x Abu Dhabi, UAEMonday 22 January 2018

Qatar Financial Centre comes into its own

The Qatar Financial Centre Authority is targeting specific industries for recruitment after facing a year of slow growth, its chief executive said.

Shashank Srivastava, Chief Executive of the Qatar FInancial Centre
Shashank Srivastava, Chief Executive of the Qatar FInancial Centre

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Another 15 companies have withdrawn their licences since setting up, including Ansbacher & Co, Standard Chartered and ABN AMRO.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."