Financial sector role in diversification stressed

November 13, 2012 - 7:05:05 am


DOHA: Financial services have a major role to play in diversifying Qatar’s economy and  the country has made good progress in that direction. The Finance, Insurance, Real Estate and Business Services sector now contributes about 10 percent of GDP – one of the biggest sectors after hydrocarbons – and the country expect it to grow further, Abdulrahman Ahmad Al Shaibi (pictured), Managing Director and Board Member, Qatar Financial Centre (QFC) Authority has said.

Helping to promote the expansion of Qatar’s financial sector is the principal purpose of the QFC. It is not an offshore centre or free trade zone but an integral part of Qatar’s financial system. At the heart of the QFC’s strategy is the determination to win and retain the confidence of all stakeholders in the financial services market place, he said while addressing the opening session of the Mena Investment Management Forum here yesterday. Underlying the fact there is immense scope for investment in Qatar, Al Shaibi said: “Opportunities for investment managers abound in Qatar. The country has one of the highest per capita incomes in the world, one of the highest proportions of millionaire households and one of the highest proportions of High Net Worth Individuals (HNWIs). It has a savings rate of about 49 percent, well above the Gulf average and around twice the world average.”

Banks are preparing for an upsurge in project financing as project plans are finalised and contractors look to raise funding. Financing will come from domestic sources as well as international ones. Some financing could be from Public-Private Partnerships or bond issues – both of which call for commitment by financial institutions. 

Qatar has undertaken a string of initiatives to develop the country’s financial sector, partly with a view to further developing the investment management industry. Measures have been introduced to deepen and broaden capital markets. Sovereign bond issues by the State of Qatar have helped to build a yield curve. A Treasury bill programme has been started. The Qatar Exchange has introduced measures to help increase the accessibility, liquidity and efficiency of the stock market. 

According to Al Shaibi, Qatar is also looking at more specialist activities. Wealth and asset management and project finance present opportunities for Sharia’ah compliant finance as well. The global market in Shariah compliant finance is still fragmented and immature, but it is certainly expanding quickly.  Citing recent studies, he noted that the addressable universe for Islamic fund managers was more than $500bn and growing by at least 10-15 percent a year.  This year has seen a surge in Sukuk issues and the Islamic Financial Service Board has estimated that half of all financial services provided in the Gulf by 2015 will qualify as Shariah.

The Peninsula