The thread of my prayer beads broke suddenly during my visit to one of the ministries, and because the ministry official’s office had a granite floor, the beads ran in all directions. Everybody present collected the dispersed beads, and after a while the search for the beads stopped. The result was that most of the beads were brought back to me.
I told the ministry official that what happened to my prayer beads was similar to what happens between foreign companies that get the principal contracts and local companies working under a subcontracting system.
The ministry official, however, said he did not understand what I meant by my analogy.
I told him that the minaret of the prayer beads, though it has nothing to do with remembrance of God, for which the beads are used, was the most prominent part of the rosary. This is why the minaret attracts the most attention. In many respects, the minaret resembles the position of foreign companies, I told the ministry official. As for the beads, I added, they are important and are moved here and there according to the desire of one’s fingers. These beads represent local companies, I said.
I added that the thin thread that links the minaret and the beads is like financial relations between the foreign and local companies. If this thread is cut for any reason, a problem will occur.
The thread that binds the prayer beads together is always cut in Qatar because of administrative procedures and local companies suffer due to the failure of foreign companies to pay them their dues.
Sometimes, these foreign companies are kind enough to give the local companies half of their dues. It is important to note that some local companies are committed to regular loan installments to certain agencies.
I asked one of the foreign companies about the reasons why they do not pay the local companies on time. The company replied that the Qatar government, represented by the Public Works Authority, failed to pay it on time and this was why the company failed to pay the local company working with it on time.
I took my query to the Public Works Authority, which said that after it had made sure that a specific stage in the project had been completed, it sent a request to the Ministry of Economy and Finance for payment of part of the dues of the foreign companies involved.
This encouraged me to call the Ministry of Economy and Finance, but I was told that the person in charge was out of Qatar.
What I noted was that everybody wanted to deflect responsibility for delaying payments and thereby causing delay in completion of projects.
The Public Works Authority has suffered a lot in the past few years from foreign companies failing to honour their commitment to finish projects at an agreed time, even though these companies had demanded huge sums of money for the work. One of the companies had demanded as much as QR600m. Many of these companies had also suspended work on projects because of the lack of money and the failure of the government to pay them.
The failure of the foreign companies to pay local companies brings a catastrophe on these companies and causes a lot of harm. This failure means that less finance goes to these local companies, which raises costs for them, making them prone to accumulation of debts, which affects their ability to continue offering commodities and services to society.
Irregular payments also result in uncertainty, which obliges local companies to rein in their expenditure, and this in turn affects overall demand in the national economy. This affects smaller supplying companies whose financial standing is weakened in ways that influence their ability to offer commodities and services.
The failure of the foreign companies – regardless of the reasons – to pay the local companies or finish projects has serious ramifications. Here, I list some of these ramifications.
Production will come to screeching halt because local companies will fail to pay shop and company owners and workers. This will reduce overall demand, which stifles production and profits. This will, in turn, suspend or at least slow down the economic cycle.
The failure of workers to receive their salaries in time weakens their purchasing power and overall spending because these workers start to reschedule their spending in ways that affect commercial activities and the local market in general. This reduces the profits of traders and weakens their ability to upgrade their business or even make new investments. More dangerous still is the fact that this situation downgrades the real value of salaries, leading to a shrinkage of the middle class and growth in the cycle of poverty.
Constant failure on the part of foreign companies to pay local firms will inevitably lead to bankruptcy and disappearance of some companies, or at least reduction in the profits of these companies. This will force these companies to give up some of their labour (even the closure of a small bakery can affect society). The inevitable result will be the widening of gaps between social classes, meaning that there will be the class of the rich, which contains a limited number of people, and the class of the poor, which contains the majority of the people.
To sum this up, delayed or irregular payments affect not only the local economy but also all segments of society. Qatari companies are vulnerable to bankruptcy if they are not paid. Adding to the difficulties, these companies face a downturn in the volume of work and a rise in labour costs.
I do not think the government is in the dark about what is happening to the local companies. Despite this, the government does nothing to solve this problem. I think a change of methodology and the economic philosophy of the government is badly needed. I think the government needs to find a mechanism through which it commits the companies concerned to paying the local companies their dues.
