A few eyebrows were raised in London and Dubai in March when the Qatar Finance Centre appointed Phillip Thorpe as its chief regulator. After all it was less that 12 months ago that Mr. Thorpe was escorted from the premises of the Dubai International Financial Centre following policy disagreements and an obvious personality clash.
But this New Zealand born professional has an outstanding track record as a regulator, and it should not be such a surprise to find that another of the booming Gulf economies has employed him. But the QFC will not be a copy of the DIFC.
Insiders say that the QFC will be built around the need to service the enormous financial demands of the expansion of the Qatar LNG and oil sectors. There will be 100% ownership and repatriation of profits for QFC companies, and a three-year tax holiday after which a low rate will apply.
This is expected to appeal to commercial banking, project finance and asset managers as well as multi-nationals. But unlike the DIFC and Bahrain, Islamic banking and large back-office operations are not a priority. The focus is more on boutique specialists servicing the local economy, albeit the richest and fastest growing economy in the Gulf of Arabia.
Mr. Thorpe is at the apex of a three-tier authority structure comprising the Qatar Financial Regulatory Authority, the Qatar Financial Centre Authority and an arbitration body.
At the announcement of the launch last week an official spokesman said that where QFC laws and local business laws conflict then the QFC law will prevail. But transactions between non-QFC companies in Qatar and QFC companies will be subject to Qatari business law. It will be interesting to see how this works in practice.
However, Qatar is being very realistic in its QFC ambitions. The aim does not seem to be to create a massive base for offshore financial professionals like the DIFC, or to provide a regional hub for Sharia-compliant banking like Bahrain.
The QFC is simple a strongly regulated environment for boutique financial services. Its arrival is welcomed by the banking sector, but it should be seen more as a further boost to the operational efficiency of the Qatari economy than an attempt to create a major new revenue source for Qatar.
Oil and gas are quite sufficient, and upgrading the financial infrastructure to handle this development and wealth makes good sense.
Saturday, April 30- 2005 @ 9:23 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.