Kickstarting Startups in Qatar
Jonathan Ortmans, President, Public Forum Institute
One hundred years of banked future hydrocarbon revenues, massive investments in higher education and a common legal framework based on western law all offer this small nation—the size of Connecticut—tremendous potential to be a hub for startups in the GCC. I find it curious therefore that at Qatar’s famous “Doha Forum” I participated in today, entrepreneurship and startups were not on the agenda.
Emir Hamad bin Khalifa Al-Thani, who has ruled Qatar since 1995, has made enormous progress in opening his nation to the world. Emir Hamad has not only been very open to global markets but his country has experienced a notable amount of political liberalization, including the enfranchisement of women, a new constitution, and the launch of the Al Jazeera news source.
His wife, HH Sheikha Moza bint Nasser who I met here in Doha two years ago, founded and leads the Supreme Education Council (SEC), which is completely transforming the traditional Qatari school system. In addition, through forming the Qatar Foundation (QF), she established “Education City,” a 2,500-acre campus on the outskirts of Doha. Education City—through its mission of providing world-class education from kindergarten to the post-graduate level—offers enormous potential for entrepreneurship by focusing on enhancing capacity for innovation, technology transfer and training more scientists and engineers. Sheikha Moza understands and articulates often that “there is no alternative that can compensate for the role of education”. The campus has already attracted western academic institutions to Qatar. Carnegie Mellon University partnered to launch an entrepreneurship certificate program and some eight U.S. universities now have campuses here.
Beyond this significant investment in education, tax policies could hardly be described as unfriendly to startups. In Qatar there are no personal taxes, social insurances, or other deductions from salaries and wages. While most foreign investors and companies operating in Qatar are taxed on business, Qatari law allows foreigners to earn up to 80% or more of company profits if the foreigner is the main person involved in the venture. Further, with Qatar remaining within the top ten in the world in terms of GDP per capita, there are plenty of sources for seed funding for new starts.
Qatar has also developed a common law framework based on Western law to be implemented in the new Qatari Civil and Commercial Court as well as in the Qatari Financial Center (QFC) and Regulatory Authority (QFCRA). The legal framework was set up to make life easier for international financial service institutions and multi-national corporations wishing to do business in Qatar.
Further, the region is being offered plenty of outside help in seeding entrepreneurship. The U.S. State Department's Office of the Middle East Partnership Initiative has long been working to encourage youth entrepreneurship in the Middle East and North Africa where there are exceptionally high levels of youth unemployment. President Obama’s own Entrepreneurship Summit in April 2010 has given rise to dozens of new initiatives, including the Global Entrepreneurship Program. Beyond the U.S., the World Bank and other development organizations like the Canadian International Development Agency (CIDA) have also focused on enterprise development in the region.
So, if there are so many pieces in place and the Qatari economy is becoming further diversified, why are there few signs of new firm formation? Some commentators have attributed it to the Qatari government being unable to establish laws and procedures which firms require, suggesting—despite recent changes—that Qatari laws and regulations are not friendly towards business ventures or foreign investment and continue to hinder economic growth. This is partly true, but a more likely reason in my view seems to be the absence of any kind of startup ecosystem. The Qatari government, through investment in education and entrepreneurship, is beginning to take some steps. The Qatar Science & Technology Park (QSTP) launched its Executive Entrepreneurship Certificate Program and plans to become an incubator for startup businesses and entrepreneurs, both local and from overseas. Also, a Qatar Development Bank (QIDB) was opened to promote and finance small and medium enterprises. But without more creative ideas, informal networks to scope them, and mentors to guide teams in exploring them, we will continue to see low rates of new firm formation in Qatar and fewer Qataris making rather than taking jobs.
I was asked today, where I might begin. Here are three thoughts for starters:
First, do no harm. Qatar should avoid buying traditional, linear, top-down programming models from overseas. Qatari’s should develop a strategy, not a plan, and allow entrepreneurship to evolve organically in an indigenous fashion that pulls some of the best methodology when needed.
Second, better leverage Qatar’s tradition of gathering the best and brightest to learn more about what entrepreneurship interventions would work here. For example, beyond the Doha Forum I attended today, the Qatar Foundation launched the World Innovation Summit for Education (WISE) a global forum that brings together education stakeholders, opinion leaders and decision makers from all over the world to discuss educational issues. The planning committee might consider focusing this year’s event in early November on steps to foster an entrepreneurial culture in Education City and on how to move innovation more quickly into the marketplace. Qatar might also consider joining the 105 other nations around the world who already collaborate in this field each year by celebrating Global Entrepreneurship Week thereby exposing more Qataris to their potential as self-starters.
Finally, look at Start-up Chile. When faced with similar challenges of kick starting an entrepreneurial ecosystem, the Ministry of Economy in Chile created a program to attract world-class early stage entrepreneurs to start their businesses there – and seed a startup fever in the process. Launched just last year, the program provided 23 teams from around the world with $40,000 subsidy (no equity) and a temporary 1-year visa “to develop their projects along with access to the most potent social and capital networks in the country.” The goal of the program is to have 1,000 startups participate before 2015—with the hope of turning Chile into the innovation and entrepreneurial hub of Latin America. Given its current assets and potential for growth, Qatar could easily replicate this program and should begin to seek the mantle of entrepreneurial hub of the Middle East.
Qatar is successfully moving away from a reliance on oil profits and has already established many of the bigger building blocks for a strong entrepreneurial economy. Every year brings a more skilled and forward-looking people. It is time to let their ideas and innovations guide the next wave of diversification into new industries and firms.
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Jonathan Ortmans is president of the Public Forum Institute, a non-partisan organization dedicated to fostering dialogue on important policy issues. In this capacity, he leads the Policy Dialogue on Entrepreneurship, focused on public policies to promote entrepreneurship in the U.S. and around the world. In addition, he serves as a senior fellow at the Kauffman Foundation.