The Qatar Financial Centre (QFC) has been following the Singapore model of targeted policy intervention to secure its position in the global financial services industry, especially in asset management to turn the center into an international hub for the sector.
The QFC’s moves come amidst assets under its management (AuM) more than doubling yearly to $16.8 billion in the fourth quarter of 2020. The sturdy growth in AuM signals the increasing potential contribution of the QFC to the local economy and its diversification.
Qatar can build its global reputation as a financial services hub with major contributions from AuM and it may need targeted policy interventions, the QFC said. In this regard, the center cited the model of Singapore which ranked sixth in the Global Financial Centres Index (GFCI) in 2019.
Highlighting that a more extensive Singaporean financial services sector journey can provide useful insights for Qatar, QFC said the Singaporean government targeted specific financial markets or sectors that were considered to be potential growth areas and then developed focused policies to grow those sectors.
The Singapore government created the infrastructure and incentives to allow the asset management sector to grow and the AuM industry climbed from $203 billion in 2000 to $2.9 trillion in 2019.
The QFC has already developed a significant incentive program for the asset management industry wherein it offers a tax incentive (0 percent) for asset managers with AuM of at least $30 million and a small team (three full-time employees) in Qatar.
The value of AuM in the QFC complement the center’s gross value added (GVA) contribution to Qatar’s GDP as a measure of QFC’s contribution to the Qatari economy. Whilst QFC’s GVA contribution of $1.89 billion in 2018 explains the impact QFC has made on the Qatari economy in the recent past.
Commenting on the AuM’s potential role in the diversification of the Qatari economy, the QFC said, asset management can match investors seeking appropriate savings or investment vehicles and the financing needs of the real economy. And these financial vehicles raise capital from retail and institutional investors and provide funding to other sectors like monetary financial institutions, non-financial corporations and government agencies.
Data from surveys of asset management and investment services companies in the QFC shows that nearly 70 percent of their overall supplier base comprised companies based in Qatar, showing the indirect benefits QFC companies in the asset management sector are creating for local businesses.
Such activity can, in turn, aid to boost economic diversification in Qatar by improving the financial services industry and the broader sectors in the economy that support would expand the local non-oil economy, the center added.