Qatari economy ranked No1 by World Economic Forum

Indeed, the most interesting comparison that economists draw in terms of regional economic reform is Qatar and the UAE. Often Qatar is accused of copying the UAE, or more particularly Dubai. But there are plenty of cases of the reverse being true; so perhaps this is just a case of imitation being the sincerest form of flattery.

There is no doubt that the Emirates Airline business model has been an inspiration for the launch of Qatar Airways into worldwide expansion. Likewise the Dubai adoption of freehold ownership for foreigners is now being followed with The Pearl-Qatar project, albeit in private rather than government-controlled entities.

Share ownership rights for foreigners were also introduced earlier this year in Doha, and up to 25% of a listed company can be foreign owned. This again followed the Dubai example, although the number of quoted UAE companies that actually admit foreign shareholders is still very limited.

On the other hand, the UAE has yet to match the extent of Qatar's foreign direct investment in oil and gas infrastructure, and has guarded ownership of such national assets more closely. However, recent private sector ownership of power stations in the UAE, with foreign participation is a sign that the UAE is now moving towards the Qatari model.

The World Economic Forum report on Arab economies for 2005 said that Qatar now needs to open up other areas of the economy to foreign investors. The response from Economy and Commerce Minister Sheikh Mohammed bin Ahmed Al Thani could not be much more positive. He said the government would welcome private involvement in any possible area of the economy.

Qatar has also stepped ahead of the UAE in terms of its property law. Full property rights for foreigners are secured by statute in Qatar while the UAE federal property law is still pending, and hoped for this autumn. Here the UAE now needs to copy Qatar.

If economic reform sometimes reads like a race between these two Gulf States, that may not a bad thing. A new Company Law in the UAE this autumn is expected to raise the limit of foreign ownership from 49% to 70%, effectively ceding control of local companies to foreign entities outside of free zones for the first time.

This throws down a challenge to Doha: will Qatar move in the same radical direction? It will be interesting to see, but in the meantime the UAE should achieve a 10% growth in GDP for 2005 and Qatar a little higher. High energy prices obviously help, but economic reform is providing an additional bonus to these economies which other countries should note.