VII. INVESTMENT CLIMATE Openness to Foreign Investment Prompted by declining rates of both production and price of oil, Qatar has resorted in recent years to various options to maintain an acceptable economic performance. Foreign finance has become an increasingly important element in executing development projects, including those of the country's current entry into the liquefied natural gas (LNG) industry. In fact, recent experience suggests that Qatar will only consider major contract bids if they carry a finance package. The Government of Qatar (GOQ) encourages foreign investment, particularly in joint ventures with Qatari partners. Wholly foreign owned firms are permitted to operate in Qatar, provided they have a local agent or a sponsor. However, there is a clear local hierarchy of privileges and preferences that favor Qatari firms and joint ventures with Qatari participation. Foreign- owned firms and the foreign owned portions of joint ventures are subject to corporate income tax, ranging from 5 percent to 35 percent of net profits. Qatari and Gulf Cooperation Council (GCC) nationals and business concerns are exempted from the income tax provisions. Qatar has yet to establish a personal income tax system. Officially, foreign firms placed on the Arab Boycott of Israel list are not allowed to do business in Qatar. However, the GOQ has unilaterally deleted in recent years some giant foreign firms, including some U.S. corporations, from the blacklist. Moreover, Qatar has moved unofficially to ease the secondary and tertiary aspects of the boycott. Further action will be linked to progress in Middle East negotiations. All importers are required by law to have an import license for almost all products. Such import licenses are only issued to Qatari nationals. Even in the case of joint ventures between foreign and Qatari partners, agency/dealership agreements issued by foreign suppliers can be registered only in the name of the Qatari partner in the Commercial Registration Department of the Ministry of Finance, Economy and Commerce. Foreign investors entering into a joint venture with Qatari partners are allowed to have only up to 49 percent of the business. The Qatari partner/s should have no less than 51 percent (Law No. 25 for the year 1990). Taken together, the above represents a formidable array of privileges and preferences, which can put a foreign investor at a severe disadvantage in the Qatari market. Despite stated fines and penalties, the practice of a Qatari illegally lending his name to a foreign-owned/operated business has been common, but on a reduced scale in recent years. Conversion and Transfer Policies Qatar's official currency, the Qatari Riyal (QR) is a floating currency. Due to little demand on the QR outside Qatar, the GOQ has pegged the QR exchange rate to the U.S. dollar (US$) but maintained a floating rate against all other currencies. The current rate is QR 1:00 for US$ 0.27 or US$ 1:00 for QR 3.65, as set by the GOQ in June 1980 and unchanged since then. In Qatar, there is no restriction on transfer of funds associated with an investment. Similarly, there are no limitations on the inflow or outflow of funds for remittances of profits, debt services, capital, capital gains and other returns. It is unlikely that Qatar will impose conversion or transfer restrictions in the future. However, in case of commercial disputes, a court decision may tighten certain remittances. The Overseas Private Investment Corporation (OPIC): Investment Insurance Agreement was approved by the GOQ in March 1988. The agreement was first submitted in October 1984. OPIC's activities in Qatar have, since then, been relatively modest. Only one U.S. firm which was involved in the Phase I development of the North Gas Field Project has bought the OPIC insurance for risk of inconvertibility and war. Other U.S. firms have expressed interest in OPIC insurance, pending an estimated US$ 5 billion investment in Phase II development (LNG) in the same project. Phase II, now in progress, will mark Qatar's debut in the LNG industry. While the U.S. share in Phase I accounted for about 28 percent (US$ 450 million in products and services) in Phase I, Phase II projects have so far gone mainly to Japanese and some French firms. In the first major deal, a Qatar Gas consortium agreement with a Japanese power company, Japanese firms were apparently favored because the buyer was Japanese and the bid included an attractive finance package. Bankruptcy and Mortgage: In the complete absence of specialized laws and regulations to control commercial bankruptcy and mortgage procedures, the civil law of Qatar is, in fact, the only reference to govern such operations. Consequently, commercial bankruptcy in Qatar is viewed as a civil liability, whereby the person and/or firm involved will be officially held responsible for settlement of all debts emanating from bankruptcy. Similarly, there are no special laws or regulations for controlling mortgage operations. Although it is now common practice in Qatar to provide guarantees for various kinds of loans, mortgage liabilities are also controlled by civil law. Apparently, the absence of specialized bankruptcy and mortgage laws does not seem to have had a significant impact on the previous and ongoing investments, foreign or local. U.S. Government (USG) Interests: USG maintains a small Embassy program (SEP) post and other offices in Doha. The current estimated cost for all USG presence in Qatar is US$ 2.2. million per year. Future plans call for building a new Embassy and Ambassador's residence in the diplomatic enclave at Doha's West Bay area. The unofficial estimated cost for this project is between US$ 25 million and US$ 35 million. While the location of the new Embassy premises and the Ambassador's residence is already allocated on a rental basis by the GOQ, USG has yet to decide on an exact time for executing this project. Expropriation and Compensation There has been no expropriatory action in Qatar. Embassy is of the opinion that there will be no rapt no such steps in the foreseeable future. Dispute Settlement Qatar is not a member of the International Center for the Settlement of Investment Disputes (ICSID) and is not a signatory to the New York Convention of 1958 on the same subject. Qatar accepts binding international arbitration of investment disputes between the GOQ and foreign investors. Resorting to arbitration to solve disputes can be more binding if clearly stipulated in contracts. Effective Qatari laws - Civil and Sharia (Islamic law) - have provided sufficient means for enforcing property and contractual laws. However, this is a very long and time-consuming process. Performance Requirements/Incentives Foreign investors are not allowed to expand their investment beyond limits set forth in the law. Performance requirements for such a purpose do not exist. However, an Emiri decree can allow the expansion of a foreign investment in Qatar. Transfer of technology, management and marketing, as was the case in establishing steel, fertilizers and petrochemical industries in the 1970s, were taken as part of the foreign equity (20 or 25 percent). This is still an accepted practice in Qatar. Unless otherwise stated in the binding contracts, foreign equity cannot be diluted over time. In the long run, the GOQ intends to ease requirements for foreign investments. The government is currently looking at the possibility of privatizing some of its services. Privatization may lead to the promulgation of laws/regulations allowing a more active role in local investment to offset sizeable Qatari investments in foreign countries. In the not so distant future, the increasing number of Qatari graduates from local and foreign universities may find it difficult to find jobs within the limited government circles. Therefore, some government officials think that the GOQ will have to impose certain ratios of Qatari employees in each privatized firm of specific size, including foreign joint ventures. Right to Private Ownership and Establishments While the Commercial Companies Law in Qatar permits a variety of corporate structures, joint ventures involving foreign partners almost always take the form of limited liability partnership. Law No. 25 of the year 1990, which controls foreign investment in Qatar's market, made it very clear that foreign investors are not repeat not allowed to enter into partnership in a joint stock company with Qatari firms. The limited liability partnership form of organization confers limited liability. The above law allows foreign investors to have up to 49 percent but the Qatari partner should have no less than 51 percent of the business concern. Foreign partners in contracting ventures organized as limited liability partnership must pay in the full amount of their contribution to authorized capital in cash or kind, prior to the start of operations. Usually, such firms are required to set aside ten percent of profits each year in a statutory reserve, until it equals 50 percent of the venture's authorized capital. Under common practice, foreigners, excluding GCC nationals, are not rapt not allowed to own property or invest in privatized public services. However, as indicated above, foreign industrial firms were allowed to own up to 25 percent in steel, fertilizers and petrochemical industries. Their contribution took the form of technology transfer and/or marketing expertise. It is most likely, however, that only Qatari nationals will be allowed to own portions of the shares of those industries (with GOQ's share 75 to 80 percent) in case of privatization. The GOQ is now looking at this step as a possible means of reinforcing private sector investment in the Qatari market. Despite assurances contained in the current commercial laws, foreign investors are advised that there have been a few disputed court cases in recent years, in which limited liability protection was denied to joint venture partners. Although very few, such cases did have a direct impact on the partners concerned. Protection of Property Rights Qatar is not a member of the World Intellectual Property Organization (WIPO). Nor does it belong to the Paris Convention for Protection of Intellectual Property. Within Qatar, therefore, owners of trade marks and copyrights and holders of patents are dependent on Qatar's own national laws and regulations for protection. Trademarks/Patents: Both aspects are contained in Law No. 3 for the year 1978. Known as "The Law of Trademarks and Commercial Indications", it generally allows internationally accepted norms. This law requires the registration of collective trademarks. Fees for registration are around US$ 65 per registration per class of goods. The Trademarks/Patents Law, as promulgated in 1978, allows the Ministry of Finance, Economy and Commerce to initiate action against trademark/patent violators. Moreover, the law permits the Ministry to penalize those who describe products deceptively with respect to their nature, type, kind, essential properties, origin, and other related aspects such as weight and amount. Enforcement of this law has been slightly more strict in recent years, but still falls short of what is required. There are continuing problems with imports of counterfeit products, including auto spare parts, household items, and clothing accessories. Copyrights: The GOQ has yet to promulgate a long-term legislation on this subject. Trade Secrets: No rules or regulations are available. Semiconductor Chip Layout Design: No rules or regulations are available. Regulatory System: Laws and Procedures Qatar recently became a member of the General Agreement on Tariffs and Trade (GATT). Earlier it participated in GATT as an observer. It is a member of the GCC and as such, participates in the GCC's free trade arrangements, which provide duty-free access to all goods produced in the GCC states, provided that the goods meet the GCC's basic local content requirements (at least 40 percent value-added within the GCC in plants which are at least 51 percent owned by GCC nationals). The GCC states have yet to work on regional integration of matters such as external tariff, standardization of investment and industrial rules and regulations, and facilitation of intra-GCC travel. Qatar has been engaged through the GCC in trade and investment negotiations with the United States, the European Community and Japan. Several aspects of the negotiations are yet to materialize. In addition to the GCC Economic Agreement (1983), Qatar signed economic/commercial agreements with Egypt and Tunisia in recent years. While some slight progress has been made in carrying out the GCC economic agreement, there has been no real headway on any of the other above-mentioned agreements. Internally, Qatar maintains a variety of trade barriers which can affect foreign investors. The Boycott of Israel was discussed in Paragraph A1. Import of religiously or politically sensitive items may also be banned by the GOQ. Although tariffs are relatively low (4 percent on a very wide range of products), the GOQ recently raised the tariff on cigarettes to reach 50 percent; the GOQ still maintains a high tariff level of 20 percent on steel imports (protection of the State-owned Qatar Steel Company). The Government's procurement regulations strongly favor Qatari and GCC nationals. According to an Emiri decree issued 1987, GOQ products are given priority in GOQ programs. In Qatar, the Government is a major end-user of a wide range of products and services. GCC products now receive up to 10 percent price preference over non-GCC products in all GOQ contracts. Unless exempted by Emiri decree on case by case basis, foreign contractors are required to import their own goods and supplies exclusively through Qatari agents. Efficient Capital Markets and Portfolio Investment Qatar has no restrictions on the flow of funds. However, restrictions exist on capital markets. While bonds of any kind are practically non-existent, investment in share-holding of a limited number of public/private share--holding companies is restricted to Qatari nationals. The GOQ, operating through the Central Bank of Qatar (CBQ)(formerly Qatar Monetary Agency (QMA)), has on different occasions, reviewed the possibility of issuing government bonds, but such a step has yet to materialize. Although the CBQ requires all banks operating in Qatar to maintain a low profile credit for the purpose of investment in local or foreign shares and urges them to have 100 percent guarantees on such operations, credit for other purposes is allocated on market terms. Effective January 1, 1992, the QMA established a base rate of 4 percent interest rate on deposits and credits in Qatari riyals. The CBQ has decided to raise the above base rate to 4.5 percent with effect from April 23, 1994. According to the CBQ directives, banks can charge up to 4 percentage points above the base rate on loans, but they cannot exceed a margin of plus or minus 0.75 percentage points around the base rate for deposits. Foreign investors can get credit in the local market. Guarantees are required for each loan. It is common practice for the Qatari sponsor to co-sign the required collateral. Banks have been the main source of all credit facilities. Qatar has no other official credit instruments, such as bonds or commercial short term notes. In some areas, legal, regulatory and accounting systems are transparent and inconsistent with international norms. However, Qatar has yet to have laws and regulations for establishing a stock market, standard accounting procedures and portfolio investment. The five largest banks in the country, four Qatari and one foreign, are: Qatar National Bank, Doha Bank Limited, Commercial Bank of Qatar, Qatar Islamic Bank, and the British Bank of the Middle East. Including branches, there are 30 banks representing 14 mother banks operating in Qatar. Estimated total assets of these five banks are QR 20 billion (US$ 5.5 billion) which represents about 80 percent of the assets of all banks, QR 25 billion (US$ 6.9 billion). Both Qatari and foreign banks operating in Qatar believe that the banking system in Qatar is sound. The banks also believe that the percentage of total asset base estimated as non-performing is acceptable. Qatar has no cross sharing style of investment. Stable share-holding exists because the Government and/or ruling family members are directly or indirectly involved in the share-holding companies. Foreign investors are, in any case, excluded, since only Qataris can hold shares in the current share-holding companies. The following is a list of Qatar's joint stock companies, showing paid-up capital, total value of shares, total number of shares, number of shareholders, and GOQ's share. Qatar National Navigation and Transport Paid-up capital: QR 62,384,400 (US$ 17.1 million); Total value of shares: QR 638,576,411 (US$ 175 million); Total number of shares: 623,884; Number of shareholders: 643; Government of Qatar's share: Nil. Qatar Cement Co. Paid-up capital: QR 65,007,200 (US$ 17.8 million); Total value of shares: QR 296,260,398 (US$ 81.2 million); Total number of shares: 650,072; Number of shareholders: 1,862; Government of Qatar's share: 43.2. Qatar National Hotels Paid-up capital: QR 797,000,000 (US$ 218.4 million); Total value of shares: QR 811,452,000 (US$ 222.3 million); Total number of shares: 797,000; Number of shareholders: 1; Government of Qatar's share: 100 percent. Qatar Flour Mills Co. Paid-up capital: QR 12,564,800 (US$ 3.44 million); Total value of shares: QR 81,278,215 (US$ 22.3 million); Total number of shares: 125,648; Number of shareholders: 501; Government of Qatar's share: Nil. Qatar Cinema and Film Distribution Co. Paid-up capital: QR 10,362,000 (US$ 2.8 million); Total value of shares: QR 17,970,174 (US$ 4.9 million); Total number of shares: 103,620; Number of shareholders: 214; Government of Qatar's share: Nil. Qatar Insurance Co. Paid-up capital: QR 4,500,000 (US$ 1.2 million); Total value of shares: QR 330,780,542 (US$ 90.6 million); Total number of shares: 450,000; Number of shareholders: 536; Government of Qatar's share: 12 percent. Qatar General Insurance & Re-Insurance Co. Paid-up capital: QR 15,000,000 (US$ 4.1 million); Total value of shares: QR 118,193,075 (US$ 32.4 million); Total number of shares: 150,000; Number of shareholders: 150; Government of Qatar's share: Nil. Al-Khaleej Insurance Company of Qatar Paid-up capital: QR 9,000,000 (US$ 2.5 million); Total value of shares: QR 36,824,241 (US$ 10.1 million); Total number of shares: 90,000; Number of shareholders: 291; Government of Qatar's share: Nil. Qatar National Bank Paid-up capital: QR 189,000,000 (US$ 51.8 million); Total value of shares: QR 1,883,698,000 (US$ 516.1 million); Total number of shares: 1,890,000; Number of shareholders: 587; Government of Qatar's share: 50 percent. Commercial Bank of Qatar Paid-up capital: QR 56,250,000 (US$ 15.4 million); Total value of shares: QR 163,186,548 (US$ 44.7 million); Total number of shares: 562,500; Number of shareholders: 682. Government of Qatar's share: Nil. Doha Bank Ltd. Paid-up capital: QR 52,500,000 (US$ 14.4 million); Total value of shares: QR 200,250,000 (US$ 54.9 million); Total number of shares: 525,000; Number of shareholders: 862; Government of Qatar's share: Nil Qatar Islamic Bank Paid-up capital: QR 100,000,000; (US$ 27.4 million); Total value of shares: QR 206,667,000 (US$ 56.6 million); Total number of shares: 1,000,000; Number of shareholders: 4,934; Government of Qatar's share: Nil Al-Ahli Bank of Qatar Paid-up capital: QR 60,000,000 (US$ 16.4 million); Total value of shares: QR 105,689,000 (US$ 29 million); Total number of shares: 600,000; Number of shareholders: 1,618; Government of Qatar's share: Nil. Qatar International Islamic Bank Paid-up capital: QR 50,000,000 (US$ 13.7 million); Total value of shares: QR 54,000,000 (US$ 14.5 million); Total number of shares: 1,000,000; Number of shareholders: 6,174; Government of Qatar's share: Nil. Qatar Tourism Co. Paid-up capital: QR 20,000,000 (US$ 5.5 million); Total value of shares: QR 20,842,977 (US$ 5.7 million); Total number of shares: 400,000; Number of shareholders: 1,939; Government of Qatar's share: Nil. Qatar Manufacturing Co. Paid-up capital: QR 100,000,000 (US$ 27.4 million); Total value of shares: QR 127,236,760 (US$ 34.9 million); Total number of shares: 4,000,000; Number of shareholders: 8,500; Government of Qatar's share: Nil. Qatar Electricity and Water Company Paid-up capital: QR 100,000,000 (US$ 27.4 million); Total value of shares: QR 100,000,000 (US$ 27.4 million); Total number of shares: 10,000,000; Number of shareholders: 16,664; Government of Qatar's share: 29.8 percent. Qatar Marine Transport Paid-up capital: QR 500,000,000 (US$ 137 million); Total value of shares: QR 500,000,000 (US$ 137 million); Total number of shares: 10,000,000; Number of shareholders: 835; Government of Qatar's share: Nil. Private and share-holding companies in Qatar are not in any way worried by potential hostile takeovers by foreign investors. As stated above, foreign investors are not allowed to hold shares in the Qatari share-holding companies. As for other private firms, foreign equity participation is controlled by Law No. 25 for the year 1990. The law stipulates that foreign equity participation can be up to 49 percent, while Qatari equity should be no less than 51 percent of the business. Consequently, majority votes are a privilege of the Qatari partner/s. The GOQ has not promulgated rules against and does not seem to be exerting efforts to restrict foreign participation in industry standards. The Doha-based Gulf Organization for Industrial Consulting (GOIC) is the only official industrial organization in the region involved in promoting private/public industries in the GCC. The 15 years old GOIC employs international standards. It provides preliminary feasibility studies on national and regional investments and on joint ventures involving foreign equity participation in industrial projects. In addition, GOIC contracts other international specialized firms to prepare feasibility and marketing studies. Described below is the basic structure of Qatar's banking and financial system. It is comprised of the banking and non- banking financial firms operating in Qatar, both local and foreign. The year of establishment and the number of branches for each firm is also included below. The Banking and Financial System of Qatar: I. Banking System A. The Central Bank of Qatar B. Commercial banks: 1. National: Qatar National Bank (1965)(10) Commercial Bank of Qatar Ltd.(1975)(5) Doha Bank Ltd. (1979)(7) Qatar Islamic Bank (1983)(4) Al-Ahli Bank of Qatar (1984)(3) Qatar International Islamic Bank (1991)(0) 2. Arab: The Arab Bank Ltd. (1957)(2) Al-Mashriq (1971)(1) 3. Foreign: Standard Chartered Bank (1950)(1) British Bank of the Middle East(1954)(2) Grindlays Bank Ltd. (1956)(1) United Bank (1970)(1) Bank Saderat Iran (1970)(1) Banque Paribas (1973)(1) C. Money exchange companies: -Khalil Ibrahim Al-Fardan Exchange (1955) -Mohamed Haji Nazar Money Exchange (1969) -Al-Fardan Exchange and Finance Co. (1970) -Al-Basry Exchange (1972) -Trust Exchange Co. (1976) -Gulf Finance and Exchange Co. (1977) -Habib Qatar International Finance and -Investment Ltd. (1978) -City Exchange (1978) -Mohamed Salih Ali Exchange (1978) -Al-Zaman Exchange (1978) -Al-Mana Exchange (1979) -Eastern Exchange and Finance Organization (1979) -Qatar Financial Services and Exchange Ltd.(1979) -Al-Shaibi Finance and Exchange Co. (1979) -Middle East Exchange Co. Ltd. (1983) -Qatar International Exchange Co. (1983) II. Non-banking System A. Insurance companies: 1. National: Qatar Insurance Co. (1964) The Qatar General Insurance and Re-Insurance Co. (1978) Al-Khaleej Insurance Co. (1978) 2. Foreign: Atlas Insurance Co. (1966) Arabian Insurance Co. (1966) Libano-Suisse Insurance Co.(1966) The National Insurance Co. of Egypt(1969) Political Violence Located in the heart of the Gulf region, Qatar has been politically stable. The country enjoys a very strict internal security system. Despite a wide diversity of expatriate residents, Qatar has a very low crime rate. Expatriate communities are screened before taking up work and residence in Qatar. Follow up on law violations is strict. Deportation is a common practice here for persons who cause or may cause disturbances of any kind. In the complete absence of any kind of labor unions or associations, it is most unlikely that there will be nascent insurrections. In Qatar, family and tribal ties are strong. On almost all national occasions, heads and leading members of all tribes renew their loyalty to the head of state, other leading members of the ruling family and to the Government. There have been no incidents of organized political violence since the country's independence from britain in 1971. Embassy is not aware of any politically motivated damage to projects and/or installations. Qatar has unresolved disputes with the State of Bahrain over its borders, involving Hawar Island and two other smaller islands off the country's west coast. Similarly, Qatar and Saudi Arabia have yet to establish their boundaries to the south of Qatar. Qatar's maritime boundaries with Iran have been the subject of bilateral discussions since Iran's announcement of a commercial exclusion zone in 1992. Qatar has pronounced itself satisfied with the results of these talks. Fully established and reorganized maritime limits between Qatar and the U.A.E., as well as Qatar and Saudi Arabia, have not been finalized. However, the absence of clear-cut boundary lines of each country in the small Gulf area does not seem to always affect the friendly ties among those countries. Qatar's territorial waters in the Gulf were not disputed when they were drawn up by an Emiri decree in early 1993. Nor, however, do the neighboring countries officially recognize those limits. Qatar's claims in the Gulf waters are apparently in line with international standards. Bilateral Investment Agreements Only with the United States. OPIC and other investment insurance programs The OPIC Investment Insurance Agreement was approved in March 1989. It was first submitted in October 1984. To date, only one U.S. firm, involved in the Phase I development of the North Gas field project, has bought the OPIC insurance for risk of convertibility and war. Other U.S. firms have expressed interest in OPIC insurance in connection with an estimated US$ 10 billion investment in Phase II of the same project. Because Japanese firms already have a lion's share in the first project in Phase II (Qatar Liquefied Gas Company (Qatar Gas)), U.S. firms may have better prospects in the larger and more expensive second project known as Ras Laffan LNG company. This project is owned by the State-owned Qatar General Petroleum Corporation (QGPC) and the U.S. firm Mobil Oil (30 percent). Qatar is not a member of the Multilateral Guarantee Agency (MICA). There are no plans at the present to become a member of this agency. Labor The majority of Qatar's labor force consists of expatriate workers. With a total estimated population of 400,000 and Qataris constituting no more than one fourth of this number, the role of expatriates in different sectors of the economy is very important. The Ministry of Interior and the Ministry of Labor and Social Affairs regulate recruitment of expatriate labor. The largest groups of foreign workers now come from India, Pakistan, and the Philippines. Restrictions, on some Arab nationalities, following the invasion and liberation of Kuwait, are still in effect. Exemptions exist. Internally, Qatar's plan to develop its own manpower resources at all levels has continued to receive attention at all government levels. However, the country is still far from being self-sufficient in this regard. The Ministry of Interior must approve all transfers of sponsorship of an expatriate from one Qatari national or firm to another. By law, an expatriate is only entitled to two sponsorship transfers throughout his/her stay in the country. Official fee for each transfer is about US$ 275. Approval of old and new sponsors is required. It is common practice in Qatar for expatriate workers and staff to be given accommodation along with salaries, end of service benefits and return tickets to fly home every one or two years. There is no minimum wage regulation. While salaries and wages are negotiable, end of service benefits are subject to three different laws. The most rewarding is that of the State-owned QGPC, then the Civil Service, and finally, the Labor Law, which applies mainly to unskilled workers, office boys and maids. Foreign Trade Zones/Free Ports In Qatar, there are no foreign trade zones or free ports. Capital Outflow Policy Qatar has no restrictions on capital outflow. Both public and private sector investment in third world and developing countries are minimal. As for Qatar's investments in foreign countries, GOQ considers this to be classified information and only a few higher management officials are aware of the volume of such investments. However, GOQ officials have noted that foreign investments, at one time estimated at US$ 10 billion, have dropped considerably in recent years. This drop was caused by a continued budget deficit, ranging from US$ 900 million to US$ 1.5 billion each year during the low oil revenue years from 1985 to the present. Apart from GOQ investment in developing countries, Europe, Japan, and the United States, the State-owned Qatar General Petroleum Corporation is an equity participant in the following Arab joint ventures. QGPC's share in each venture is indicated in each case. - Arab Shipbuilding and Repair Yard Co. (ASRY) (Bahrain), 19 percent. - Arab Maritime Petroleum Transport Company (AMPTC) (Kuwait), 14 percent. - Arab Petroleum Investment Corporation (APICORP) (Saudi Arabia), 10 percent. - Arab Petroleum Services Company (APSC) (Libya), 10 percent. - Arab Petroleum Pipelines Company (SUMED) (Egypt), 5 percent. Foreign Direct Investment Statistics: According to the Economic Review Report, 1991 (latest available figures) of the Ministry of Finance, Economy and Commerce and updates from contacts at the Ministry, the total number of joint ventures involving foreign and Qatari nationals licensed to operate in the State of Qatar was 3245. Total foreign capital outlay for the above ventures is QR 3579.6 (US$ 983 million). According to the same sources, 1036 joint ventures were established on the basis of up to 49 percent foreign and no less than 51 percent Qatari. The number of wholly owned foreign investment registered firms reached 512 and individual foreign investment firms reached 1697. The following tables show the number of trading firms in Qatar and their capital content: Table I. Number of Trade Companies by Type of Capital Type of Company Year 1989 1990 1991 National Companies 3852 4289 4609 Mixed Companies 1003 987 1036 Foreign Companies 501 509 512 National Establishments 8153 8953 9573 Foreign Establishments 1677 1686 1697 Table II. Total Capital Invested in Trade, Industry and Oil Companies (in millions of US$) Description Year 1989 1990 1991 National Companies 1382.2 1612.4 1638.1 Mixed Companies 521.6 549.8 655.4 Foreign Companies 258.8 262.0 322.1 National Establishments 518.7 531.7 532.4 Foreign Establishments 5.2 5.7 6.0 It should be noted that the above figures represent firms and capital officially registered, but not necessarily still operating. As per common practice, and as an exception to current rules and regulations, wholly-owned foreign firms, as well as individually owned businesses, are allowed to operate in Qatar by force of an Emiri decree. Such firms are usually licensed to operate only on certain projects and move outside the country when the contracted works/services are completed. It should be noted that the amount of registered capital does not reflect the actual volume of foreign and/or Qatari investment. According to the 1992 Economic Survey of Qatar (latest available) issued by the Ministry of Finance, Economy and Commerce, U.S. investments in Qatar were estimated at QR 235 million (US$ 64 million) in 1991. No further breakdown was reported. However, the above data does not rapt not seem to include the entry as investor in qatar of the U.S. firm Mobil Oil. Mobil owns 10 percent of Qatar Liquefied Gas Company (Qatar Gas), which was established in May 1992, with an equity share capital of QR 500 million (US$ 137.5 million). Moreover, Mobil Oil holds 30 percent equity in Ras Laffan LNG Company, which was established in June 1993 with an equity share capital of QR 7.2 billion (US$ 2 billion). Major Foreign Investors There is no major foreign investment by the USG or U.S. private firms in Qatar. However, the U.S. firm Amoco recently completed a lengthy but unsuccessful oil and gas exploration operation covering about 85 percent of Qatar's mainland. Total cost of more than US$ 60 million led to no commercially viable findings. Amoco failed to win a second production sharing agreement for oil exploration operations covering the offshore gas-rich area five, north of the Qatari coast. Other U.S. firms are now competing for production sharing contracts related to the upgrading of Qatar's oil fields, as well as upstream/downstream natural gas works. The following is a list of foreign equity participation investment, U.S. firms included, in some major state-owned industrial/petroleum related industries: Qatar Steel Company (QASCO) Equity share capital: QR 200 million (US$ 55 million). Shareholders: GOQ 70 percent, Kobe Steel (Japan) 20 percent, Tokyo Boeki (Japan) 20 percent. Year established: 1974. Commencement of commercial production: 1978. Current value of foreign equity: Not available. Qatar Petrochemical Company (QAPCO) Equity share capital: QR 360 million (US$ 98.6 million). Shareholders: GOQ 80 percent, CDF Chimie Atochem (France) 10 percent and Enichem (Italy), 10 percent. Year established: 1975. Commencement of commercial production: 1981. Current value of foreign equity: Not available. Qatar Fertilizer Company (QAFCO) Equity share capital: QR 100 million (US$ 27.4 million). Shareholders: GOQ 70 percent, Norsk Hydro (Norway) 25 percent, Davy McKee Ltd. (U.K.) 3 percent, Hambros Bank Ltd. (U.K.), 2 percent. Year established: 1969. Commencement of commercial production: 1974. Current value of foreign equity: Not available. Foreign equity: Not available. Qatar Liquefied Gas Company (Qatar Gas) Equity share capital: QR 500 million (US$ 137.5 million). Shareholders are: the State-owned Qatar General Petroleum Corporation , 65 percent, CFP/Total (France) 10 percent, Marubeni Corporation (Japan) and Mitsui Company Ltd. (Japan) 7.5 percent each and Mobil Oil (U.S.A.) 10 percent. Year established: 1984. Qatar Gas objectives: Produce and export LNG from Qatar's North gas Field. Commencement of commercial production: Production is scheduled to start in 1997. In May 1992, Qatar Gas signed a Sales and Purchase Agreement (SPA) with the Japanese firm Chubu Electric Power Company, for the sale of 4 million m. tons of LNG per year for a period of 25 years commencing 1997. Ras Laffan Liquefied Natural Gas Co. Equity share capital: QR 7.28 billion (US$ 2 billion); QGPC 70 percent, U.S. firm Mobil Oil 30 percent; This company was established as per Emiri Decree 48 for the year 1993 dated June 29, 1993. Objectives: To produce natural gas from the North Gas Field for the production of an estimated amount of 10 million m. tons of LNG per year. End-users of LNG worldwide. Upstream operations are already in early stages. Qatar Fuel Additives Company (QAFAC) Equity share capital: QR 370 million (US$ 101.7 million). Shareholders: QGPC 50 percent, International Octane Ltd. (IOL) (Canada) 20 percent. QAFAC Objectives: Produce and market 6660,000 m. tons of methanol per year, as well as 500,000 m. tons of MTBE (methyl tertiary butyl ether). Note: Both parties have yet to officially announce whether this agreement will be executed or not. Negotiations are stalled at present. QGPC and Penspen International Company signed a memo of understanding in April 1992, to establish Qatar Clean Energy Company (QACENCO). The company aims at producing/exporting methanol and MTBE. Note: Both parties have yet to officially announce whether this agreement will be executed or not. Negotiations are stalled at present. Other natural gas related joint ventures between QGPC and foreign investors are yet to materialize. We note that QAFAC and Penspen, as well as Qatar Europe LNG Company (Eurogas), have not yet made progress. Partners in these three ventures have yet to announce officially cancellation of agreements on these ventures.