Emerging Market Global Players: Institutions, Governance and Strategy: The Case of Qatar Yasir Yasin Fadol Assistant Professor of International Business and Strategy College of Business and Economics Qatar University Qatar [email protected] AIB 2014 Annual Meeting Vancouver June 25, 2014 Introduction • • • Qatar at A Glance: Qatar is the world’s largest exporter of liquefied natural gas (LNG). Qatar is ranked amongst the three fastest growing world economies. Growth averaged 14 percent over the past decade with per capita GDP reaching $100,000, the highest in the world. • Investments by TNCs in West Asia increased by 65% in 2013, souring FDI by TNCs from Qatar (more than quadrupling), explained most of the increase. Despite this increase, Qatar is still in the first steps in enhancing its outward investments. However, the Qatari economy is still heavily reliant on state-owned enterprises (accounted for approximately 60% of GDP, 2009). Most of Qatar’s investments in international markets are dominated by state owned enterprises. Major challenges: 1. Development of a strong financial system to encourage the privately owned companies and publicly owned enterprises to invest globally. 2. Enhancing the education system to produce qualified and educated leaders capable of managing their companies internationally and to conduct related research studies. In 2008 the government created its first national strategic plan for future development, the Qatar National Vision 2030 (QNV). Some of the Institutions on Qatar’s Foreign Investments Qatar’s authorities continue pursuing development and diversification strategy and promoting competition, trade, and investment. Government has indicated broad plans to encourage investment and development of industry outside the oil and gas sectors. In so doing, the authorities are striving to make major reforms: Economic Reform Initiatives • Enhancing the institutional framework for fiscal policy; • Strengthening financial regulation and monetary operations to maintain financial stability; • The establishment of Qatar Financial Centre (QFC); • The establishment of capital markets; • Taking initiatives for trade and investment policy implementation, which include: • Adopting the WTO Code of Good Practice in 2006. • Becoming a member of ISO, Codex, and the IEC, and utilizes their international standards. • Becoming a member of the GCC’s Gulf Standardization and Metrology Organization (GSMO). Some of the Institutions on Qatar’s Foreign Investments Economic Reform Initiatives (Contd.) • The establishment of agencies in charge of trade and investment policy • • • • • implementation. These include: The Ministry of Business and Trade: was given responsibilities for developing programs necessary to execute policies on the development of trade and investment. Qatar Investment Authority: (QIA) is the government's sovereign wealth fund established in 2005 to strengthen the economy and build long-term strategic investments for the State. It invests in a variety of assets, both domestically and abroad, and is considered a global investor for the State of Qatar. National Committee on WTO Affairs: was established in 2001 to coordinate and liaise on WTO policy matters. Qatar Chamber of Commerce and Industry: was established to develop the private sector. Qatar Standards and Metrology Department: part of the Ministry of the Environment, prepares standards based on international standards. Some of the Institutions on Qatar’s Foreign Investments Human Development Initiatives • Human Development: Qatar Vision 2030 and National Development Strategy place high importance on education during the country’s transition process. Two major actions were taken improve education and research services: • Qatar Foundation (QF): was established in 1995 to support the Qatari people in three main areas: education, science and research, and community development. It supports an innovative and open society that aspires to develop sustainable human capacity, social and economic prosperity for a knowledge-based economy. • Education City: was established by QF to provide a common education facility for the establishment of world renowned universities in Qatar and to facilitate interaction with research institutions and industries. The Influence of Institutions on the Corporate Governance of MNEs Enacting and implementing the aforementioned institutions led to the appearance of new forms of ownership MNEs other than state-owned enterprises. Although no statistics are available, a number of business firms such as banks and telecommunication companies began to expand their businesses globally. Qatar National Bank (QNB) Today operates in 26 countries and across three continents. Board N1 N2 Acting CEO CFO QNB Switzerland Chairman of the Board COO QNB Capital Director Business QNB Syria Director Risk QNB China Director Services and Special Proj QNB Mauritania Director International Business QNB Singapore Director Retail QNB Kuwait Director Asset and Wealth Mgt. QNB Oman Director Communication QNB Yemen Director Human Resources Operations Information Technology QNB Africa Strategy QNB Europe International Banking QNB Lebanon Treasury QNB Sudan Audit QNB France Compliance QNB Iran Ownership structure: From a bank wholly owned by Qatar state to a bank with ownership structure split between the Qatar State (50%) and the private sector (50). QNB Simple Organizational Chart QNB Libya QNB Financial Services The Influence of Institutions and Corporate Governance on MNEs’ Strategies, Behaviors, and Performance No information is available since most of MNEs in Qatar are still new to measure the relationship between these variables. In this context, support from researchers and research and consultancy centers and regional and international partners in the form of policy advice, sharing the experience of other countries, and market access will all be helpful.