Abdul Hakeem MOSTAFAWI

The increase in locally produced goods, with onshore manufacturing rising, creates even more opportunity for diversification and growth.


Diversification and growth in Qatar

September 22, 2020

Abdul Hakeem Mostafawi, CEO of HSBC Qatar, talks to The Energy Year about how the recent crisis has hastened the development of local supply chains and spurred new investment opportunities in Qatar’s logistics and gas sectors. HSBC is a global banking and financial services organisation that has been present in Qatar since 1954.

This interview is featured in Qatar Special Edition: Crisis and Resilience in the Covid-19 Era

How much of an impact will the Covid-19 pandemic and low oil prices have on Qatar’s economy?
There has clearly been a deep impact on economies and jobs across region and around the world. Our economists expect significant contractions in most economies this year – globally our economists forecast a contraction of 4.8%, while in Qatar we expect to see GDP shrink by 3.7% year on year in 2020.
Looking specifically at Qatar, it is in a position of relative strength, thanks to the broad support provided to both the private and public sectors by the government. The country has strong revenue streams, which are complemented by a steady downtrend in expenditure as Qatar has moved past peak capital outlays ahead of the 2022 FIFA World Cup and related infrastructure projects. Meanwhile, the assets held by the Qatar Investment Authority (QIA) help to shield the economy against drops in hydrocarbon revenues.
In April 2020, Qatar issued USD 10 billion in bonds, becoming the first sovereign state from the GCC region to successfully return to the international debt markets in the current low oil price and Covid-19 environment. The overwhelming demand for the jumbo issuance reflects the strong belief the international investor community has in Qatar.


How have the private and public sectors banded together to maintain supplies and promote economic stability?
The market reacted positively to the government’s comprehensive stimulus packages. The packages enabled banks to provide much needed payment relief via liquidity lines offered by the Central Bank. Particularly significant was the action taken to alleviate the impact on retail space and to provide subsidies for strategic imports. Moreover, the Qatar Development Bank programme offered much needed relief for SMEs to meet their fixed costs during these critical months. Qatar’s reaction was swift and stood out in terms of the speed and breadth of the stimulus packages. Also noticeable was the engagement of the government with the concerned stakeholders while enacting and deciding on these support schemes.

Has the lockdown spearheaded a revolution in all forms of online transactions?
The impact of Covid-19 has put an even greater focus on the importance of innovative digital banking solutions. A great example is our technology team taking the initiative to accelerate planned developments, such as our work on digital signatures, to provide a fully digitised, contactless service.
While the vast majority of our customers in Qatar have been digital for a number of years, more customers than ever have been using our digital channels and have realised that digital banking is better for them – it reduces turnaround times, it reduces time to receive payments, it is more convenient, and it has greater security. We’ve had an incredibly strong response from our customers to our digital offerings over the last few months and we are committed to transitioning more customers to digital in the post-Covid-19 world.
Our fourth branch, in Msheireb Downtown Doha, is mainly a digital branch with minimal in-person interfaces. The branch offers customers a simpler, faster and better way to manage their own personal finances. This branch is the first of its kind in Qatar and underlines that HSBC is leading the way by investing in advanced banking platforms.

What is Qatar doing to promote diversification of the economy?
Economic diversification is a key pillar of the Qatar National Vision 2030 and has been a driver for many of the infrastructure projects of the past decade. The expansion of the port and the airport, as well as the establishment of the Free Zone, create new opportunities for growth.
With two main logistics avenues for shipping and trade, via sea and air, Qatar Airways Cargo has now become the world’s largest cargo carrier, fulfilling a great global demand and overcoming the fact that the country does not have a land route. New shipping agreements with India and Singapore have further helped with growth opportunities.
The increase in locally produced goods, with onshore manufacturing rising, creates even more opportunity for diversification and growth in the country. The boom in locally produced fresh foodstuffs in the past three years indicates the capability for further growth in the sector.

How significant will Qatar’s gas expansion initiative be to the economy?
The gas expansion will be twofold: the first segment is exploration and the second is petrochemicals. New gas production from the North Field resulted in projects to scale up its LNG production capacity at a rate of about 43% per annum. The projects are expected to be awarded by the end of 2020.
Thanks to its low upstream costs supported by associated liquids revenue, Qatar has earned a reputation as the world’s lowest-cost producer of LNG. Qatar Petroleum (QP) is well-placed to compete with new liquefaction capacity around the world due to its superior economics. That is opening the door to new customers in South Asia, Vietnam and the Philippines
Looking beyond 2020, Qatar stands to benefit from additional LNG production at good prices, which will likely see the country gaining more global market share. That, together with an excellent commercial reputation, is expected to bring around USD 30 billion to the country, which is significant. The entire development will take four to five years and require an investment of USD 50 billion-100 billion, spread across various projects.

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