BMI believes the suggestion from Qatar's Advisory Council that there should be restrictions on the number of driving licences issued to expatriates in order to reduce congestion is too little too late. Although the expat community does account for a significant number of licences, the move does not take into account the other causes of congestion, such as the country's road-dependent freight transport industry, nor does it offer immediate viable alternatives for expatriates as the public transport network is vastly underdeveloped.
Congestion is undoubtedly a problem in Qatar, as its car ownership levels are around 390 cars per 1,000 people, which is almost on a par with the US, but in a country with a greater population density. Moreover, BMI forecasts show this growing to 418/1,000 by 2018, which means we can expect the situation to worsen if measures are not implemented, in contrast to the gradual dip in ownership rates we expect in the US ( see 'Car Ownership Decline Set To Continue', May 15 2013).
It is also fair to say that the expat community, which accounts for 74.6% of the population according to the BMI Labour Market Risk Index, is the key driver of this growth. Data from the Qatar Statistics Authority show that In February 2014 alone, some 6,995 licences were issued to non-nationals, compared with 438 for Qatari nationals.
|Becoming Increasingly Crowded|
|Car Ownership In Qatar And US|
However, BMI believes the attempt to limit expat driving licences overlooks and, indeed fails to address, many of the other factors contributing to the congestion problem. Firstly, the country lacks a viable alternative to driving a car. BMI's new Logistics Risk Index shows that Qatar has no rail network, which takes away one of the most practical alternatives.
Our Infrastructure team notes that a USD40bn rail network project is underway, which will include building four metro lines for the capital in time for the World Cup in 2022, as well as tram ways in West Bay and Lusail, a high-speed line and dedicated freight railways. The first phase of the project is scheduled to become operational in Q419, however, which we believe is far too long-term to accommodate people who might be denied a driving licence now.
|Investment On Track, Growth To Come|
|Railways Infrastructure Industry Value (QARbn) and Real Growth (% Change y-o-y)|
We have also previously commented on the need to replace the country's bus fleet, which is old and in many cases falls short of safety and environmental standards. We pointed out that the move to power government and public fleets with compressed natural gas (CNG) provided a timely opportunity to replace the country's bus fleet with CNG alternatives ( see 'CNG Recommendations Align With Regional Trends', June 3 2013). There have been positive developments in the bus fleet with state-owned Mowasalat expanding its fleet, which began operations in 2005, but this is still a small-scale public transport network compared with the level of private car ownership.
However, it is not just private cars creating the congestion problem. Our Freight Transport team points out that with no rail network and no navigable waterways, ranking Qatar bottom in both these categories of the Extent of Transport element of the Logistics Risk Index, the freight transport sector is reliant on the roads. This means a large number of heavy-duty vehicles clogging and potentially damaging the roads, which also needs to be addressed.
On the positive side, Qatar scores highly for the quality of its road network with 80.4/100, although this is largely as a result of the amount of work that has had to be done to increase capacity and this is set to continue. In February 2013, the government initiated US$8.1bn of road projects, with contacts awarded so far being valued at more than USD1.8bn, according to Qatari officials.
This leads our Infrastructure team to forecast average annual growth over the 2014 to 2023 period of 5.5% in the road sub-segment, which does show a commitment to tackling the overburdened roads. However, more will still need to be done in the near term to provide alternative methods of transport before restricting opportunities to drive.