“Qatar at a Crossroads”, a talk by Dr. Alexis Antoniades

– Good evening, excellencies, distinguished guests,
students and faculty. On behalf of Georgetown
University and Qatar, it is my pleasure to welcome you to this important event
on the economy of Qatar. Today’s presentation kicks
off a series of events commemorating the centennial celebration of the Edmund Walsh
School of Foreign Service. These celebrations mark
an important milestone for our entire university,
and for our campus in Doha in particular. And the inauguration
ceremony that launched Georgetown’s new school of
foreign service in Washington in 1919, Father Walsh,
the new dean of the school said the following in
his dedicatory remarks, and I quote, having entered upon the stage of world politics and world commerce, we assume worldwide obligations. Our viewpoint can never
be quite the same again. The establishment of the program dedicated to educating students on local and global issues and preparing them for lives of service is an increasingly, in an increasingly interconnected world is 100-year legacy we are
proud to continue today on Georgetown’s Qatar campus. Since we entered upon the
stage of Qatar’s growth and development, we have been honored to assume the obligations
of our partnership with Qatar Foundation to contribute to the goals and aspirations
of an ambitious nation. It is against this backdrop that I’m proud to present today’s speaker. A preeminent scholar,
researcher, published author, and professor, who exemplifies
both in the breadth of his work and the
depth of his expertise, the best that Georgetown has to offer. Dr. Alexis Antoniades is
an associate professor and director of International Economics here at Georgetown,
Qatar, and is an expert on global markets and a leading authority on the economies of Gulf countries, and in particular the economy of Qatar. He teaches courses on Money and Banking, International Finance, and The Global Financial System, to name a few. Dr. Antoniades received
his PhD in Economics from Columbia University. He has, he was named a Fulbright Scholar and has been awarded
the Princeton University Niehaus Fellowship in 2012, the fellowship given to the most talented scholars on issues of globalization and governance. He spent 2012-13, the
2012-13 academic year at Princeton University where became a member of the European Union Program at the Woodrow Wilson School of Public and International Affairs. Closer to home, Dr. Antoniades was awarded two very prestigious grants from the Qatar National Research Fund to undertake first, to undertake the first micro study on the economies of the Gulf countries, and the second was a research
grant to use social media and analyze sentiment in the Arab world in collaboration with colleagues
from Qatar University. Indeed we are in good hands for
today’s critical exploration of the new social, political,
and economic realities that have placed Qatar at
the crossroads once again. I say once again because Qatar has been at the crossroads before. Faced with the unsustainable
promise of fossil fuels, the nation choose a path of economic diversification and social development. And structural and economic
demographic changes came swiftly on the heels
of its implementation. So where is this economy now? What are the new challenges facing Qatar’s prosperity and pursuit
of his national vision? What are the unexplored opportunities and recommendations for its future? These are some of the questions that Dr. Antoniades will
attempt to address in his talk. So without further ado, I know you wanna listen to him, not to me. Please join me in
welcoming Dr. Antoniades. (audience applauding) – Thank you, Dean Dallal. Welcome guests. Qatar is at the crossroads from falling and fluctuating oil prices to changes in the socioeconomic structure, to the illegal and unjust blockade, I think you agree with me
that we are experiencing a turning moment in the
history of the country. And what I would like
to do for the next hour is share with you my understanding of what the economy
looks like at the point, and moving forward,
which is more important, what are the main challenges
but also the opportunities? And you all come from
different backgrounds, we’ve been here for
different periods of time, so our understanding differs. I hope I can give you some insights from my, from how I make
sense of what’s around me that you can take and connect
them with your experience and leave this room with
a better understanding. I’ve been in Qatar as Dean
Dallal said for 10 years now. And as a friend says I
drive like a Qatari now. But, and I didn’t know much
about the country before, but a year before in October of 2007, 11 years ago, I was in
the US and I was reading the Financial Times and
they had a report on Qatar. It was a four page report. Emirate pushes on global stage. And they had a (mumbles),
and I want to come to that because I found that very
intriguing back then, and I still find it very intriguing now. It was about the, on the first paragraph they talked about the Asian Games, and they start saying, “As
Sheik Tamim bin Hamad Al Thani, “Qatar’s crown prince,
rode an Arabian horse “up a flight of wet
steps, his mount slipped.” So they talk about the Asian Games, it never rains in Doha,
but that particular night that you didn’t want to have any rain, like tonight, it did rain. It was very dangerous to go up the steps and lights the Olympic flame. “But the entire stadium missed a heartbeat “as presentational disaster
loomed, but Sheik Tamim, “a skilled equestrian
managed to guide the stallion “up to the last few meters
to light the Olympic flame. “The fear quickly morphed
into a sense of achievement “that Qatar, through the games, “had finally arrived on global stage.” And it is fascinating at many levels. The first one is, this is
not His Highness Sheik Tamim. This is his brother. But that was the understanding
of the world back then. They didn’t, 11 years ago, they
didn’t know where Qatar was. They wrote a report on us
in the Financial Times, and they couldn’t get the name right. You look at Emirates. We don’t refer to Qatar as an emirate, it’s a country, it’s a state. And the titles are interesting. Investing in its own future pays off. Higher profile means higher scrutiny. Build it and they will come. It’s as if you’re reading a report from yesterday, still very relevant. But what I found intriguing,
because I couldn’t tell who that person was back then, they use this example of going up the steps when everybody thought
maybe he shouldn’t do it, everybody was very skeptical, so Qatar face a challenge but somehow
they found a way to succeed and prove everybody that they were right. And the article says this
wasn’t the first time. In 1992, Qatar faced
financial difficulties. And the Under Secretary in Ministry of the Economy, Trade,
and Finance back then, back then Yousef Kamal who
became the Finance Minister, went against the view of the IMF and borrowed to expand our capacity to monetize in natural reserves. And that was proven successful. And if you go back in time, the gas was discovered in 1971, but
the price wasn’t very high, and the emir back then
decided against the skepticism of many to borrow heavily
to build the infrastructure that allowed this country
to become a rich country. So I think this is
intriguing because this is not the first time the
country’s facing a challenge, this will not be the last
time it will face a challenge, but somehow the country
always finds a way to succeed because they are very well prepared. And I hope this would
be one of these times. So I want to structure
my talk in four sections. First, I want to tell you what I think should be the objectives of this country. Because if we want to
discuss where should we want the country to go, we always
need to ask a question, what are the objectives? So I will get that out of the way first. Then, I will discuss the
current economic environment. What is going on? And the economy’s slowing down, so I’ll also explain what are the main reasons behind this slowdown. And of course in doing so,
we need to ask a question, is it because of the blockade? What was the impact of the blockade? And finally, we will
move on to what I think is the most important part,
which is how do we move forward? Because in the current
situation we have no control, but how do we move forward? What are the main challenges? What are some of the limitations? But also what are the opportunities and what are the steps that
will help us reach our goals? This is a plan for the talk. And I hope I can spend the next 40 minutes to go over this information. And then we’ll have a Q and A session, so we can go into more depth on the issues that you are interested in. For us living in the
country, we don’t realize how fast the country has changed. We may see a little bit
of traffic and complain without realizing that many years ago we didn’t have the superb
infrastructure network. This is a photo from 1983. That’s a photo of West Bay,
there was nothing there, just a Sheraton, and in
such a period of time, the country has grown substantially. We have a superb educational system. It is often said that when his father, the father emir was born,
you had no schools in Qatar. Huge progress in 50, 60 years. We have superb infrastructure
in this country. A world winning airline that connects us to more than 150
international destinations so we are centrally located. And most importantly, we
have a friendly, committed, and supportive political regime. So the country has made a lot of progress, and many times we failed to recognize that because we live the moment. And it’s good to take a step back. But there are challenges. And to me there are three main challenges that Qatar has to address. The first challenge is how do we preserve the wealth for the future generation. We can extract a lot of
natural gas and sell it, but we need to preserve the wealth or the gas for future generations. How do we do that? How do we diversify the economy? The second challenge is
a demographics challenge. In this part of the world, we
have a very young population. 50% of the population
is below the age of 20, unlike Europe, Japan, the US. That means that we need
to be able to create a lot of jobs very fast,
because these people will enter the labor force very soon and we need to create jobs for them. And we cannot keep adding
people in the government. We need to create jobs
in the private sector. And we need to work both on the supply to create these jobs,
but also on the demand to make these jobs appealing
for the local population. And we may be better off
because we are a rich country than other Middle Eastern countries, but it is a major challenge. So this is the second challenge. The third challenge is a new challenge. Actually I didn’t have this as a challenge 10 years ago when I was
talking about Qatar. What we need now is to attract investment and businesses to come here. How to attract money? And this is new. The country always had money. And the challenge was how
to manage our own wealth. The country will always have money. But now we need to attract money. And it’s not very obvious. One reason, for many
reasons, but one of them is that Qataris are not salespeople. They had money, they become experts in finding investment opportunities in their own country and
taking advantage of them. Then, the country was too small for them, so then they started making investments outside, they made investments in London. They could understand
the market very well. They are key investors. But they never had to
go and convince people to invest in their country. They’re not salespeople
and we often forget that. So it takes a different approach when you try to promote your country. And you shouldn’t be shy
about the infrastructure, about the opportunities. For me, these are the three challenges the country has to solve. Now I will move on quickly
to the second section. What’s going on with
the economy right now? And all of you because
you live in this country, you know that the economy has slowed down. If you walk to a shopping
mall during the day, you don’t see a lot of
people, if you go to a hotel, again you don’t see a lot of people. We can look at GDP,
gross domestic product, and what we find is that
growth has slowed down in the last couple of years, and it’s been slowing down before. But I want to move away
from that statistic, because that’s linked to the price of oil. I want to, I like to
look at some other data. What I have here is revenue per, per room in a five-star hotel. What’s the average
revenue, what’s the average profit a hotel makes, a
five-star hotel makes. Not the cost of the room but the profit they make from renting that room. Over the last two and a half years, it went from around 700 Riyals to 300. There’s a big decline. We can look at private car registrations, how many cars do we register each month? And I know there’s one member
of the audience sitting who works in the, in a dealership, and this is not a good slide, I’m sorry, but in less than three years,
we went from 10,500 cars registered each month to 3,500. There is a slow down, we cannot deny that. And it doesn’t seem that
this has reached the bottom. Maybe it has, but the
graph will not show that. What could explain that? What are the reasons behind the slowdown? The obvious one is oil prices. Oil prices have collapsed in 2014. They went from $100 to
less than $30 in barrel. And because our wealth is
linked to the price of oil, it affected the ability of the government to invest in many projects. That’s the first factor. But that’s not the only one. The second reason is that
in the photo I showed you, which is this one, there
was nothing on the ground. The country went through
two or three decades of massive spending on infrastructure. We had to build the country. We had to build schools,
we had to build hospitals, hotels, shopping malls,
highways, the airport, invest on Qatar Airways, but
we are finishing that stage. It’s done, we built the country, there is no more space to add more stuff. This will come to an end. So we need to seek for
new engines of growth. This is a structural change
that is taking place. And a healthy one, we need to move on. The third structural change
is that purchasing power, the ability of people
to spend, is going down. If we look at population numbers, the population is going
up, but if you look closer, it’s going up because we get a lot of low skilled workers now to maintain the infrastructure we have built. We get a lot of workers
to staff retail space in the shopping malls we have. We get a lot of workers
to fill the hotels, reception and the restaurants. Their purchasing power is not the same as the people they are replacing. A lot of high paying expats
are no longer in the country. A lot of them that are in the country, they have seen their package going down in terms of housing allowance,
in terms of schooling. Even the locals, they see
their purchasing power going down, either because
they decide to make more investments outside when
they observe this situation, or because their income,
say from real estate, has gone down, but also the
cost of living has gone up. So purchasing power is going down. And I don’t think that
that is going to change. What may change in the
future is to get more people with high paying jobs, but
purchasing power is going down. The fourth reason why the
economy’s slowing down is because we have a
mismatch between the demand and the supply in many sectors. There’s more supply than demand. You can see that in retail space. We have a lot of shopping malls but there isn’t enough demand. And you go to some shopping
malls during the day on a weekday, then you
don’t see a lot of people. But the supply keeps rising. I have an example, the
example of the hotel industry. If you take the first half of this year compared to the first half of last year, tourism has gone down by 35%. And that’s mainly the GCC. Although we have a lot of initiatives to bring tourists, free visa
for 80 nationalities and so on, we haven’t seen the numbers going up yet, because these things take time. We haven’t seen the numbers
from Europe going up, we haven’t seen the
numbers from US going up. While tourism is down, what
happens to the supply of hotels? Just in the first half of 2018, we have 6% more hotels that we
had the year before. Last year we had 10% more
than the year before. We have 45 hotels and 30 something residential towers going
up in the coming years. Until we reach the World Cup,
and maybe a few years later, we will keep adding around 10%
on the supply of hotel rooms. But the demand is slow. So that creates a mismatch. And prices have to go down
and business is not very good. This is the economic
environment, but I also want to talk about business,
the business environment. It used to be very simple to do a business in the country a decade ago. It was a simple environment,
you had a local business that did business locally,
not, so you didn’t care a lot about exchange
rates and the outside world. The regulatory framework
was protecting businesses. The owner was the founder that
was controlling the company. That has changed. The environment is very different now. If you want to launch
a business, geopolitics are very different,
regulation is very different, we don’t support monopolies,
there’s more competition. And what is also different
is family structure. I want to spend a couple
of minutes on that. If you look at the
private sectors in Qatar, it’s mainly driven by
family owned businesses. If you look at those
businesses and they’ve been very successful and the people
behind them work very hard, but they are going through
a succession right now. Because many of the big businesses were established by the grandparents. They went through one
succession, they gave it to the children, but now for many of them, we are going through the third succession, the third generation succession. This is problematic because you can give a company to your
children, but now they have their own children, so now
there are so many grandchildren, cousins, how do you transfer a company? Especially when we go through a slowdown. And I think a lot of the
family owned businesses here, they face the third
generation succession problem. Globally, what we know is
that only 30% of the companies make it to the second generation. And only 13% will make it
to the third generation. Our family owned companies in Qatar, many of them have to go through this third generation transition
in the midst of a slowdown and in the midst of uncertainty. So they need to establish
specific goals and objectives and decision making process, a succession plan, and a transition plan. So there are a lot of challenges
in the business world. But we want those
companies to do very well, because to grow, we
rely on these companies, and new companies but we need to save the ones we already have. Naturally, we may ask, what’s the impact of the blockade on all this? Did it affect us? To assess the impact,
the point I want to make as economist, we cannot
see the economy before that was doing better than after, and say the impact affected the economy. It could be a trend, it
could be that the economy was slowing down before, so of course after the blockade, there’s more slowdown, which seems to be the case. It could be a shock, but
this wasn’t the case. And it could be cyclicality. The blockage was initiated on June 5. In the summer months, the
economies always slow down. Everybody’s away. When we try to assess the impact, we have to be careful not to attribute everything to the blockage,
especially trend and cyclicality which were very, very
important for our economy. What were the concerns
when the blockade happened? When the blockade happened, you all know that there was a disruption
in the supply chain. Everything, or most of
the things we get here would come from UA from Saudi. We lost the supply chain immediately. And the first thing this government did was to ensure that we had
things on the shelves. Milk actually was the most important one. Because when the blockade happened, they took a look around and they said, what’s the one thing
that’s more important, it’s going to expire, and that was milk. And milk has an expiration of three days. So they said, okay for
diapers, we can wait 10 days. For juice, five days, but milk, we have three days to solve this. And the planes went to
Turkey and they brought milk. For us who lived here, the
only recollection we have of that is going to Carrefour and finding the Turkish milk and we
couldn’t read the label and you had to take photos and
send to our Turkish friends and say this is 1.5% or 2%. That’s the only inconvenience we have. Or that the coffee at Paul taste different with a Turkish milk? But that’s all because the government was well prepared and they
took immediate action. And that is not obvious. When the East Asian crisis hit in 1997, and it brought the East Asian tigers to a state of despair and panic, the IMF stepped in and they called for raising interest rates,
restructuring, austerity, and they exacerbated the problem. They’ve been criticized for their action. But one criticism is that they failed to realize that the crisis
became a humanitarian crisis. People were losing their
jobs, they were losing their income, and they failed to work. In this case, the
government, the first thing they did was to make sure
that people are fine. And I think that’s very important. We had concerns. Banking sector was a very big concern because a lot of the money, especially the deposits of the expat,
left the banking sector. And that creates all sort of problems. It can lead to speculation
against the currency, it can cause downgrades
of our credit rating. But again, the government and
Qatar Investment Authority and the central bank took decisive action to replace the deposits that left and send the message that
the economy is very strong. There was some pressure on the currency, but because of the
actions of the government, and over time oil prices were going down, the tension on the currency
peg diminished over time. One concern that I want to highlight were the rating agencies. They put a score on our risk. And when they heard about the blockade, and they don’t understand exactly what’s going on in the country, the first thing they wanted to do was to play it safe and downgrade us. So they put us on a negative watch. And if you read their reports, they said that one reason
for the potential downgrading is because they cannot get
access to data from the banks, but also because I guess
to justify their position, they said maybe defaults
in the construction sector will go up, and that
will cause more bad loans in the banking sector, and therefore it will affect the
financial sector in Qatar. (audience sneezes)
Bless you. And that didn’t happen. I’ll explain what I think is a key moment that nobody noticed. That was October 1, 2017. What happened that day? The Ministry of Development,
Planning, and Statistics released the numbers for GDP growth in the second quarter of 2017. And why was this a key moment? Because the second quarter
has April, May, and June, the first months of the blockade. And up until that point, our story was that the blockade has no impact on us. It’s a blessing in disguise. So GDP of the second
quarter would have been the first time that we
would see actual numbers. And the numbers were bad. Slowed to its lowest rate since
the global financial crisis. But look at the next thing. Sanctions inflicted minor damage. Nobody realized that. It’s a paradox. It was the slowest, and all the news said, so the blockade had no impact. Why? Because part of it was
a drop in oil prices, and we’re able to
communicate to them that, if you look at the non oil sector, it’s been growing much faster. Not as fast as before, but especially if you look at the construction sector, it had grown by 15.4%. The story the rating agencies
were trying to put forward that the blockade was going to affect the construction sector,
and that was going to spiral out of control, they
couldn’t say that anymore. Construction grew by 15.4%. Part of it because 2016 was a particularly bad year for the construction sector. But that’s, that was to our (mumbles). We say many times that the blockade is a blessing in disguise. And it is. And I want to explain why. It really changed the way people operate. I’ll come to that in the moving forward, but I launched a project
with a student of mine and a colleague from the
Qatar Financial Center, and because we think the
blockade is a turning point in the history of the country, we wanted to record the many developments. If you read the news everyday, you hear about the new initiative. If you go on Qatar Living,
if you go on social media, there’s a new initiative every day. The Qatar Financial
Center is putting aside $2 billion to support companies
that set up offices here. We set aside $3 billion
to support companies that would like to use our
free zone near the port. We have a lot of these initiatives. And everybody, Qatar Development Bank, the Ministry of Economy,
the Ministry of Finance, the central bank, QFC, they’re busy with their work, they launch this thing, nobody took time to actually
record all the initiatives. So I set a team and we are doing that because I think it will be important for the history of the country, for academics, for policymakers, to have all the initiatives together. And then we went back in
time 12 months before, day by day to record the initiatives. It’s ongoing project, it’s funded by the Qatar National Research Fund, but the one thing we realize immediately, you have three times more initiatives in the 12 months post the
blockade than you had before. But most importantly, if
you compare the quality of those initiatives, they differ. So today, we’ll say we
have this $2 billion for companies that would like to commit to 10 years staying here and this is how we’ll use the money,
and these are the criteria. If you read the initiatives before, they read something, this entity announces a plan
to launch an initiative. And that’s it. Now we are more serious, we mean business. It’s hard to quantify that with number, but you can look at the stock markets, it’s interesting, in Qatar versus Dubai over the last two months. Yes, the blockade was really
a wake up call for us. Nobody will say that it
makes things easier for us. Absolutely not. It doesn’t help us diversify the economy, but institutionally it
changes how we operate. It motivated us in some levels. I would summarize these two parts, and the economy’s slowing
down because of falling oil prices, falling
infrastructure spending, falling purchasing power, and a mismatch between supply and demand in many sectors. I think the slowdown unfortunately will persist for another
couple of years at least. The blockade had a muted impact, but in some ways it really
benefited the country. Some people will ask, will the World Cup help the economy? And the answer is from an
economic point of view, if you want, just want to look at a short period of time, absolutely not. The World Cup, the World Cup
is an event for one month. But it’s from a branding point of view to showcase the country
and the opportunities here and the people and the environment
and the infrastructure, it’s the best you can do to launch, basically, your country
in the global arena. In 2012, I became the first
academic to get access to all the tweets, and I
launched a couple of projects. One was look at Bitcoin,
but the second one, with a student, we did a
very, very simple exercise. We said take all the tweets
since the beginning of Twitter, and everyday just count
the number of tweets with the hashtag Qatar,
in Arabic or in English, and just count how many tweets
globally talk about Qatar. This is the graph we got. This is December 2, 2010. That’s the day Qatar won the rights on live TV to host the World Cup. And most viewers, millions of viewers, probably had no idea
where the country was. And what you see,
immediately you see a spike. But what is more interesting,
you see a structural change. From that moment on, we raised our branding as a country in social media. It really put us on the map. And before that, you ask many people in the business world, is
winning the World Cup important? And if they’re not in Qatar, they will not say it’s that important. We bought Harrods, we bought
a lot of other companies, it didn’t get anybody’s attention. We won the rights to host the World Cup, it put us on the social map. I think it’s good to be aware of that. Now the interesting part, moving forward. The question is how do we grow next, how can we achieve the
national vision 2030? The answer to that, to me the answer is we need to innovate our way out. And by innovating, I mean
in technology and business, but I also mean innovating the way we communicate and
collaborate with each other. Innovate in the way we evaluate projects. Innovate in the way we
decide what projects to support and what
projects not to support, in the way we monitor projects. We set targets, we need to innovate. In the next stage, the private
sector has to lead the way. But it cannot do it alone. We need the government to monitor, we need the government to support, we need the government
to intervene when needed. So it would be a partnership now. We relied on the
government all these years to launch the projects, to
set up the infrastructure, but now the private sector has to pick up. And that’s why the work of my colleagues at QFC and other entities, it is so fundamental in this stage. And we thank them for that. There are challenges. The obvious are the economic challenge. We are a small country, and
companies care about scale. Okay so we need to recognize that. It’s not a showstopper, but
we need to recognize that. It’s doing business here
is a little more expensive than other places, and
prices would come down. We have inadequate
labor force so you don’t really start a lot of
manufacturing projects because you have to import labor, and there’s a limit to
the high skilled workers we have in the country because
of a small local population. But there are ways to
overcome those challenges. You also have institutional challenges. There is many times coordination failure among various stakeholders. There is very little
collaboration and sharing. And why is that? I think part of it is because before for that part of growth, it was very clear what the Ministry of Finance had to do. It was very clear what the
Ministry of Economy had to do. It was very clear what the
central bank had to do. There was no reason for collaboration. But now the problems we have to deal with, free zones, residence permit,
change in the kafala system, it requires the different
departments, institutions, ministries to come work
together, and work together. And they don’t have the
skill because before they were more isolated
and now they are working on building the capacity that
allows them to come together. That’s an area where we need more work. But again, that’s an area that changed a lot post the blockade. We need to come together. Even sometimes, within
ministries, within institutions, you have departments
that are still working on the way to collaborate together. That creates another problem. Who is in charge of the process? Is it ministry A or is it ministry B? Or should they appoint somebody (mumbles) to be in charge because
we cannot solve that? Again, that’s something
we need to resolve. We realize that our regulatory framework was not supportive for foreign investors. We need to change that. And again, the work QFC
has been fundamental, but if I may say, before the blockade, not many people were paying
attention to the amount and the quality of the
work that QFC was doing, and now that work is at the forefront. It takes a different sense of importance. And the work of QDB and the
work of the central bank. I think the fourth challenge is that we don’t have specific strategic priority areas for investment. Well we didn’t have and
now we try to build them. We have a national vision, and we have a national development
strategy that identifies some areas, but I think
they’re more broad. You need to be very specific. And these were the challenges before. All of this are changing right now. I give an example of the,
everybody talks about startups, entrepreneurship, and you have
every possible institution you can think of, they
will say that they have a program about
entrepreneurship and startups. And if you ask them who’s the main agency here about startups, they will say we are. All of them will be, from Qatar
Science and Technology Park, QFC, QDC, even the central bank. It’s fine to have many
institutions working, but we have to make sure
we avoid redundancies, replication, so we need to innovate in the way we share
information and collaborate. Many times you happen to talk to somebody and they say, oh I didn’t
realize you do that, can we meet for coffee
and exchange some ideas? It could be as simple as that. Let me offer you a very
simple economic model that I use to think of the economy. It’s very naive and maybe
incorrect, but I think it helps. Think of our growth in three stages. First one, you discover
you have natural resources, what do you have to do? Borrow, create the infrastructure, monetize on the resources,
and get the money. There’s nothing else you need to do. This is what the country has done. Now you have money in your pockets. What’s the next thing you do? You either go out and
you spend your money, or you build your country,
you build the infrastructure. You build schools, you build hospitals, you build highways, and this
is what the country has done. Now we are finishing the second phase. The third phase is let’s go out and get business to come here. Let’s get people, let’s get foreign direct investment to come. This is a journey we start right now. The blockade came at the
best possible point in time. We hope we didn’t have to live through it, but at least it came at
the point when we need it to start going out, and now we are very serious on how we do that. It’s not a, it’s a lose-lose
situation for everybody but we have to move on and we have to do what’s best for this country. How do you move on to the third stage? I think you do in three steps. First, when you have
companies that come here and consider Qatar as
a place to do business, we have to make it easy for
them to set up a company. We have to go to the
drawing board and say, how many people do they need to visit? Can we bring the people together? Can we change the regulatory
environment to support them? Can we reduce the cost
of setting up a business? Can we help them get more information and data about this country? On the World Competitiveness Report, Qatar didn’t rank very well. The response of the
policymaker was the following. Okay, how did they come
up with that number? Well, they got information
on this variable, on the regulatory framework. Okay, let’s have one person assigned for every component and see how we can make things
better from the ground up. And this is the right approach. That tells you that if I
come here as Dr. Alexis and I want to set up a
business, I don’t walk away and go to Cyprus because
it’s cumbersome here. But the second step is I have
to be convinced to come here. What we need to do, we need to come up with specific strategic priority areas. So when we go out and we talk to people, we tell them Qatar is a great place, and actually there are couple of areas where we think there’s an advantage for you being in the country. We need to find what is
our competitive advantage. I’ll give you an example. We have two smart cities,
Lusail and Msheireb, and they are empty cities. Why don’t we go to Volkswagen and tell them, we know you’re spending a lot of money on autonomous vehicle. Why don’t you bring your lab in Lusail? You cannot take your lab in New York because you have so many pedestrians, so many cars, bicycles regulation, but you give them a city
that’s already wired, and it makes sense for
them to test their cars and then you bring Google, SiteWorks Lab. You can create synergy. We need to understand what we already have in the country and try to build. We don’t want to launch
projects, leave them aside, and then launch new projects. We need to be able to
merge what we already create in the country,
because there’s a very, a lot of good infrastructure
in the country, and we need to figure out where
is our competitive advantage so then when we go out
and we talk to people, we go there with something very specific. Somebody told me many
years ago, I don’t know if he’s in the audience, somebody working at Qatar Investment Authority. He told me the following
that got my attention. He said, whenever
delegation come to Qatar, they visit His Highness,
and then they come to the Qatar Investment Authority. They tell us you should invest in Cyprus, it’s a great place. You should invest in Bulgaria, you should invest in Greece, you
should invest in Turkey. But what they don’t tell
us is where to invest. They don’t come up with a project. It’s not our job to go and figure out where to make investment. It’s better to come and say, invest in Cyprus because I think this sector is very good,
it creates synergies. Goes back to what I
said, it wasn’t our skill to be salespeople, we are humble. We need to change that,
we need to be specific. The third area is to be able to improve the environment of setting up companies. To identify strategic priority areas. We need people to come together. So maybe a way to work on structures that will enhance collaboration, sharing, coordination, and so on. One area, there are 172
investment promotion agencies that offer a targeted
approach to investment. Maybe we can set up such
an investment authority. There are other things we can do, but can we work on structures and there’re some other ideas
but I cannot discuss here. Can we work on structures that will enhance information sharing? We say that data is worth
more than oil these days. Data companies are worth
more than oil companies. Data scientists are getting
the same salaries as NBA stars. Data is key. If you work on a project,
and I work on a project, and the ministry works on a project, but we are in different institutions, can you imagine it will
benefit this country if we have a way to come together? But right now you need
to talk to your director to write a letter to my director, and I have to be careful what I say. We need to change that. To conclude, the economy is slowing down. The blockade has been a catalyst for change in the right direction. We have seen a lot of improvements, so we need to continue
to improve coordination and collaboration among
agencies, enhancing strategic planning will go a long way in helping the diversification effort. But there’s still risk in the horizon. Interest rates in the US
are going up by the Fed, the Federal Reserves Bank. Our currency’s pegged to the US dollar, it’s fixed with the US dollar, which means that when interest rates in the US go up, we need to raise interest rates in the country, and that puts more pressure on our economy on those that borrowed. That slows down the economy further. And we cannot avoid that
because the currency is fixed. That’s one risk we need to be aware of. The second risk is there may
be potentially a slowdown in the global economy,
it may have started. And if there’s a slowdown, there will be limited liquidity in the system. When things are booming, it’s easier to get investment here, but when there’s a slowdown, there’s flight to quality. Everybody takes the money
and plugs them in the US. That’s another challenge. The third challenge,
which for obvious reasons, I left at the end, is
Saudi, the situation, the developments in Saudi Arabia. It’s a challenge from an
economic point of view and from a social and
security point of view. But we can elaborate more in the Q and A. Okay, and with this, I would like to end just to allow time for
questions and answers. Thank you. (audience applauding)

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