Qatar Digital Cluster
Qatar is the most advanced Arab country, within the Middle East, with the highest per capita income in the sphere. It boasts of a high-income economy backed by the fact that it has the world’s third biggest natural gas and oil reserves. The nation state hosts an indigenous population of about 313,000 citizens and 2.3 million expatriates as at statistics from a 2017 headcount (Furlan, & Petruccioli, 2016). This translates to a massive dependency on the expatriate workforce to fuel the economy. Expats are individuals that temporarily or permanently reside in a country and provide skilled or professional labor individually or on behalf of an organization outside that country. As a result of those statistics, it can be seen that the country is entirely dependent upon these individuals. Expats tend to be more expensive with regard to the salaries they ask for since they offer specialized skills which may not be locally available.
The issue with Qatar that presents challenges to big companies wanting to set up in Qatar is its high levels of unskilled indigenous labor. The countries education system does not produce qualified individuals to join the professional labor force. According to “America’s Persistent Problem: Unskilled Workers,” an article by the CNN, “Employers want ready-now people” (2015). Most employers from big companies such as Microsoft need people who know what they are doing when they join the organization. It would be more costly and time-consuming for them to start training individuals on how to perform tasks from scratch. These companies would then instead continue operations in their countries or seek better-skilled nations such as China and Japan to set-up operations. To counter this predicament, they could opt to adopt a better more efficient curriculum for the students currently present as well as offer scholarships to promising individuals who can show the potential of providing standardized labor force in the event that these companies set up.
Secondly, another challenge the West Asian country experiences with regard to having big companies set up in their emerging digital cluster, is their inexpensive investment towards technological innovation. As mentioned earlier, the country is a significant oil producer, it ranks third worldwide, and oil and gas is their primary source of revenue. Fuel is expensive, and this means that the country reaps significant from its production and mining activity. The disadvantage to this is that the state has put so much focus on oil production that it neglects its technology sector to some extent. If a country is looking to develop a digital cluster such as the Silicon Valley in the United States of America, it may need more than a vision and a few computers. It may need to invest heavily on software, hardware, and expertise to set up and maintain operations of the techno-city.
Companies such as Facebook require locations that offer high-speed internet speeds, heavy server machinery and fiber optics that can withstand the high traffic they receive from all over the globe. It may be essential for the country to consider injecting more expenditure towards this cause if they are to identify with such big firms. According to Reuters, “Qatar Investment Authority (QIA) has accelerated its investment in technology and is keeping the door open to strategic partnerships for technological investments” (2018). This is a credible solution that will enable the country to reach its aim of having top worldwide companies getting attracted to Qatar as an investment location. The disadvantage of this is that science takes time to develop processes; this means that it may take some time before the country experiences investment from a foreign country.
Qatar is indeed facing challenges in attracting big companies thirdly because its neighboring countries are believed to have severed ties with it. This is due to their supposed support for terrorist organizations such as the ISIS and Al-Qaeda. Saudi Arabia, Bahrain, UAE, and Egypt cut diplomatic tied with the country meaning that trade and transport between the countries are at a stand-still (Roberts, 2017). It kept relation with Iraq, and other countries are not happy about. Qatar is seen to be on the frontline in funding Islamist groups which means that the country may very well have a lot of terrorist living within it. This provides very hostile grounds for business set up as one may not be prepared for any terrorist outcomes that may follow. The trade ties that were also cut present hostile breeding grounds for a company since they cannot readily use the nearby routes to transport their goods.
The claims have, however, been met by a lot of opposition from the state as countries such as the USA urge them to resist such acts of impunity. A rift in relation is moreover not that healthy for a country trying to attract foreign investors. Expatriates may also be fearful of moving to such countries as no one wants to leave their peaceful countries to live in fear while away on work in another country. Such scares put off a lot of companies that are not necessarily big companies. They project a higher possibility for losses and offer enough scare for these countries not to set up. Qatar is already on its way to addressing this issue and this notion that Middle Eastern countries support terrorism is about to end. This will enable the country to attain better trust levels from other nations.
Fourthly, the policies and laws that exist within the country provide a hostile environment that may not be readily adaptable by the new big businesses. Corruption also presents a significant challenge for the adaptation of new companies into the Qatar market. Qatar foreign investment law possesses many barriers to foreign investment and ownership. According to an article by the International Trade Administration, the law is not very transparent in its procurement (2018). The government gives preferential treatment to indigenous bidders; this poses a challenge to a big foreign company that may want to make local investments to increase their company net worth or even to service their operations. Though the corruption rates are dwindling, it is still a major challenge that can repel investors from setting-up in a country.
If a company such as Amazon were to set –up in Qatar, it would require a lot of space for warehousing, production and manufacturing activities for them to bring the products closer to the people. The country, however, has strict policies on investments by foreigners especially when it comes to real estate. The council of ministers offers limited opportunities for foreigners to retain ownership interests. This presents barriers for companies wanting to set up making it harder for them to gain access to real estate that they can own for long periods. This does not suit most companies, especially ones with the capability and capital to invest wholesomely in their companies. If the country was to loosen these policies, it would encourage and even lure business giants towards them, and they would consequently be in business.
Lastly, being an Arab country bordering the Sahara desert, the Mediterranean Sea and within the drylands of the Middle East, Qatar is presented with a great challenge concerning climate. The land reaches high levels of heat that at times it makes the inhabitants unable to work. Such uncontrollable climatic conditions mean that the company willing to set up there will have to employ high tech heavy and very costly air conditioning equipment to deal with the temperatures. Temperatures in the country can rise to 50 degrees Celsius which offer unbearable work conditions. For most people, the thought of spending months on end in air-conditioned hotels, malls, and workplaces is not a pleasant one and thus, comes as a depressing reality. It may be essential to have individuals maybe work during the night and rest during the day as opposed to what the rest of the world does.
Since the high temperatures are a natural occurrence, it drives out the urge to set up within the country. Needless to say, even the USA has extreme temperatures during summer and winter, and people still go to work and live there. This only means that people would have to be more open-minded towards the idea of living under such extreme conditions. Companies would have to adjust their time schedules and the clothing that can be allowed to work to cater for this issue. Meaningful work can be rescheduled to cooler times of the day to ensure maximum efficiency while workers may have to be educated on the symptoms of heat stress to prevent them from passing out at work. Since one cannot control the climate, people can figure out a way around it.
References
Furlan, R., & Petruccioli, A. (2016). Affordable housing for middle income expats in Qatar: Strategies for implementing livability and built form.
Roberts, D. (2017, June 5). What’s behind crisis with Qatar?. Retrieved from https://www.bbc.com/news/world-middle-east-40159080
Gillespie, P. (2015, August 7). America’s persistent problem: Unskilled workers. Retrieved from https://money.cnn.com/2015/08/07/news/economy/us-economy-job-skills-gap/
International Trade Administration. (2018, March 11). Qatar – Market Challenges. Retrieved from https://www.export.gov/article?id=Qatar-Market-Challenges
Knecht, E., & Azhar, S. (2018, December 10). Qatar Investment Authority has accelerated investments in… Retrieved from https://in.reuters.com/article/us-qatar-investments/qatar-investment-authority-has-accelerated-investments-in-technology-ceo-idINKBN1O914P
