The Qatar Financial Centre (QFC) has started aggressively pursuing asset management and insurance companies in its quest to rival Dubai as a hub for the region.
Shashank Srivastava, the acting chief executive of the QFC Authority, said the centre was in the "execution phase" of a strategy to attract niche industries to set up in Doha.
"We have something different here at the QFC," Mr Srivastava said. "This is an onshore platform, which means you can do business within Qatar and abroad. There are no geographic limitations."
The structure is broader than the Dubai International Financial Centre (DIFC), which restricts companies from doing business outside of the free zone.
The QFC Authority last month implemented a 10 per cent corporate tax on profits earned within Qatar, but is giving exemptions to asset managers and captive insurance and reinsurance companies.
Ian Anderson, the director of finance and tax at the QFC, said at the time: "We're not working to attract firms interested in the lowest tax. We're interested in those that want to do business in Qatar."
The QFC has been honing its offerings and image this year after facing slow growth in companies setting up. Only seven companies have signed up this year in the centre, compared with 16 last year, 32 in 2008, 36 in 2007, 30 in 2006 and three in 2005, its public registrar of companies shows.
Another 15 companies have withdrawn their licences since setting up, including Ansbacher & Co, Standard Chartered and ABN AMRO. Three companies are in liquidation and three are inactive, putting the number of active companies at 103.
This puts the QFC at just under an eighth of the size of DIFC, which has 801 active companies, according to the registry. But the DIFC has lost far more companies, with 195 liquidating, becoming inactive or withdrawing from the centre since it opened in 2004.
Mr Srivastava said the QFC did not measure its success based on the number of companies setting up. Instead, it had set internal milestones for different industries based on the amount of money they were managing or amount of underwriting from insurers.
"Measuring the number of companies licensed doesn't help us in measuring if an industry is taking root," he said. "Our goal is to be the pre-eminent hub in the region for these industries."
The QFC has been marketing itself as a broader financial centre. The QFC Civil and Commercial Court is looking to become a venue for disputes between parties that are not even in Qatar.
The law that set up the court allows it to be established as a venue of dispute resolution if two parties write it into their contract.
Robert Musgrove, the recently appointed chief executive of the court, said recently this meant the court could "hear a case between a Somalian company and a New Zealand company who contracted to build a bridge in Kenya".
This is an aggressive move for a regional court and one that has been publicly considered by the DIFC Courts, but never acted on.
International banks and financial advisers have been drawn to Qatar as it enlarges its investment footprint worldwide.
Flush with cash from the sale of natural gas resources, government-related companies have been on a buying spree, including trophy assets such as the department store Harrods and Banco Santander Brasil.
Mr Srivastava said companies would keep flocking to the region because of pressure to be near their customers.
"If you want to do business with these entities, it is important to have offices here," he said. "Partly this comes from what has happened with Lehman Brothers and the Madoff scandal. For trust, they would rather deal with them locally than with suitcase bankers."
bhope@thenational.ae
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
The specs
Price: From Dh529,000
Engine: 5-litre V8
Transmission: Eight-speed auto
Power: 520hp
Torque: 625Nm
Fuel economy, combined: 12.8L/100km
Another way to earn air miles
In addition to the Emirates and Etihad programmes, there is the Air Miles Middle East card, which offers members the ability to choose any airline, has no black-out dates and no restrictions on seat availability. Air Miles is linked up to HSBC credit cards and can also be earned through retail partners such as Spinneys, Sharaf DG and The Toy Store.
An Emirates Dubai-London round-trip ticket costs 180,000 miles on the Air Miles website. But customers earn these ‘miles’ at a much faster rate than airline miles. Adidas offers two air miles per Dh1 spent. Air Miles has partnerships with websites as well, so booking.com and agoda.com offer three miles per Dh1 spent.
“If you use your HSBC credit card when shopping at our partners, you are able to earn Air Miles twice which will mean you can get that flight reward faster and for less spend,” says Paul Lacey, the managing director for Europe, Middle East and India for Aimia, which owns and operates Air Miles Middle East.
Results:
Men’s wheelchair 200m T34: 1. Walid Ktila (TUN) 27.14; 2. Mohammed Al Hammadi (UAE) 27.81; 3. Rheed McCracken (AUS) 27.81.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
More from Neighbourhood Watch:
Abu Dhabi card
5pm: Handicap (TB) Dh100,000 2,400m
5.30pm: Wathba Stallions Cup Handicap (PA) Dh 70,000 2,200m
6pm: Abu Dhabi Fillies Classic Prestige (PA) Dh110,000 1,400m
6.30pm: Abu Dhabi Colts Classic Prestige (PA) Dh110,000 1,400m
7pm: Handicap (PA) Dh85,000 1,600m
7.30pm: Maiden (PA) Dh80,000 1,600m
The National selections:
5pm: Valcartier
5.30pm: AF Taraha
6pm: Dhafra
6.30pm: Maqam
7pm: AF Mekhbat
7.30pm: Ezz Al Rawasi
'Munich: The Edge of War'
Director: Christian Schwochow
Starring: George MacKay, Jannis Niewohner, Jeremy Irons
Rating: 3/5
