Doha: Qatar is working on an ambitious initiative with Malaysia and Turkey to serve the $2 trillion global Islamic finance market by establishing hubs in the three countries using common platforms and technology.
“We have a vision to cover the entire globe’s Islamic financial transactions between three financial centers: Doha, Istanbul and Malaysia,” said Yousef Mohamed Al Jaida, CEO of the Qatar Financial Centre (QFC) Authority in a group interview on the sidelines of the recently-concluded annual Doha Forum.
“This requires international platforms and technology which we believe Qatar Financial Centre has”, Nikkei Asian Review quoted Al Jaida as saying in its report.
The story, tweeted by Qatar’s Ministry of Finance yesterday said, under the proposed plan, Qatar would serve the greater Middle East, Turkey would cover Islamic finance needs in Europe and Malaysia would sell to Asia.
“That’s a big vision, we’re working on it and this is a new project,” Al Jaida said. Relations between Qatar, Turkey and Malaysia had “intensified recently and become a lot closer,” he added. “We share similar visions, we share similar progressive outlooks... so there’s a lot to be achieved between these three countries.” He did not give time scales for the project.
The London Stock Exchange is currently a global venue for the issuance of sukuk, while Hong Kong and Luxembourg have also made inroads but Qatar believes the market should be led by Muslim countries, Al Jaida said.
According to Nikkei Asian Review, Malaysia is already one of the world’s biggest issuers of sukuk, or shariah-compliant bonds, with 34 percent of the global market last year. The Malaysian central bank signed a memorandum of understanding with the regulatory authorities of Qatar in 2007 to promote mutual cooperation. A confident Qatar is pushing its financial centre aggressively as an alternative to the longer-established and larger Dubai International Financial Centre.
Al Jaida said the UAE had undermined the business model of Dubai as a regional hub during the blockade by forcing international companies operating in the region to set up an alternative base to serve Qatar. As a result, the number of foreign companies operating in the Qatar Financial Center had grown by 100 percent since the blockade and Qatar now had the opportunity to challenge Dubai as a hub in the Gulf region.
Qatar has attracted foreign businesses by offering guarantees that Doha will be a cheaper base to operate from than Dubai, in return for a commitment to a minimum 10-year presence.
The Qatar Financial Centre offers 100 percent foreign ownership, a legal and judicial framework based on English law, 100 percent repatriation of profits and other regulatory advantages to attract businesses. It compares itself to Hong Kong in offering companies an access point to a wider market under internationally friendly terms.
Islamic banks in Qatar today account for over 25 percent of total financing in Qatar. As per data available on public domain, the growth rate of Islamic banks in Qatar in the first half of 2016 was 7.2 percent, outperforming their conventional counterparts.