Nonetheless, the centre was formally opened by Prime Minister Sheikh Abdullah bin Khalifa Al Thani with the intention that it become a “hub of financial and professional services in a low-cost, low-risk environment”.
As a demonstration of governmental commitment to the idea, a new law was also enacted to allow the QFC to have a totally new, independent business and legal infrastructure run by a commercial body, the QFC Authority, and an autonomous regulatory body, the Regulatory Authority. The first is responsible for commercial and administrative matters, while the second grants licences and oversees what goes on inside the new centre.
At the head of both these bodies and in charge of the QFC is Phillip Thorpe, the chairman and CEO of the Qatar Financial Centre Regulatory Authority (QFCRA).
However, uncertainty over aims has been a factor. Local banks in particular have been particularly curious about the QFC, but have not been involved in setting up or operating the centre so far. The Qatar Central Bank (QCB) has also been absent from the planning and establishment, which has left some worrying about how it will interact with QFC and how considerations about international firms’ operation on Qatari soil will be addressed. Indeed, for the locals there has certainly been a feeling they have been left in the dark.
“We are watching,” one senior local banker commented to OBG recently. “We are just not sure what we are watching.”
However, the minister of economy and commerce, Sheikh Mohamed bin Ahmed Al Thani is clear about who will be coming into the QFC.
“We are hoping to bring in three types of businesses,” he explained when talking to OBG recently. “The biggest one is the corporate or project finance. Qatar has been one of the leading project finance bases and the projects have not been based on equity but high leverage term loans. The oil, the gas, the petrochemicals all go and borrow millions of dollars. So we are hoping to attract the banks which would do these projects in Qatar.”
But the focus is not just on banking operations.
“The second type of business we hope to bring is insurance,” he continued. “The third one is asset management. These are the core at the moment, but this is a financial and business centre, so specialised firms can open head offices here and operate in a very transparent and easy environment.”
However, the new centre is not the first in the region. Bahrain Financial Harbour and Dubai International Financial Centre (DIFC) are also seeking to stake their claims as regional financial centres, and are backing these up with major real estate ventures.
Indeed, this seems to be major difference between QFC and its regional competitors. It is neither a real estate venture – no announcements have been made about a specific location for the centre – nor a traditional offshore centre, as the government is planning to allow companies in the QFC a three-year tax holiday, but will then apply taxes, albeit at a low rate.
Another key difference between the centres is that Dubai and Bahrain are attempting to drive economic diversification with their respective projects. Neither enjoys the enormous natural resources that Qatar does. With Qatar aiming to invest $100bn plus in infrastructure and hydrocarbons in the next five years, it makes sense to bring the know-how closer to the bricks, steel and gas.
“People will tell you there are issues with competition from other centres,” Sheikh Mohamed continued. “We think each place has its own merits and there are complimentary points between the different bases. Each place has their own partners who will come or stay.”
With its own procedures for streamlining visas and addressing dispute resolution, the whole aim of the centre is essentially to make coming to Qatar and doing business easier for the international firms that are needed. However, it may be the clarity of dispute resolution with existing Qatari bodies that is a point of contention.
When announcing the launch of the centre, a Ministry of Economy spokesman explained that in the case of local law conflicting with QFC laws, the QFC law would prevail. Transactions between firms in QFC and those in the rest of Qatar will be subject to Qatari business law. Some are concerned as to how this will work in practice if so much business will be done that relates to Qatari deals.
The presence of the centre should, however, drive the speed and efficiency with which Qatar’s financial and economic institutional infrastructure can deal with the vast volumes of investment coming to Doha. The locals are now watching to see who comes.
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