Download Qatar Financial Centre Authority PO Box 23245 Doha, Qatar T +974

Qatar Financial
Centre Authority
PO Box 23245
Doha, Qatar
T +974 496 7777
F +974 496 7676
[email protected]
www.qfc.com.qa
Banking
V1 / 500 / 11.2008
Qatar lies at the heart of
the Gulf, and is playing an
increasingly influential role
on both the regional and
world stages. It has one
of the highest per capita
incomes in the world and
is the most rapidly developing
economy in the Middle East
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06
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14
Introducing Qatar
The economy
The Banking opportunity
Qatar Financial Centre
Qatar’s government
is using its vast oil and
gas wealth to create
a society that provides
opportunities for all
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03
Introducing Qatar
Qatar is emerging as one of the most
dynamic economies in the Middle East,
with a clear vision for its future and the
means and determination to achieve
it. It offers both significant business and
investment opportunities to new players
in the financial sector.
Under the leadership of Qatar’s Emir, Sheikh
Hamad bin Khalifa Al Thani, the country
has taken steps towards the creation of
a modern, knowledge-based economy in
order to establish a stable and sustainable
future. The government is using its vast oil
and gas wealth to create a society that
provides opportunities for all.
Reliance on crude oil exports has been
replaced by an ambitious and progressive
approach to the management of the
nation’s economy, which focuses on
developing Qatar’s huge natural gas
reserves and its expansion of liquefied
natural gas, petrochemicals and
condensates production. This is supported
by a far reaching programme of economic
liberalisation and diversification into a more
broadly based economy.
Investment in education is a central
focus of Qatar’s development goals.
To support its vision of a modern,
industrialised and knowledge-based
economy the government has recognised
that education is key to business success
and long-term prosperity and has funded
social development and technological
projects at all levels.
One such project is The Qatar Foundation
for Education, Science and Community
Development, which was set up in
1995 to provide world class educational
opportunities, to support Qatar’s
diversification programme and to attract
world class research and development
to Qatar. The most visible elements of
this investment are Education City, which
comprises a 2,500 acre campus hosting
six world-renowned US universities, and
the Qatar Science and Technology Park
(QSTP), which supports the country’s desire
to attract technology transfer and value
added research. By bringing research
and business together, QSTP is also
spearheading the development of
Qatar’s knowledge-based economy.
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05
“Qatar is on the rise…
US$140 billion investment is turning this
small country into
a leading center
in the Middle East”
Forbes
Qatar’s economy is rapidly expanding
in practically every sector and industry.
A combination of government
investment and the participation of
multi-national companies is creating a
culture of opportunity. The government
has committed over US$140 billion for
investment, infrastructure and expansion
in a wide range of sectors, including
energy, health, education, transport,
infrastructure and tourism.
Qatar enjoys one of the world’s fastest
growing GDPs, reaching 11.8% year on
year, with a nominal value of US$92 billion
in 2008 (Economist Intelligence Unit),
making Qatar one of the wealthiest
nations in the world.
Finance
The finance sector in Qatar is growing
both within and outside the QFC and is
attracting international investment. The
Doha Securities Market (DSM) was opened
to investors in May 1997 and in June 2008
had 43 companies listed on its exchange
with new listings occurring on a regular
basis. In June 2008 it was announced that
NYSE Euronext would be taking a 25%
shareholding in the DSM and would play
a significant role in the future development
and management of the exchange.
Major international finance companies
have already established a presence in
Qatar, including HSBC, Standard Chartered
Bank, Zurich, AXA, Barclays, EFG Hermes,
Credit Suisse, ICBC, ICICI, Citi and
Morgan Stanley.
The economy is characterised by low
private consumption and a high national
savings rate, making Qatar a very attractive
financial market within the GCC and with
a high asset growth rate. In its June 2008
report on the MENA Banking Sector, EFG
Hermes identified Qatar as the banking
destination of choice in the region thanks
to its strong momentum in investments and
strong economic growth. The QFC also sees
a strong potential for Qatar to become the
regional hub for insurance and reinsurance.
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Energy
Qatar is quickly becoming the world’s
single largest producer of LNG, and by
2010 will have a production capacity of
77 million tons per year. Qatar’s LNG industry
is expanding fast, while new oil capacity
continues to come on stream, thus boosting
export volumes. Output of associated
condensates — light oil extracted during
gas production — is also growing and other
gas-based industrial projects, such as the
Oryx Gas to Liquid facility, are reaching
completion. Qatar’s role as a major supplier
of energy to the world has been recognised
with the decision for Doha to host the 24th
World Petroleum Congress in 2010.
Transport
The transport sector is key in supporting the
rapid growth of Qatar, and with significant
investment in fleet and infrastructure
projects, Qatar is establishing itself as a hub
for global travel. Its flagship airline, Qatar
Airways, now flies to over 80 destinations,
and has ambitious plans to treble its
fleet of airliners by 2015. The New Doha
International Airport, which is currently
under construction, will offer an initial
capacity of 12 million passengers per year
in 2010 and the ability to handle 50 million
passengers per year upon its completion
in 2015, making it the largest airport in the
Middle East.
The scale of Qatar’s oil and gas industry,
and the associated opportunities it
provides, are truly remarkable. The latter
half of 2008 will see Qatar take delivery of
the world’s largest LNG carrier. The 265,000
cubic metres vessel is currently being built
by a Korean shipyard and, with a total of
58 new LNG tankers under construction in
Korea, Qatar is the biggest client for Korean
shipbuilders. To supply gas to its global
customer base, Qatar will expand its fleet
of 20 vessels by another 60, at a cost of
some US$15 billion, by 2009.
A massive public works renewal programme
is now in full swing with projects ranging
from new and improved roads to power
supplies and enhancements to other
utilities, with projects ranging from the
US$1.8 billion ‘Friendship Bridge’ between
Qatar and Bahrain and the regeneration
and development of the Ras Laffan port
now underway.
The government is continuing to invest
billions of dollars as part of its commitment
to the transport sector with plans to build
a 140km light rail system, to add a number
of multi-lane motorways, to extend current
road networks and to expand and improve
the bus and taxi system.
Infrastructure
To meet the expected demand from
business travellers, more than 80,000
hotel rooms will be available in Qatar
by 2016, with several multi-national hotel
corporations already in the final stages of
building properties in the capital including
Hilton, Rotana Hotels, Shangri-La Hotels
and Resorts, W Hotels and the Global
Hyatt Corporation.
Long-term residents are also being served
with several ambitious residential projects
underway including The Pearl Qatar.
The Pearl is a US$2.5 billion man made
island covering 985 acres of reclaimed
land offshore. Once opened, it will be
the first real estate venture in Qatar to
offer international investors freehold and
residential rights to 7,600 units of high quality
accommodation of varying styles. Lusail is
a mixed use development which will house
Energy City and will accommodate some
200,000 residents. Demand for electricity
and water in these major developments
will be met thanks to planned new power
plants, with a projected doubling of the
country’s water and electricity distribution
capacity by the end of 2009.
Healthcare and science
Qatar is building capacity across the
healthcare and research sectors. It has
set aside US$8 billion — the largest cash
endowment of its kind anywhere in the
world — to create the Sidra Medical and
Research Centre. At its heart will be a
US$900 million fully digitalised academic
medical centre that will help to build
Qatar’s scientific expertise and resources.
It is scheduled to open in 2011. A further
2.8% of Qatar’s GDP has been committed
to fund biomedical research.
The Qatar Science and Technology Park
has been set up to encourage research
and innovation in science. The Park,
which officially opens in 2009, already
boasts tenants such as Shell, Microsoft,
Cisco, EADS, Rolls Royce, Total and GE,
with research underway into upstream
environments, carbonate reservoirs and
solar energy.
07
The economy
This nation, with an
indigenous population
of some 250,000 is
transforming itself into
one of the fastest growing
economies in the world
The increasing demand
for banking services has
created a market with
immense potential for
experienced players
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09
The Banking
opportunity
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11
Qatar’s burgeoning economy and the
scale of new projects coming onstream
offer a compelling case for banks.
The lion’s share of investment in the GCC region
is expected to be in the
construction sector, with a
likely value of US$663 billion
between 2008 and 2011
There is therefore considerable wealth
being generated in the market, and a
growing appetite for investment and
innovative financial products, both at the
personal and the business level. While the
A programme of investment across the
gross savings rate in the GCC is one of the
entire economy, supported by Qatar’s
highest in the world, the ratio of private
increasing energy revenues, has created
consumption to GDP is significantly lower
new avenues for a wide range of banking
than the global average. According to the
services including commercial and
investment banking, project finance, Islamic EIU, Qatar records one of the highest
savings rates in the GCC, with 61%, and the
finance, as well as asset management,
private banking and wealth management. lowest private spending rate of 22% in the
The increasing demand for banking services region. This clearly indicates an opportunity
for additional investment and retail
has created a market with immense
banking products.
potential for companies able to provide
new capacity to the financial sector.
Wealthy individuals and government
funds are increasingly looking outside
The opportunities are not only in Qatar. The
traditional markets to diversify their portfolios,
GCC region as a whole is benefiting from
with 80% of Middle East private wealth
large hydrocarbon revenues, which have
been channelled into over US$2 trillion worth invested outside the region in 2006 (Cap
Gemini World Wealth Report). While this
of infrastructural and other major projects.
represents a significant opportunity for
Qatar has consistently enjoyed the fastest
banks from outside the region, in support
growth in the region, and this is projected
of the domestic banks in the region, it also
to continue with GPD in Qatar forecast to
represents the potential for investment
increase at 10.5% in the period 2006-2010
vehicles to be established inside the region.
(source: EIU). Real Economic growth in
Qatar is expected to continue, estimated
to be 13.4% in 2009 from 2008, and 6.7% in
2011 from 2010 (source: EIU). Real economic
growth in Qatar is expected to continue,
averaging 14% annually from 2008-9 and
11.0% in 2010-11 (Standard & Poor’s).
The lion’s share of investment in the GCC
region is expected to be in the construction
sector, with MEED Projects estimating its
likely value at US$663 billion between 2008
and 2011. This is being invested across
almost 1,000 construction and real-estate
projects, with over 140 of them having
estimated values of US$1 billion. The
majority of these projects will take place
in UAE, Saudi Arabia, and Qatar.
Qatar is leading the way in oil and gas
investment with around US$40 billion
allocated to its LNG program to extract,
store and transport gas from the vast North
Field reservoir, and a further US$30 billion in
other energy projects, while its neighbour
Saudi Arabia is committing over
US$80 billion into petrochemical and
industries projects.
According to the EIU,
Qatar records one of the
highest savings rates in the
GCC, with 61%, and the
lowest private spending
rate of 22% in the region
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The GCC is the world’s largest project
finance market, with the Ras Abu Fontas/
Nakhilat deal in 2006 achieving tenors of
more than 25 years for the first time for
any project financing in the region. With
continued development in the energy
sector, and a surge in non-traditional
industry projects, the prospects for further
project finance in the region look strong.
Estimates put the total project finance
needs for the GCC region at US$ 420 billion
in the period 2006-2009 (Zawya). This is
being serviced by an increase in the
number of international banks entering the
GCC market, along with a focus on newer
sources of funding such as Islamic tranches
and bonds. Inevitably there has been
a commensurate rise in project finance
advisory opportunities across the region.
Heightened investment activity has also led
to an increase in corporate borrowing and
long-tenor funds from debt capital markets,
with GCC companies expected to look
further towards the long-term international
bond markets as an alternative source to
meet their financing needs. In 2006 three
of the largest GCC bond issues came from
Qatar (Rasgas at US$1.55 billion, Nakilat at
US$1.15 billion and Qatar Petroleum at
US$650 million).
Furthermore corporate borrowing is
increasing and diversifying. The total
corporate debt for the GCC region nearly
doubled in 2006 to US$93 billion, with a 45%
increase in the total number of loans, and
growth in loans in newer sectors such as
telecoms, real estate and shipping. Multinational banks were the main beneficiaries
of this growth.
GCC Sukuks are becoming increasingly
popular among international investors
resulting in high levels of oversubscription.
The appetite for Shari’a compliant finance
as a means of diversifying investments is
clear, and, as Islamic finance matures as
an industry, the region is likely to see the
emergence of a liquid secondary market
for trading Sukuks.
Islamic finance continues to grow in
demand, popularity and diversity, and its
expansion has been considerably faster
than conventional banking within the GCC
region in recent years (though from a much
lower base). However, the regional Islamic
banks are small by international standards
and they are likely to have capacity
constraints in catering to the large domestic
financing needs. New Islamic banks are
being formed and there is evidence of
established regional banks adding Islamic
finance to their portfolios. Sukuks (Islamic
bonds) are increasingly attractive sources
of funding with nearly US$2 billion believed
to have been raised in the GCC region
through Sukuk issues in 2007 (IFIS).
Even taking into account recent equity
market corrections, stock exchanges in
the region are developing with an increase
in M&A and IPO activity. In every GCC
country M&A and Equity Capital Markets
advisory is dominated by the foreign
investment banks. Over US$20 billion is
expected to be raised across 100 IPOs in
the GCC over the next two years. Such
transactions will undoubtedly become
more efficient and sophisticated with the
increased involvement of such leading
exchanges as Nasdaq and NYSE Euronext.
Given the wealth of the region, it comes
as no surprise that there is great potential
for private banking services. HNWIs are
increasingly seeking innovative financial
solutions that capitalise and diversify their
current holdings. 80% of HMWIs in the region
claim residences in non-GCC countries,
with 45% having children living abroad. This
group is characterised by an international
mindset and desire for new products that
compare with those available in more
developed exchanges, as well as catering
to local market needs and providing
value-added services.
Qatar and the QFC offer banks the
opportunity to tap into this significant
potential. The business environment
created by the QFC enables banks to
quickly establish a meaningful presence
in Qatar and the region. With the ability
to handle both onshore and offshore
business, banks licensed by the QFC
have the chance to directly engage with
some of the most economically dynamic
economies in the world today.
Council of
Ministers
THE BOARD:
Chairman
Chief Executive Officer and Director General
Non-Executive Director
• Oversight & strategy
• Business Development
• Policy, plans procedures
• Provide infrastructure/ HR/administration
• Budgeting & reporting
• Develop location
• Corporate Communications and Marketing
• Propose & submit regulation
• Approve licensed companies and persons
• Collect fees and taxes
• Issue visas and permits
Companies Registration
Office
Executive Team
Business
Development
Promote the Qatar Financial
Centre and shape offering
to businesses
• Help, advise and support
businesses to make their
commercial decisions
Operations
Provide facilities and
infrastructure for the efficient
operation of the Qatar
Financial Centre
• Support services to
all other departments
(HR, IT, finance etc)
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Corporate
Communications
and Marketing
Promote the reputation
and profile of the QFC
Authority through media
relations, sponsorship and
other activities
• Provide information,
communications and
knowledge support to
the QFC and its partners
External Liaison
Serve as link with
government and locating
companies, provide
support to businesses
• Macroeconomic
monitoring
• Visas, taxation, health
and education etc
Qatar Financial Centre
Qatar Financial Centre (QFC) is a financial
and business centre established to attract
international financial services and multinational corporations in order to grow and
develop the market for financial services
in Qatar and the region. QFC provides
access to over US$140 billion of investment
in Qatar over the next 5 years as well as
to over US$1 trillion planned investment
across the GCC.
QFC consists primarily of a commercial
arm, the QFC Authority (QFC) and an
independent financial regulator, the QFC
Regulatory Authority. QFC operates to
international and transparent laws based
on standards found in the UK, the USA and
other leading financial jurisdictions around
the world. It also has an independent
judiciary which comprises a civil and
commercial court and a regulatory tribunal.
A combination of revenue potential,
low operating cost and low risk for financial
services firms provide a compelling reason
for establishing operations in Qatar. Many
of the top global financial institutions
are already enjoying the benefits that
QFC has to offer. This number is growing
at a rapid rate and is made up of both
financial services firms, and those offering
professional services to and in support
of the financial sector including legal,
insurance, accounting and consulting
organisations.
QFC provides access to local and regional
investment opportunities, providing an
abundance of expertise. Business can be
transacted inside or outside Qatar, in local
or foreign currency. Uniquely, this allows
businesses to operate both locally and
internationally. Furthermore, QFC allows
100% ownership by foreign companies, and
all profits can be remitted outside of Qatar.
QFC has a low, highly transparent, flat
rate tax regime, applying 10% tax on
profits generated by QFC licensed firms.
Qatar Financial Centre (QFC) Authority
The QFC Authority is responsible for
commercial strategy and for developing
relationships with the global financial
community and other key institutions both
within and outside Qatar. QFC Authority
aims to help all QFC licensed firms generate
new, and sustainable, revenue streams,
and in doing so contribute to the further
development and deepening of the
financial services sector in Qatar.
One of the most important roles of QFC
Authority is to approve and issue licences
to individuals, businesses and other entities
that wish to incorporate or establish
themselves in Qatar with the Centre.
In practical terms, QFC helps licensees
concentrate on their core business by
offering fast and efficient on-call support
and commercial counsel. It provides a
direct link with government institutions in
Qatar and a wide reaching international
political and business network.
The QFC Authority provides licensees with a
principal point of contact via its Operations
Department for infrastructure, office space
and IT, as well as communications support
for its licensee community. Licensed firms
are able to choose their own location
provided that it has been confirmed as
an approved site.
Qatar Financial Centre (QFC)
Regulatory Authority
The QFC Regulatory Authority is an
independent statutory body and authorises
and supervises businesses that conduct
financial services activities in, or from, the
QFC. It has developed principle-based
legislation of international standard,
modelled closely on those standards
employed by London and other major
financial centres. The QFC Regulatory
Authority has powers to authorise, supervise
and, where necessary, discipline regulated
firms and individuals.
In 2007 the government announced
a decision to create a single unified
financial regulatory platform in which the
QFC Regulatory Authority, the banking
supervisory arms of the Central Bank and of
the Qatar Financial Markets Authority, which
oversees the Doha Securities Market, would
be combined into one body, and the laws
and rulebooks of the country’s financial
sector would be revised and rewritten to
meet international standards. This move will
set Qatar apart from its regional neighbours
and will provide a high level of regulation
and efficiency for all participants in Qatar’s
financial sector.
The Independent Judiciary
The Centre also comprises a Civil and
Commercial Court and a Regulatory
Tribunal. The judiciary exists to uphold the
rule of law and ensure the transparency
of QFC business transactions. These two
bodies provide the legal infrastructure
for the QFC to resolve disputes between
QFC firms or financial institutions and their
counter-parties, and for arbitration or the
formal resolution of civil disputes.
The Court is modelled on the internationally
respected Commercial Court in London.
It is responsible for hearing and delivering
judgements on cases that come before
it, and is the final arbiter in the event of
disputes in matters of law. The Regulatory
Tribunal has been established to hear and
decide upon appeals from decisions of
the QFC Regulatory Authority and other
QFC agencies.
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“We believe that we have
helped raise the standards
of regulation and market
development in the region,
established a place for Qatar
among the elite of the global
financial services industry and
improved the quantity and
quality of financial services
provided to our citizens” HE Yousef Hussein Kamal, Chairman, QFC Authority
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