A recent decision by the Ministry of Commerce and Industry has provided a unified definition of small and medium enterprises in the State of Qatar.
Qatar has a number of policies and initiatives in place that support and encourage the growth of entrepreneurship and in particular small and medium-sized enterprises (SMEs). This action has been taken to encourage sustainable development and economic diversification, as the country looks to move away from its reliance on hydrocarbons as a source of revenue. Despite regional and global political and financial uncertainties, this sector is showing great progress.
The sector is expected to see further growth in the next couple of years, with the 2022 FIFA World Cup QatarTM approaching – in fact, investment is expected to reach USD5 bn. This gives emerging companies and entrepreneurs the chance to participate in this global event.
The Ministry of Commerce and Industry (MOCI) recently issued a set of unified definitions for SMEs in the country, opening up the sector to investment funds and venture capital. This move could greatly benefit the SME sector and further enhance economic growth. It is in line with the economic development pillar of Qatar National Vision 2030.
Ministerial Decision No 250 of 2018 on the unified definition of SMEs aligns with the State’s keen interest in developing the private sector, particularly small enterprises. The decision was drawn up in conjunction with Qatar Development Ba1nk (QDB) after consultation with a number of stakeholders.
The decision classifies enterprises according to headcount and annual revenues; SMEs are companies established under Qatari law, with not more than 250 employees and annual revenues not exceeding QAR100 mn.
Under the decision, SMEs have been classified into three categories:
• Micro-sized entities with not more than 10 employees and annual turnover under QAR1 mn.
• Small-sized companies with a headcount of 11–50 employees and a turnover of more than QAR1 mn but less than QAR20 mn.
• Medium-sized enterprises with a headcount of 51–250 employees and a turnover of more than QAR20 mn but less than QAR100 mn.
The unified definition of SMEs is limited to autonomous private and profit-seeking enterprises. Excluded are ministries, public bodies and institutions, diplomatic bodies, public welfare institutions and establishments owned by public bodies, and corporations and companies in which the state is a shareholder.
As per the decision, a private, profit-seeking entity shall not be considered a mixed enterprise. It shall maintain an independent status within the scope of the definition set out in the preceding article of the decision, even if the percentage of equities or voting powers of investors such as public investment companies, venture capital companies, business enterprise financiers, universities and non-profit research centres, and institutional investors (including regional development funds) is up to 50%.
The decision also stipulates that MOCI shall coordinate and cooperate with all relevant authorities to introduce any amendments to this definition, by reviewing the outcome of applying this definition, and evaluating its suitability to the needs of SMEs in the country and its compatibility with the State’s strategic plans, eg Qatar National Vision 2030.
Speaking to press at the launch of the new definition guidelines, Saud Abdullah Al Attiyah, director of Economic Policies and Research Department at MOCI, stated that adopting the same definition for SMEs in Qatar will lead to create a clear framework for development of the sector, which will support the establishment of evidence-based decisions.
There is already a common definition for SMEs in the banking sector, but for the first time this will be one definition for the whole country, aligned with global best practices and Qatar’s vision to create a diversified economy.
How local entities are supporting the SME market
The Qatar Stock Exchange’s Venture Market is excluded from the definition of SMEs when applying the rules of listing to companies. However, the Venture Market may decide to use it as a guiding definition.
The QE Venture Market is dedicated to SMEs who have a minimal track record and a higher risk profile but who are growing and need access to capital. The development of the Venture Market is specifically designed to fit within the state’s overall desire to support SMEs as part of Qatar National Vision 2030. Eventually those companies on the Venture Market should be able to grow and graduate to the Main Market.
Companies on the QE Venture Market trade on the same infrastructure and benefit from the same regulatory safeguards as those on the Main Market. However, it is easily identifiable as a separate and dedicated marketplace. For more details, visit qe.com.qa.
Meanwhile, Qatar Development Bank (QDB), who was involved in the development of Ministerial Decision No 250 of 2018, plays an important role in empowering entrepreneurs, with a package of initiatives and programmes. Small companies in the country are launched through different channels, and are now contributing to the economy of the country, some of which have reached the stage of foreign exportation.
Their SME Excellence List recognises and celebrates the top performing SMEs in Qatar via defined eligibility and evaluation criteria. In 2018, QDB gave QAR8 bn in financial support to Qatari companies, including SMEs. For more information on the services available to SMEs, visit qdb.qa.
A full list of investment regulations and company structures can be found in Investment and Trade in this section. More information is also available from the Ministry of Commerce and Industry at moci.gov.qa, for investment opportunities visit invest.gov.qa.
Author: Sarah Palmer
This feature is an editorial from the ‘Banking and Commerce’ section in the latest issue of Marhaba – Issue 75, published in August 2019.
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