Posted on April 07, 2011

The slowdown in oil and gas production in Qatar has forced government and business to continue diversifying the economy to maintain the country's stable economic growth, participants in a business and investment in Qatar in New York said on Wednesday.

"We are entering into a new era of diversification and non-hydro-carbon," said Dr. Ibrahim Al Ibrahim, economic advisor in the Emiri Diwan and secretary general for the development planning in Qatar. "This is another page of our development." The slowdown in oil and gas production will last until a technical study about future production is completed, Ibrahim said. "It will slow down but to maintain growth we have to maintain an expansion of non-hydrocarbon projects," he said.

To encourage foreign investment in 14 non-energy sectors, the government has launched a five-year development strategy. The first aspect is to cut red tape and make regulations friendlier to foreign companies to enter the country, Ibrahim said. Foreign companies can already own 100% of their firms in Qatar. Regulations on land use for electric and water companies in particular need to be relaxed to make land acquisition cheaper, said Ibrahim. The government also had to created a forward-looking national budget "based on the strategy and not on ad-hoc needs," he told a largely American business audience at the Business and Investment in Qatar Forum held at New York's historic Waldorf Astoria Hotel last night.

This included improved fiscal coordination in Qatar's monetary policy to make sufficient funds available to maintain economic stability, Ibrahim said adding, ''The strategy also will attempt to "nurture entrepreneurship and enterprise," he said. "We are trying to encourage Qataris and non-Qataris to establish businesses through facilitating capital, incubation and guaranteed loans." The strategy also includes reducing the cost of foreign investment. This had been done in the oil and gas sector and needed to be extended to other areas of the economy, Ibrahim said. One example of a growing sector in the Qatari economic landscape is the research being conducted at the Qatar Science and Technology Park.

For his part, the park's executive chairman, Dr. Tidu Maini told the conference that within three years of its existence 43 international companies, involving 800 engineers and scientists, have invested in the park's research and development. Among the parks projects is research into new solar energy technology a significant diversification from oil and gas. "We are focusing on solar power as a main thrust," Maini said. "There's lots of sunshine in Qatar." ''The science park is building a 500 kilowatt demonstrator to test 18 different alternative energy technologies, he said. Among these are photo voltaic and thermal heating'', he said.

The park is working on what would be breakthrough research to solve the problems of high temperatures, dust and condensation associated with these new technologies, Maini said. There is also work on building a factory in Qatar that would create as much as 400,000 tons of poly-silicon used in making solar panels. The science park is partnering with Qatar Holding and VW Porsche to develop cheaper composite material for using in manufacture future automobile bodies, Maini said. Currently composites are used in building aircraft but is still too expensive for car manufacturers, and must be dropped to $5 a kilo before it can be adapted for cars, he said.

Other projects are the development of synthetic aviation fuel in a project with Qatar Airlines, Shell Oil and Rolls Royce, Maini said. There is also a joint project with Conoco Philips and General Electric on water purification systems and with the U.S. Department of Energy on developing carbon capturing technologies an important advance in clean energy. In the health sector, the Qatar Science and Technology Park, is developing robots for image surgery and protein markers to detect cancer and diabetes.

Conceding that Qatar cannot compete with India and China on software development, the science part is concentrating on advances in wireless technology, Maini said, including new sensors to measure vital functions in humans. Maini appealed for partnerships with his American audience for their "experience in commercializing technology" and using their distribution networks. "We are not just funding for the sake of funding, Maini said, but participating in these breakthrough technologies. he said,'' Qatar had to fight its image abroad of investors who often "see oil companies as quick easy money."

Meanwhile Dr. Hussein Ali Abdullah, an executive board member of the Qatar Investment Authority, said Qatar's investments in foreign holdings had increased to over $30 billion last year in both industry and in private equity, fixed income and hedge funds. These include 20% ownership of VW, 7% of Credit Suisse and 7% of Barclay's Bank, Abdullah said. The Investment Authority is aggressively looking for new opportunities within a six month time frame, given the difficulties in the world economy, he said.

source: QNA