The Business Year

Shashank Srivastava

QATAR - Finance

A Fortunate Position

CEO and Board Member, Qatar Financial Centre Authority


Shashank Srivastava joined the Qatar Financial Centre Authority in 2006 and has decades of global experience in strategic consulting and investment. His work has spanned three continents, and has held positions with Dresdner RCM Global Investors, Andersen Consulting, Abraaj Capital, and the Dubai International Financial Centre. He has also worked for Swiss Re and Prudential. He earned his MBA from the Manchester Business School at the University of Manchester.

"Our strategy is in line with the ambitions set out in the Qatar National Vision 2030 to diversify our economy."

The Qatar Financial Centre (QFC) was set up by the State of Qatar in 2005. What ideas led to its founding?

The QFC was established by the government of Qatar in 2005 with a mandate to support the development of a world-class financial services industry. Our strategy is in line with the ambitions set out in the Qatar National Vision 2030 to diversify our economy. A principal goal of the Qatar National Vision 2030 is to develop Qatar as a dynamic, knowledge-based economy and a world-class financial services sector, and QFC is a vital component of that vision. We have made great strides in the last few years in implementing our strategy. A growing volume of business by QFC firms, coupled with an attractive, world-class business, tax, legal, and regulatory environment is stimulating the development of the financial services sector in the State of Qatar. This is further demonstrated by the increasing number of Qatari firms that are using the QFC as a platform for their international growth ambitions.

When one hears the name Qatar, the first thing that comes into many people’s minds is oil and gas. What efforts is the QFC making to promote Qatar globally as a financial center?

The QFC Authority, as the strategic and commercial arm of the QFC, is dedicated to playing a major role in the expansion of Qatar’s financial services sector. Besides ensuring that this world-class environment continues to evolve to maintain best practices and facilitate the growth of the financial sector, we also help to promote Qatar as an international financial center in a number of other ways. Developing international links is an important element in our growth strategy. In the last year or so we have entered into Memoranda of Understanding (MoUs) with our counterparts in China, India, Japan, Turkey, and the UK. We have strengthened our cooperation with Luxembourg for Finance, the agency for the development of the financial sector in Luxembourg, and Europlace, the promotional body for the French financial services industry. Thought leadership by way of increasing the availability of data and analysis on the MENA region is another important element in our strategy. With a population of over 380 million, the MENA region accounts for a combined GDP of over $2 trillion. As a key international energy exporter, the region is an increasingly attractive proposition for financial services providers. In 2012, the economies of the region’s oil producing nations grew by an impressive 5.5% on average. The QFC Authority continues to commission significant research to further its business strategy by supporting thought leadership initiatives, including events and publications, which encourage dialogue, the sharing of knowledge and best practice, and the identification and exploration of growth opportunities. During 2013, these initiatives have included the Seventh MultaQa Conference, organized with Global Reinsurance magazine. MultaQa has become the leading international insurance industry event of its kind in the Middle East. The QFC Authority also supported the second Bloomberg Doha Financial Summit, which was attended by more than 300 asset management professionals from Asia, Europe, the Middle East, and the US. Our research shelf includes the D&B Business Optimism Index, the MENA Insurance & Reinsurance Barometers, the FTSE Global Markets Asset Management Survey, and the GCC Mutual Fund Survey. In April, we published the first annual MENA Asset Management Barometer, providing industry practitioners with detailed insight into the regional asset management. In May, we revealed a groundbreaking report on private wealth and the scope for family offices in the Middle East.

There is sometimes a perception that the QFC is more inclined toward multinational companies. What opportunities exist for local companies to establish themselves under the QFC umbrella, and what is being done to promote this?

The QFC is an integral part of Qatar’s financial sector and, therefore, an integral part of Qatar’s economy. We offer domestic as well as regional and international firms a highly attractive base from which to expand their businesses. The QFC specifically provides domestic companies with an ideal environment from which to launch their businesses internationally. This world-class environment comprises a legal system based on English common law, independent principles-based regulation, a competitive tax regime, and efficient administration. Domestic firms can also benefit from the evolution of the QFC’s regulatory framework, where developments have been designed to add capacity and facilitate the growth of the financial services industry within Qatar. At the end of 2012, for example, we introduced new regulations for Special Purpose Companies and Single Family Offices. Almost half the firms newly licensed with the QFC in 2012 were Qatari firms. Quite a few of the local players have capitalized on the QFC platform to support their businesses, including QIA, Ooredoo (QTel), QIC, QNB, Doha Bank, Amwal, Qatar First Bank, QInvest, and SEIB Insurance. In short, the QFC helps all licensed firms generate new and sustainable revenue streams and provides access to local and regional investment opportunities.

“Our strategy is in line with the ambitions set out in the Qatar National Vision 2030 to diversify our economy.”

What role does the QFC play in diversification and what are your aims for the future?

One of its objectives is to diversify the economy and reduce dependence on hydrocarbons. Developing the financial sector is an important part of that diversification, and is essential as the economy matures and wealth accumulates. Part of the synergy between the hubs is therefore the extent to which they all play an important role in the evolution of the financial sector and cross-fertilize each other. For example, the insurance and asset management sectors are closely connected. Asset management and insurance are also vital components of the rich ecosystem of financial services firms and activities we are stimulating. The potential for asset management lies regionally in rapidly increasing wealth. This wealth is first and foremost driven by strong economic growth. The IMF forecasts that the GCC economy will grow at 3.5% a year between 2012 and 2017. Qatar is forecast to grow at 5.2% annually over the same period. Qatar is fortunate to have the world’s third-largest reserves of natural gas, and the monetizable value of Qatar’s oil and gas reserves has been put at $16.7 trillion. The country also enjoys the world’s highest per capita income and the largest percentage of millionaires. There is increasing evidence that high-net-worth individuals from across the region are increasingly looking to invest their money closer to home and Qatar also has a substantial sovereign wealth fund. Regionally and internationally, Qatar’s strategic location in a time zone between the mature markets of the West and the emerging markets of the East and South, the stable and world-class business environment, and the increasing attraction of Qatar and the GCC more generally as an investment destination underpin the case for basing asset management operations in the QFC. Despite spectacular growth rates, the reinsurance sector in our part of the world is still in its infancy, accounting for as little as 1% of GDP as compared to 6%-7% in the developed world. However, we believe that the potential for further growth is enormous. Qatar plans to invest $140 billion over the next five years in projects such as a new airport, a seaport, and a rail and metro system. Total infrastructure investment, including the 2022 FIFA World Cup, may be about $200 billion over the coming decade, a fact that illustrates the possible synergies between asset management and insurance. The region’s demographic profile is another factor that supports the long-term growth projections for the insurance sector. GCC governments, including Qatar’s, are introducing compulsory insurance schemes; for example, healthcare and motor insurance, which further boosts premium volumes. GDP growth is set to remain above the global average for the foreseeable future. These strong economic fundamentals, combined with the QFC’s first-rate regulatory and operating environment, suggest that our objective of developing into a leading financial center is within reach. But again, we pursue a long-term approach and are committed to building a sustainable platform. Our long-term vision continues to be to cement Qatar’s position as a platform for financial services in the region. All three hubs share huge growth potential, not only in the domestic market but also through the use of Qatar as a strong regional base for expansion into the GCC and beyond into the wider Middle East, North and Sub-Saharan Africa and the Asian subcontinent, reflecting the global shift in influence and business toward these economies. Qatar is geographically, economically, and philosophically extremely well positioned to take advantage of this trend. In short, we aim to build a broad and representative range of licensed local, regional, and international firms. Our goal is to be a major center for asset management, reinsurance and captive insurance, as well as being a continuing source of growth for the financial sector, as an integral part of Qatar’s financial system.

FDI in the region is expected to rise over the next few years. What is the potential for attracting investments into Qatar from new markets such as Africa and Latin America?

It is certainly true that FDI in the GCC region is expected to increase over the coming years, attracted by strongly growing hydrocarbon-based economies, favorable demographics, and massive state infrastructure spending plans against a backdrop of developing capital markets. Heavy public infrastructure investment will create a wide range of funding and investment opportunities for the private sector such as project finance, bond and sukuk issues, and public-private partnerships (PPPs). These all point to excellent opportunities to find growth when other parts of the world, notably the mature and debt-laden economies of the West, are still offering only modest returns. There is growing interest from overseas investors in Qatar in sectors such as health, education, and technology, as well as infrastructure and, of course, hydrocarbons. We fully expect that investors from the fast-emerging economies, such as Africa and Latin America, in addition to those from Asia, will show increasing interest in Qatar.

© The Business Year – July 2013



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