It is the prospect of such a solid and assured government-led investment program, and Qatar’s successful track record of foreign direct investment over the past decade that now has international financial institutions queuing up for licenses at the QFC, which will move to its new permanent home later in 2006.
Only formed in May, the QFC is an onshore financial centre with its own regulator working to Western-style rules and regulations. Members can do business in the local Qatari riyal or any other currency they choose; and new companies can be set-up within the QFC regulatory framework.
There is also 100% foreign ownership within the QFC, and 100% repatriation of capital. The centre is also not a real estate venture, and will derive its income from a tax of up to 10% of profits earned within its jurisdiction, after a three-year tax holiday period.
It promises to be a fair landlord with rents passed through at cost, and is not interested in making money by renting property; indeed QFC members can set-up anywhere in Doha and have their offices designated part of the QFC.
Because of Qatar’s timing in setting up the QFC so quickly after the Dubai International Financial Centre, the false conclusion that this is another me-too project is easily drawn. However, on closer analysis these are two very different bodies, with different objectives.
The simple rationale of the QFC is that with such a large volume of project finance opportunities, and the associated banking requirements, along with an increasingly affluent population, then Qatar needed to build its own centre of excellence for finance, and to provide a suitable working environment for financial institutions and their business associates.
The law passed this February established a unique sort of financial centre, combining the most modern regulatory framework on Western lines with a one-stop shop to enable bankers and their colleague to rapidly set-up in business and to get on with making money rather than chasing visa permits and licenses.
So what are the major projects that comprise this $133 billion spending program? Energy is the biggest ticket spender with $15 billion allocated for LNG expansion projects by 2010, and $60 billion for the North Field Development project up to 2012. There is a further $15 billion for LNG tankers by 2010.
General infrastructure projects total $13 billion with $5.5 billion for the new airport, and $1.8 billion for the Qatar-Bahrain causeway, as well as $3.8 billion for a five-year program of public works that ends by 2009. Plus electricity and water projects will total $3 billion: $1.6 billion for the Energy City and the balance for major projects.
Qatar has also put aside $12 billion for public, tourism and cultural projects; $2.8 billion is being spent on next December’s Asian Games; the Pearl-Qatar is a $2.5 billion reclaimed island property project; there are to be 10 new hotels on the North Beach; a whole host of museums and a national library; and in addition more than 80 high-rise towers are under construction at present in Doha.
With such burgeoning economic activity, and a GDP growth rate of 20-25% in an energy-rich economy, it is hardly surprising that bankers around the world are starting to pay more attention to the QFC, which is a friendly, open door to participation in the Qatari economic boom.
Tuesday, December 20- 2005 @ 11:04 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.