By Giovanna Albanese
The country of Qatar has a population of more than two million people. Of this number, a small percentage is made up of individuals in the business world. As a country booming in business, Qatar is home to a strong economy that hopes to continue growing in the future. With the help of hardworking individuals both from Qatar and around the world, future growth is possible, but paramount growth can only occur if entrepreneurs can establish their start-ups.
Alongside being home to a strong economy, Qatar is home to many entrepreneurs overflowing with creative ideas that will positively impact people and the reputation of Qatar’s business scene. But, before entrepreneurs can turn their ideas into reality, they are confronted with numerous regulations enforced by the country’s Ministry of Labor.
We understand and appreciate that regulations are needed to keep structure in place, but there is room for improvement. So, if you’re an entrepreneur ready to take your idea to the next level, we’ve identified three barriers you may encounter during your start-up process – but don’t worry, you can do it!
1. Ownership: To have a business in Qatar, most companies must have majority Qatari ownership. This means that for most businesses, companies have to give 51% of their equity to a Qatari for the potential to do business in the country. Once a Qatari partners with a foreign businessperson, he/she takes on the legal burden of the business. That’s why, as in anywhere in the world, it’s important to choose the right partner. The Qatar Financial Centre can also help new businesses establish themselves in the country, but require business owners to pay a 12% tax.
Both the foreign businessperson and the Qatari businessperson must be smart when choosing who they will partner with in order to have a successful business. Once a partner is decided upon, to minimize the potential for conflict the partners must decide and agree on how profits, intellectual property (IP), and royalties will be divided.
However, despite the ‘partner process,’ the fact that for most businesses the Qatari partner must own 51% “is the most significant in that it immediately limits the universe of potential investors in Qatar down to either real estate in (in very limited areas) or business geared around local consumption (restaurants, salons, barber shops, massage spa, law firms, jewelry stores, etc.),” stated Donald Jordan, Chief Executive Officer and Managing Director at Ocean Advisory & Consulting W.L.L., a private Qatari company that provides investment and financial advisory services.
Looking at the way business is done worldwide, this ownership rule is not universal as “the most valuable businesses globally, whether Apple, Google, Facebook, Ali Baba, Ford Motor, Tesla, Toyota, Sony, LVMH, Johnson & Johnson, etc. are ultimately creating and selling intellectual property that end buyers consume globally,” stated Jordan.
The key difference here is Qatar’s focus on local consumption rather than global consumption. Local consumption is great and essential for a thriving local economy, but to have significant growth in the world economy, global consumption is necessary. The 51% Qatari ownership rule is not the best when a country is looking to positively influence the economy of the world and diversify from hydro-carbons.
So, in the end, ownership rights not only impact both partners of a potential start-up, but also impact the local economy and the global economy.
2. Location: One barrier that a lot of entrepreneurs face is signing up for commercial registration. Since the recent introduction of the working from home law/the commercial license, it’s easier for some people to start their businesses, but not all. Although the hope of the new law is to implement change for many, many are still excluded from doing what they wish to do with their business.
According to Ahmad Al-Saygh, Entrepreneurship Advisor at Bedaya Center, a center which provides two primary services: entrepreneurship advising and career development, and has helped 200 established entrepreneurs last year through bazaars and 5,000 individuals overall since the start of Bedaya five years ago, “with commercial registration, sometimes a company has to find a physical location to start their business – otherwise they can’t have the registration.” But, the problem for a lot of people is finding a location.
“A lot of people want to have a permanent location to sell their things, but rent prices are very high over here for some people…so it’s like a burden for some business owners to spend all that money [when] they don’t [know if they will] make the sales to pay back for the rent,” stated Al-Saygh. Because of this, some companies will opt to present their business on social media platforms such as Instagram and try to sell their product(s) without having a commercial registration.
Every business, regardless of its focus, requires a location. Some businesses such as clothes-making, food-making, and web designing can be done in a home, while other businesses cannot. But, to obtain a commercial registration, a location is a must have.
3. Hiring: If you make it through the start-up process, congratulations! Now, you may want to expand your business and hire talented individuals from around the world, but this is where yet another barrier may occur.
Hiring people is difficult and can be expensive. In a previous ILQ article, we explored Qatar’s hiring process and the many regulations in place and the costs that come with them. When it comes to start-ups, hiring someone and getting an approval of their visa application can be one of the most difficult processes as approval can depend on specific positions, national origin, age, etc.
In speaking with Hossein Heyder, Executive Director of Embrace Doha, which offers a range of cultural services, “applying for visas is more difficult than you can expect.” However, one positive aspect is that “if you apply for a certain nationality [or position] and get rejected, you can ask for a meeting with the committee,” stated Heyder. Although there is no guarantee that the decision will be reversed, it can be worth a try to appeal your case.
Furthermore, when businesses are applying for visas it is usually for full-time employment, as it’s hard to hire part-time people officially. For example, in many countries like the U.K. and the U.S. it’s common to see students working part-time in restaurants, both sit-down and fast-food. However, this is near non-existent in Qatar. So, if you’re looking to hire part-time, you may be out of luck.
Ultimately, the hiring process is expensive, uncertain, and full of favor to certain types of employees.
The ability for entrepreneurs to chase after their dreams and let their creative ideas flow is a wonderful way for local economies to thrive and global economies to be impacted. With Qatar being home to a strong economy, what better way to make it stronger than investing in local start-ups that have the power to not only change the local community but the global community as well?
Although it may be difficult to get licenses and approvals for a business in Qatar, we at ILQ wish any and all entrepreneurs the best as they start, run, and grow their business. We also hope that the regulations and processes in place will keep improving so that the many driven individuals in our country can begin to influence the community around them.
What have your experiences been setting up a start-up business in Qatar? What have your interactions with the Labor Department been like? Leave us a comment below and don’t forget to give us a like and a share!
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