The announcement of Qatar's new gas policy was quickly followed by a renewed thrust to promote small and medium-sized enterprises (SMEs) in the country. On December 20th Qatar's Department of Industrial Development commissioned India's National Small Industries Corporation (NSIC) to conduct a feasibility study for some 30 small-scale industrial units that can be set up to manufacture products, including petrochemicals, aluminium, steel and cement, using locally produced materials. The planned expansion of Qatar's petrochemical industry could potentially offer significant opportunities for SMEs looking to set up facilities to manufacture different types of polyethylene pipes, steel rolling sheets, scaffolding, automotive parts and a host of other consumer and industrial products. The NSIC is expected to submit its report within six months and, if needed, participate in joint ventures to facilitate technology transfers to domestic companies. The government, for its part, has set up a QR2bn (US$550m) special fund to support the initiative, and has offered to stand as a guarantor for bank loans to economically viable SMEs.

Qatar has long been trying to encourage its citizens to set up SMEs by offering incentives, including the provision of free plots of land, subsidised utilities, exemption from customs duties, soft loans and preferential treatment for local products in government purchases. However, few Qataris have come forward to take advantage of these offers, not surprisingly perhaps given the weak entrepreneurship (suppressed by the availability of lucrative public-sector jobs that are virtually guaranteed to Qatari citizens), as well as the paucity of know-how and skilled domestic manpower. To overcome these deficiencies, the government has extended the facilities available to Qataris to foreign investors in an effort to encourage them to team up with willing Qatari entrepreneurs. Last year, Qatar amended its foreign investment law to allow 100% non-Qatari ownership in several sectors, including consultancy services, information technology, services related to sports, culture and entertainment, and distribution services.

The recent push to prioritise the formation of SMEs follows the publication of a recent study, conducted by the UN Development Programme (UNDP) and the General Secretariat for Development Planning, which found that Qatar's SME sector was "underdeveloped" even when compared with those in other emerging economies. The study also found that the sector "does not provide a sufficient engine for the government's economic diversification and Qatarisation programme", two fundamental pillars of the country's economic vision. The report adds that although Qatar has the potential to develop a vibrant and productive SME sector in view of its sound macroeconomic development policies, regulatory regime, low taxes and good access to regional markets, its SMEs are concentrated in low value-added sectors, such as trade and retail distribution, and account for a very small proportion of total GDP. The study calls for multi-sectoral reforms to promote entrepreneurship, greater access to funding for start-up businesses and better access to land for industrial development purposes.

Qatar relies heavily on its oil and gas sector, which in 2010 accounted for almost 61% of its GDP. Despite efforts to reduce this dependence, the Economist Intelligence Unit forecasts that extractive industries will still contribute, on average, 67% towards the country's GDP throughout the forecast period, largely owing to the expansion of its LNG industry, which is expected to bring Qatar's production capacity to 77m t/y next month.