oil reserves of 15 billion barrels will enable output at current levels for 37 years.
Qatar’s reserves of natural gas are nearly 26 trillion cubic metres, about 14 per cent of the world total and third largest in the world. Qatar is currently the leading global exporter of liquefied natural gas, and an estimated US$16.7 trillion in monetisable oil and gas reserves (Source: Progress Qatar 2010-2011). Qatar’s sovereign wealth fund is growing and establishing itself with many high profile foreign acquisitions, but also with substantial local development arms.
- Increased government spending on infrastructure – continued economic growth and development of Qatar’s LNG resources has resulted in significant population increases and the development of many new industries. Rapid economic growth over the past years has allowed Qatar to invest heavily in its economic and social infrastructure. The nation has made accelerated progress in areas such as urban development, health, education and the environment.
- A robust economy – Qatar’s real GDP has grown an average of 15 per cent since 2000 and is one of the world’s fastest growing economies. Qatar’s GDP is projected to total $180.4 billion in 2011 and $199.9 billion in 2012.
Qatar’s per capita GDP for 2009 has been estimated at $121,000 compared to the advanced industrial nation’s median of $40,844. Qatar’s economy has doubled in the past four years and will double again in the next four years. Qatar’s risk rating is the highest in the region, with Standard and Poor rating it AA. The 2009 budget estimates show revenues of $35.93 billion and expenditures of $28.28 billion, providing the State with a budget surplus which is a rarity in today’s economic climate.
- Sporting events – Qatar continues to host and bid for major sporting events. After winning bids to host the FIFA World Cup in 2022 and the Handball World Cup in 2015, Qatar is now bidding for the World Athletics Championship in 2017 and the men’s Volleyball World Championships in 2018.
- Population growth – In emerging markets such as Qatar, fast growing populations, accelerated urbanisation and robust economic growth will see construction activity to continue to grow.
Opportunities
In an emerging market such as Qatar the opportunities for Australians to enter the market are vast. Key areas of opportunities in the construction and infrastructure sector include but are not limited to, specialist rail and roads consultancy, transport and logistics, including ports, water management, green building expertise, facility management, project management and construction contracting and specialist sub-contracting.
As a result of Qatar winning the bid to host the FIFA World Cup 2022 there is significant opportunities in the sports industry. Australia is a world renowned leader in the provision of sports products and services from design, planning, engineering, construction and implementation of major sporting infrastructure like stadia, villages, etc and therefore can competitively compete in this arena.
Product opportunities include, but are not limited to heavy machinery, a wide variety of building materials and products including sustainable solutions, water saving devices, systems for building automation, air-conditioning and security, cutting edge solar and wind energy solutions and swimming pool equipment..
What makes Qatar an attractive place to do business?
- Qatar has a sound economy, a well-funded government, and a progressive vision.
- It is investing heavily in education for its youthful population with improvements in primary, secondary as well as tertiary education and training.
- Australia's profile in Qatar is growing – there is high regard for Australian companies and capabilities. Many Australian companies have established themselves on the ground in Qatar, while many others have provided products or services to the Qatari market. An estimated 3,000 Australians work in various capacities in both government and private enterprise.
- Australia's advanced engineering and building-services, innovative products, ‘can-do’ approach and ability to deliver are ideal for Qatar’s huge infrastructure programs.
- The Qatar Government is continuing to promote capital development projects in areas such as power, desalination, manufacturing and industrial zones. These initiatives represent opportunities for Australian firms as they are significant in value and number.
Competitive environment
Qatar, like the UAE, is strategically located between India and Europe and not far from South East Asia. Competitors from Europe and Asia are numerous. Price positioning is an important consideration in this market as purchasing decisions are often based on price rather than on quality.
Tariffs, regulations and customs
There is a five per cent tariff on all goods and services imported into Qatar. Steel and cement have a higher tariff of 20 per cent as Qatar has its own cement and steel industry.
Industry standards
Qatar has developed its own Qatari Sustainability Assessment System (Qsas) for green building standards. New developments are to meet regulations that focus firstly on water consumption and energy consumption.
Qatar has its own building code which is based on British and US standards.
In some cases, even if products meet British or Australian standards, they are may be difficult to sell if they are not tested, approved or certified by the municipal governments. This can take a significant amount of time and may involve a cost.
Companies should enquire are to whether testing and certification is required for their product. Generally, this is a process which local companies distributing the product can undertake.
Marketing your products and services
Market entry
Australia enjoys a good reputation in Qatar and Australians are influential leaders in construction management, both in local and Australian-owned companies. Australian products and services including consultancy, contracting, technology transfers and materials are heavily utilised.
Opportunities for Australia exist in almost all areas of the construction industry.
Suppliers of products and materials usually require an agent who can work to ensure their products are pre-qualified with the architects and consultants.
Providers of specialised services need to bid for projects and therefore, a local presence is recommended. Australian companies are encouraged to leverage the strong Qatar-based Australian construction industry network.
The Middle East has a strong manufacturing base and well developed relationships with suppliers in India and China. Australian companies compete best when they have a value- added product with a distinct competitive advantage. Commodity-style products which do not have a strong technical component and are easy to produce do not generally fare well in Qatar.
All government purchases are carried out through tenders. Local representation can be useful and sometimes logistically necessary to be successful.
In the Middle East there is a strong focus on forming relationships to do business. For this reason, companies aspiring to success generally need the commitment and resources to make a number of visits to maintain relationships with their partners or establish an office.
How Austrade can help with market entry
Qatar is investing in its future and building to a grand scale to compete with its neighbours in the UAE, while establishing its own niche in the region. There are, therefore, vast opportunities for Australian businesses in the building and construction industry. However, the large number of players, lack of Internet information, and different business culture makes it difficult for Australian companies to identify the most important contacts and secure appointments.
Experienced staff – Austrade's experienced Business Development Managers are members of key building sector business groups and provide input into a number of building and construction directories. They are well connected with key business people and able to open doors on behalf of Australian companies.
Arranging visits – Austrade regularly assists with business delegations to Qatar and appointment programs for companies making individual visits.
Trade exhibitions – Qatar has a growing number of trade exhibitions. Austrade arranges activities which bring local and Australian business people together at Project Qatar each year and assists with networking at several other exhibitions.
Legal issues – There is a big difference between the commercial laws in Qatar and Australia, which if not understood by Australian companies, can result in decisions which impede the growth of business. It is very important to understand the legal context. Austrade provides information about agency/distribution and franchise regulations and the different types of commercial entities open to Australian companies.
Austrade can also refer Australian companies to providers of professional services, such as lawyers and accountants.
Links and industry contacts
Government, business and trade resources for Qatar
Arabian Modern Equipment – www.ameinfo.com
Government of Qatar – www.gov.qa
Qatar Chamber of Commerce and Industry – www.qcci.org
Qatar General Water and Electricity Authority (Kahramaa) – www.km.com.qa/en/
Qatar Ministry of Business and Trade – www.mbt.gov.qa (Arabic/ English under construction)
Qatar Ministry of Interior – www.moi.gov.qa/
Qatar Ministry of Municipality and Urban Planning – www.up.org.qa/upeng/
Qatar Public Works Authority (Ashghal) – www.ashghal.gov.qa/English/
Qatar National Vision 2030 – www.gsdp.gov.qa/
Media
Gulf Construction Online – www.gulfconstructiononline.com
Middle East Economic Digest – www.meed.com
Contact details
The Australian Trade Commission – Austrade – is the Australian Government’s trade, investment and education promotion agency.
Through a global network of offices, Austrade assists Australian companies to grow their international business, attracts productive foreign direct investment into Australia and promotes Australia’s education sector internationally.
For more information on how Austrade can assist you, contact us on:
Australia ph: 13 28 78 | Email: info@austrade.gov.au
A list of Austrade offices (in alphabetical order of country) is also available.
Sources
Successive Business Monitor International Infrastructure Reports
The Middle East Economic Digest
Articles from the Zawya database
Articles from Middle East news source AME Info
Gulf Times – Qatar