april 15-16, 2013 qatar - globus vision · to the qatar 2022 supreme commit-tee the responsibility...

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Founded in 1973 and origi-nally known as the Qatar Mon-etary Agency, the Qatar Cen-tral Bank (QCB) oversees the country’s financial fortunes.

Many factors have contributed to building the monetary safe haven that the State of Qatar is today. One of the most important has been the link between the Qatari Riyal and the US dollar. Sheikh Abdulla Saud Al Thani, Governor of the QCB, be-lieves this attachment to the dollar has had a profound effect on creat-ing the solid platform on which Qa-tar’s economy stands today.

“There are several advantages in maintaining the USD peg; first of all, the fixed exchange rate provides a credible anchor for monetary pol-icy as almost all of Qatar’s export contracts and invoicing are done in the US dollar. Secondly, for most of the period in which the peg has been maintained, the Qatari economy has benefited from the stable economic environment in the US,” says the central bank governor.

Since 2001, QCB has maintained

a policy of keeping the Qatari Riyal pegged to the US dollar, at an aver-age exchange rate of 3.64 (QR) per USD. However, this is not the only action taken by the central bank, which is constantly studying new ways to fortify and stabilise Qatar’s economy.

“Despite obvious benefits there are some challenges while operat-ing under fixed exchange rates, as

we have to maintain our stance of policy consistent with that of the US, which may not always be jus-tified based on our own domestic considerations. We continue to re-iterate our faith in the pegged ex-change rate regime after carefully weighing the benefits against the costs. Nevertheless, we will con-tinue to review the situation accord-ing to evolving international and

domestic macroeconomic develop-ments,” he adds.

Unlike many countries whose economies rely heavily on exports of natural resources, Qatar has been able to withstand market fluctua-tions in the prices for those prod-ucts. The government’s national de-velopment strategy includes support for the expansion of non-hydrocar-bon industries, so that in the case of a slowdown in the oil and gas sector, the economy will not be unduly af-fected. Right now, both areas of the economy are doing well – so much so that the central bank has even lowered interest rates to make credit more easily available to companies in the private sector.

“The non-hydrocarbon sector also recorded higher growth, in-dicating resurgence in economic activity during the year in sync with the pickup in global growth. In order to support and sustain the growth momentum in 2011, we have recently reduced our key policy rate by 50 basis points to signal a soft in-terest rate regime and encourage the

flow of credit to the private sector,” says Sheikh Abdulla Saud Al Thani.

The government’s long-term vi-sion is a cautious and careful one, which seeks to preserve financial stability through a two-pronged ap-proach. To date, this strategy has been highly successful.

The first aspect of the policy is to prevent the financial system from exposure to unnecessarily high lev-els of risk. To this end, the QCB has taken preventive measures to regu-late and supervise the system, so that any weaknesses can be detected early on. Even with extensive super-vision, however, no financial system can be completely protected from all types of risk. For this reason, the second axis of the policy is correc-tive, as it seeks to contain any prob-lems at the earliest possible moment and in so doing, prevent them from spreading.

The central bank has also taken preventive steps to limit the bank-ing sector’s exposure in real estate and in stocks. Rising prices in both these areas during the past two years

have increased speculative invest-ment. As a result, restrictions have been placed on loans in the real es-tate sector and financing of stock purchases has been prohibited. With measures like these, the Qa-tar Central Bank seeks to maintain equilibrium between the country’s development goals and its need to maintain a stable financial system.

In order for investors to make long-term commitments in produc-tive sectors, they require economic stability. Even so, all countries eventually find themselves exposed to crises, long- or short-term fluctu-ations in export prices or even situ-ations of extreme financial distress that can adversely affect economic activity.

Stability is the watchword for the Qatar Central Bank and the proof is in the results of its policies. QCB keeps a close watch on all poten-tial dangers to the country’s bank-ing system; to date, it has published three Financial Stability Reviews and the intention is to make this a continuing process.

Strong foundations for sustainable development

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APRIL 15-16, 2013 1

The Qatari government is building on the nation’s strengths, turning Doha into a leading global knowledge and financial centre

QATAR

Ranked consistently as one of the three fastest-growing econ-omies in the world since 2008,

Qatar is experiencing an unprecedent-ed economic boom that is changing the face of the country. Under the leader-ship of Emir Sheikh Hamad bin Khali-fa Al Thani, the government has made great progress towards accomplishing the goals of its National Vision 2030, which are to ensure sustainable, eq-uitable and rapid economic growth, while developing the country’s human capital, enhancing competitiveness and protecting the environment.

In a speech to the International Symposium held in Doha in June 2012, Prime Minister Hamad Bin Jas-sim Bin Jabr Al Thani emphasised the important role of the Qatari lead-ership in transforming the country into one of the most competitive and diversified economies in the world.

Qatar, he said, has earned “world-wide admiration and praise from international economic and devel-opment circles for its outstanding success in achieving a qualitative economic, social and cultural trans-formation in less than two decades, a feat which took several decades to achieve in other countries.”

Indeed, in less than two decades the Persian Gulf nation of less than two million has become the second wealthiest country in the world meas-ured by GDP per capita. The country’s double-digit GDP growth in recent years has been accompanied by good governance and competitiveness. Proof of that is the fact that the World Economic Forum ranks Qatar as the most competitive country in the Mid-dle East and the 11th most competitive in the world; the World Bank ranks it as the third country in the Middle East and 40th worldwide for ease of doing business; and Transparency In-ternational as the 27th most transpar-ent country in the world, higher than many OECD countries.

The oil and gas sector remains the stronghold of the economy and an im-portant contributor to the state budget, which is not surprising seeing how Qatar has significant oil reserves of

25.4 billion barrels, according to the Oil and Gas Journal. The country is also home to the third largest reserves of natural gas in the world and is the number one exporter of liquefied natu-ral gas (LNG) worldwide. The sector has grown exponentially in the last decade as a result of the government’s efforts to develop the infrastructure needed to export LNG to far-away places like Japan and Belgium, and to increase the added value of energy exports by promoting downstream sectors, particularly the production of petrochemical products.

But energy only tells part of the sto-ry, as the contribution of the fast-grow-ing services sector to the economy is expected to reach 40 percent by 2015.

This trend illustrates the government’s ambition to turn Qatar into a knowl-edge and finance hub in the Middle East and a centre for Islamic culture. Since 2003, when the country’s Edu-cation City was founded, prestigious international universities like Carnegie Mellon, Georgetown University and University College London (UCL) have opened up branches in Qatar. These programmes are held to the same standards as their counterparts in Western Europe and North America, but are also in line with Qatar’s devel-opmental needs and strategic interests. Meanwhile, the Science and Technolo-gy Park, located across from Education City in Doha, hosts R&D operations of some of the largest multinationals

in the world, including ExxonMobil, Maersk Oil, Total, Shell, Microsoft, CISCO, Siemens, Virgin’s stem cells research centre and Rolls Royce.

But perhaps the most important growth catalyst in the coming years will be Qatar’s hosting of the 2022 FIFA World Cup tournament, for which the government has delegated to the Qatar 2022 Supreme Commit-tee the responsibility of supervising preparations. The committee has a budget of over $100 billion to be spent over the next ten years on in-frastructure, and has already started works on futuristic-looking stadiums that encapsulate the spirit of the new Qatar: innovative, dynamic and glob-ally-engaged.

Governing Qatar’s monetary policiesThe Qatar Central Bank has done and still does an exemplary job of managing finances in the country

“We continue to reiterate our faith in the pegged exchange rate regime [with the USD] after carefully weighing the benefits against the costs.” Sheikh Abdulla Saud Al Thani, Governor of the Qatar Central Bank

Qatar seeks more IMF cooperation in region

Finance Minister Sheikh Y ousef Hussain Kamal has called upon the IMF and the World Bank to take a “business unusual” approach to-wards the Arab nations and respond to their needs with greater flexibil-ity and speed.

Speaking at the annual meeting of the International Monetary Fund and World Bank held in Tokyo in October, the Finance Minister said the IMF should review its quota system, widen the availability of its global knowledge base and do more to develop the private sector across the Arab world.

The Minister, who spoke on be-half of his Arab colleagues, urged the two institutions to “take a ‘busi-ness unusual’ approach and be ready to go the extra mile at short notice and in demonstrating more flexibility with regards to the con-ditions placed on the Arab countries by the IMF.”

Specifically, the Minister said the IMF should review its system of quotas, which he said “lacks fair-ness.” He also addressed the issue of global knowledge – the enor-mous amount of data, studies and other resources contained in the IMF and World Bank. He said these must be made available in real time, in Arabic, and should be produced in collaboration with local country policymakers and think tanks.

Finally, Sheikh Y ousef Hussain

Kanmal urged the two institutions to improve their efforts to develop the private sector across the Arab world.

“We see the private sector as the main driver for future growth and the key to realising the region’s po-tential for robust and sustained job creation, technological innovation and regional economic integration that are urgently needed,” he said.

On broader issues, the Qatari fi-nance minister said the IMF should increase its financial support for the Palestinian Authority, “to help it in building a viable economy,” and increase the representation of Arab nationals both at the Fund and at the World Bank.

Finance Minister urges more flexibility towards needs of Arab nations

Sheikh Yousef Hussain Kamal, Minister of Finance

Chancellor Angela Merkel with Qatari Prime Minister Sheikh Hamad bin Jassim bin Jabr Al Thani


APRIL 15-16, 20132 QATAR

Onshore banking with offshore benefitsThe world’s most famous financial cen-tres are well established: London, New Y ork, Frankfurt, Singapore. Many coun-tries are actively promoting the forma-tion of their own financial centres, and few have been more successful than Qa-tar in such a short time, which passed the law setting up the Qatar Financial Centre (QFC) in 2005.

Since then, the Qatari government and the QFC have invested heavily in providing financial services companies with the most modern legal, financial and physical infrastructure possible, permitting companies to move into the region to establish themselves quickly and smoothly.

The QFC is comprised of three main parts: the QFC Authority, which is the commercial arm of the centre; an in-dependent financial regulator, known as the QFC Regulatory Authority; and an independent judiciary made up of a Civil and Commercial Court and a Regulatory Tribunal.

The combination of physical, legal and regulatory structures set up by the QFC provides financial institutions with the vital environment they need to establish operations profitably in the Gulf Cooperation Council (GCC) re-gion, which boasts one of the world’s fastest-growing economies and will be the destination for billions of dollars of investment in coming years.

“Those in the financial services in-dustry like to be in close proximity to each other, but need a proper environ-ment to thrive,” says Shashank Sriv-astava, Chief Executive Officer of the QFC Authority. “I believe we have created the right legal and regulatory environment that allows the companies to not only access the domestic market with their international companies but also the regional international markets.”

The QFC provides companies with an onshore trading environment with a strong legal sector based on Eng-lish common law, a principles-based regulatory structure and a low tax of 10 percent on locally sourced profit. Profits can be freely remitted outside the country and the law allows 100 percent foreign ownership by foreign companies and places no restrictions on dealing in any currency.

Qatar has double-taxation agree-ments with more than 35 coun-tries, providing still more benefits for companies, and their employ-ees, that relocate to the country. Employees can also enjoy a high quality of living, with top-notch, reasonably-priced housing, af-fordable healthcare and many in-ternational schools.

This highly desirable offer has already attracted many well-known interna-tional financial institutions, with more than 165 licenses issued since 2005 to both local firms and companies from abroad. The list includes Allianz, AX A, Barclays Capital, Citibank, Credit Sui-sse, Deutsche Bank, ICBC, JP Morgan, Kane, KPMG, Marsh, Mitsui Sumito-mo, Morgan Stanley, Pricewaterhouse-Coopers, UBS and Z urich FS.

The QFC Authority has been so successful at setting up and promot-ing the financial centre that it has won the Best Financial Centre in the Mid-dle East award from Global Investor magazine, the flagship publication of the prestigious Euromoney group, in 2011 and in 2012.

“We are extremely proud to be rec-ognised as the best financial centre in the Middle East by such a highly re-garded industry publication,” says Mr Srivastava. “Winning this award for a second year in succession is welcome recognition of the progress we are con-tinuing to make in building a world class financial centre and the leading platform to capitalise on the emerging opportunities in the Middle East.”

The QFC is also busily planning for the future. Financial centres need well established legal and regulatory frame-works to function, but they also need a large pool of talent, and the centre has already taken important steps towards providing such a group of well edu-cated people.

The Qatar Finance and Business Acad-emy (QFBA) was started in partnership between the QFCA and the Qatar Foun-dation for Education, Science and Com-munity Development. The QFBA arrang-es for students to go on courses which are certified by third parties (such as the Chartered Institute of Bankers).

The Qatar Financial Centre Authority promotes the expansion of the country’s financial services sector

Shashank Srivastava,CEO and Board Member of the Qatar Financial Centre Authority

The establishment of the Qatar In-dustrial Development Bank in 1997 (QIDB) reflects the farsighted vision of H.H. Sheikh Hamad Bin Khalifa Al Thani, Emir of the State of Qatar, to diversify the income resources of the Qatari economy by promoting private sector projects, especially by supporting the small and medium en-terprises in Qatar.

Qatar Development Bank (QDB) aligned its strategy to correspond with the Qatar National Vision for the year 2030, to promote and facilitate develop-ment and growth of small and medium enterprises in core economic realms, resulting with long-term socioeconomic benefits to the people of Qatar.

Throughout the past years, gov-ernments have been supporting small- and medium-sized enterprises (SMEs) to be successful and prosper-ous, knowing that these businesses are considered vital to generate wealth and employment in the country.

“Since the bank was established, we’ve aimed to support the private sec-tor,” says Mansoor Al-Mahmood, the QDB’s Chief Executive Officer.

One of the bank’s latest developments is the Al-Dhameen programme, which is a loan facility set up by the bank to guarantee loans made by private-sector banks to small businesses. The purpose behind this programme is to help com-panies with limited credit histories hav-ing lack of collateral to gain access to the financing they require.

The programme does not provide direct finance to small and medium en-terprises, but rather offers the business owner facilities to receive the required finance for their project from a partner bank, through issuance of guarantees in favour of the bank, under which the programme guarantees a portion of the finance (85 percent of the finance value not exceeding QR15 million).

Any Qatari project – small and me-dium enterprises or joint ventures (in-cluding foreign investors) whose annual turnover does not exceed QR30 million – can apply for finance from banks un-der the Al Dhameen programme. The individual project can receive more than one facility under the Al-Dhameen pro-gramme, since a letter of guarantee is is-sued for each provided facility. The total

guarantees issued per project will not exceed QR15 million.

If the customer has more than one pro-ject (maximum two), two separate letters of guarantee can be issued provided that the total value of issued guarantees will not exceed QR20 million.

Under the programme, existing companies are eligible for guarantees of up to 75 percent of the unsecured outstanding principal and financing limits of up to QR15 million. Al-though QDB guarantees the loan to the partner bank, the sponsors are li-able for the full loan amount.

The Al Dhameen for start-ups is for private sector companies less than three years old that are 51 percent Qatari-owned. These are eligible for guarantees of up to 85 percent of the loan amount, which is limited to QR15 million.

Al-Dhameen loans can be either in the form of project financing loans for man-ufacturing, where the maximum tenor is eight years including a two-year grace period. Financing for services will have a maximum tenor of five years, includ-ing a one-year grace period.

All main sector business activities are eligible for support under the pro-

gramme, except the following sectors: agriculture, fishing and livestock, non-oil mining and quarrying, wholesale and retail trade, financial and insurance ac-tivities and real estate activities.

QDB is much more than the Al-Dha-meen programme, of course. The bank’s overall strategy is to move Qatar’s eco-nomic focus away from the oil industry by providing the financing needed for infrastructure and other projects of na-tional interest and to spur the growth of a strong and diversified private sector.

The bank was set up with the mission to provide funding solutions and servic-es through direct and indirect financing and venture capital and advisory ser-vices. It helps Qatari exporters gain ac-cess to new markets through promotion and development activities along with its normal financing operations.

QDB launched TASDEER, or the Qatar Export Development Agency in 2011, which is specifically tasked with promoting exports and providing credit guarantees, insurance, advisory services and other financial products needed to reduce the risks that beset exporters around the world.

TASDEER offers services to all Qatari exporters, regardless of their turnover or the size of their exports. It helps them identify products and their target markets, along with supplying trade information, market entry stud-ies and support in international and regional trade fairs.

One of QDB’s first services is direct lending (project finance). Project Fi-nance is long-term financing covering part of total cost of the project, including constructing business premises and pur-chasing the main production equipment.

Direct lending products aim at sup-porting Qatari companies with projects in manufacturing, healthcare, tourism, education, agriculture, fisheries and farming sectors; existing or start-up

companies are qualified for a project fi-nancing or a raw material facility.

Financing terms vary according to the nature of the project. Repayment could reach a maximum of 15 years with a three-year grace period which is calculated based on the cash flow of the project. Annual interest rates stand at between 3-5 percent for industrial sector applications and annual interest rates stand at between 2.5-4 percent for education, healthcare and tourism sector applications respectively.

QDB manages the government-spon-sored and funded housing loans for Qa-taris, which is part of the Government’s effort to achieve social development goals for 2030. In this context, the bank manages the entire

procedure related to housing loans for all Qatari citizens who are deemed quali-fied to get such loans. In order to provide

the best possible service to its customers, QDB endeavours to organise, simplify and streamline the procedures associated with the loan request and disbursement of the loan amounts.

In addition to financing, support and guidance at early stages are the key suc-cess factors for start-up companies and small and medium enterprises to grow and prosper. With this key fact in mind, QDB offers value-added services to pro-vide entrepreneurs with the necessary know-how, which includes business education, skills and resources to enable entrepreneurs to successfully compete in the local and international markets.

And finally, as the country prepares to host the World Cup in 2022, invest-ment in tourism, sporting and transport infrastructure is set to rise; QDB has al-ready ensured that the necessary fund-ing is in place.

New financing to promote diversification

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Al-Dhameen programme is a loan facility set up by QDB to guar-antee loans made by private-sector banks to small businesses

“Since the bank was established, we’ve aimed to support the private sector.” Mansoor al-Mahmood CEO of Qatar Development Bank

Qatar Development Bank’s Al Dhameen programme provides loan guarantees for small and medium-sized companies


APRIL 15-16, 2013 3QATAR

Barwa Bank, the fastest growing bank in Qatar 2012The decision by the Central Bank of Qatar ordering conventional banks out of the Islamic finance market has helped Qatar’s newest Shariah-com-pliant lender become the Gulf state’s fastest growing bank.

Barwa Bank was among the first to benefit from the QCB’s surprise rul-ing in 2011, instructing conventional banks to close their Islamic windows. In what was later deemed Qatar Deal of the Y ear by Islamic Finance News, the bank simultaneously boosted its customer base and expanded its net-work from one branch to six by ac-quiring International Bank of Qatar’s Al Y usr Islamic retail banking opera-tions in August that same year.

In June 2012, it won the award for Fastest Growing Bank in Qatar at the Banker Middle East Industry Awards, and in September was named Fast-est Growing Company at the Arabian Business Qatar Awards.

At the 2012 Islamic Business &

Finance Awards held in December, Barwa won Best Bank, Best Branding and Best Domestic Corporate Bank.

“We have seen a reduction in com-petition in a market that is growing faster than conventional banking,” says CEO Steve Troop. “It is a great place to be, and we intend to realise the opportunities as much as we can.”

With authorised capital of QR6 bil-lion ($1.6 billion), and total equity of QR5.1 billion ($1.4 billion), Barwa Bank offers a full range of financing services in retail, business, corporate and private banking.

The velocity of the bank’s rise is reflected in its financial results for 2011, which recorded a 882 per cent rise in net profit to QR244 million ($67 million), compared with QR25 million in 2010. 2012 also posted strong growth, with net profits rising 41 percent to QR345 million.

When the bank launched a QR1.7 million ($467 million) rights issue in

2011 to fund expansion, its offer of 109.1 million new shares to existing shareholders was oversubscribed by 13 percent.

Barwa Bank is an associate com-pany of Barwa Real Estate, the Middle East’s biggest property company by as-sets, which is its most significant share-holder. It also has an indirect relation-ship with Qatari Diar, the real estate arm of the Qatar Investment Authority, through its other prominent sharehold-er, Qatar Holding, the sovereign wealth fund’s investment subsidiary.

These are important connections for the bank. “We are committed cor-porate bankers, so we are involved very much in lending to large corpo-rations and businesses here in Qatar,” says Mr Troop.

Barwa Bank’s investment banking arm, The First Investor (TFI), raised financing for the $700 million Cit-yCenterDC development in Washing-ton DC, one of the largest urban reju-

venation projects in the United States, for which Qatari Diar is the anchor in-vestor. TFI has also started a property fund in Brazil as a joint initiative with the US-based Hines International Real Estate Holdings.

At home, Barwa Bank participates in Qatar’s economic development, includ-ing working with Hochtief, the German construction company, based in Essen. “Much of the activity is associated with major infrastructure projects, but not exclusively,” says Mr Troop.

The bank has also developed a strong focus on assisting small and medium-sized enterprises (SMEs), and was one of the first to sign up to Qatar Development Bank’s Al Dha-meen scheme for start-ups, an indirect lending facility to guarantee commer-cial bank loans to the private sector.

Mr Troop says that at present Barwa Bank is essentially a domestic institu-tion, but its long-term ambitions will eventually see it establishing offices

beyond Qatar’s national boundaries. “We have lots to do before we

think about expanding internation-ally. I would stress, however, that we are ambitious and wish to grow. We can only go so far in this market, and inevitably we will go international,” he says.

Meanwhile, since establishing its Islamic Capital Markets platform last year, the bank has emerged as a key player in the growing market for Shari-ah-compliant bonds, known as sukuks.

In September, it was appointed co-lead manager for the Republic of Tur-key’s first sukuk, a $1.5 billion issue, following its involvement in high-profile sukuks for the Government of Dubai, the State of Qatar, Saudi-based Islamic Development Bank, and real estate developer Emaar Properties.

Bloomberg Islamic Finance league tables rank Barwa Bank among the top 10 arrangers for international, global and MENA region sukuk issues.

Awards for Qatar’s newest Islamic lender as it builds on a remarkably successful entry into the market

QIB: the benchmark Islamic bank in Qatar

While the rapid expansion of Islamic finance is a relatively recent phenom-enon, Qatar Islamic Bank, the Gulf Arab state’s largest Shariah-compli-ant lender by assets, this year marks its 31st anniversary.

Established in 1982, QIB has long been at the forefront of the Islamic banking industry, extending its ac-tivities from Qatar and the Gulf to the Middle East, Asia, Europe, and North Africa.

The bank defines itself as “the benchmark Islamic bank in Qatar”, and experts agree. Global Finance this year named it Best Islamic Financial Institution in Qatar, recognising the bank’s contribution to the growth of Islamic banking both locally and in-ternationally, while The Asset maga-zine awarded it Best Bank in Qatar. Last year it was named Best Islamic Bank in Qatar for 2011 at the Islamic Finance News (IFN) awards.

Despite the plaudits, QIB is not a bank to rest on its laurels. Indeed, re-cently it has been undertaking a trans-formation programme in order to take full advantage of the promising growth opportunities in Qatar and beyond.

With paid-up capital of QR2,360 million ($648 million), and a well-dis-tributed network of 30 branches, QIB holds a 36 percent share of the Islamic banking market in Qatar, and an ap-proximate market share of 10 percent.

Along with offering a wide range of products and services for individuals, the bank is active in financing for busi-nesses of all sizes, from major corpora-tions to small and medium-sized enter-prises, and micro enterprises, as well as participating in joint financing projects with other financial institutions.

One of the largest initiatives of na-tional importance to which it has con-tributed is the Barzan Gas project, being implemented as a joint venture between Qatar Petroleum and ExxonMobil Qa-tar. QIB provided $500 million to fi-

nance the project, which is the biggest portion of the total Islamic tranche of $850 million.

More recently, in August, QIB signed a $380 million package for the Qatar Gas Transport Company (Nakilat) in partnership with Qatar International Islamic Bank (QIIB). QIB has also ex-tended a $500 million Islamic financing package to Qtel.

The bank’s sound financial position and business strategy is reflected in its rating from international ratings agen-cies. In August, Fitch Ratings affirmed

QIB’s long-term issuer default rating at ‘A’ with a stable outlook, and viability rating at ‘bbb’.

Standard & Poor’s, rating the bank for the first time, recently assigned its ‘A-’ long-term and ‘A-2’ short-term counterparty credit ratings to QIB with a stable outlook rating on the long-term. S&P hailed QIB’s leading position in the Qatari Islamic banking segment, and its business model and management.

Financial results for for year-end 2012 show QIB realised a net profit of QR1.24 billion ($340 million), a drop of 9 percent compared to 2011. Neverthe-less, the bank’s total assets increased by 25.6 percent to stand at QR 73.2 billion ($20.1 billion), while customer deposits show 55 percent growth at QR43.1 bil-lion ($11.8 billion).

Sheikh Jassim Bin Hamad Bin Jas-sim Bin Jaber Al Thani, QIB’s Chair-man, says, “The bank continues to show significant growth, stable and well diversified revenue streams, and positive results.”

QIB has also recently been celebrating the hugely successful first tranche of its new $1.5 billion Islamic bonds (sukuk) programme, a $750 million 5-year sukuk priced at a profit rate of 2.5 percent – the lowest profit rate ever achieved by any GCC financial institution.

Marking QIB’s return to global debt markets after two years, the sukuk aroused enormous interest from inter-national as well as regional investors, with strong participation from Asia and the MENA region, and also from Eu-rope. With the final book reaching $6 billion, the issue was eight times over-subscribed in a year when there was no shortage of Middle East sukuk issues. Sheikh Jassim says the sukuk pro-gramme will enable the bank to further contribute to Qatar’s economic growth both at home and internationally.

This year finds Qatar Islamic Bank renewed and ready to exploit opportunities for growth in Qatar and beyond

A financial bridge between the region and the world

Masraf Al Rayan, one of Qatar’s largest banks, set itself the goal of becoming an international Islamic finance institution right from when it was established seven years ago.

“Because of what was going on in the whole region in terms of growth, and particularly in Qatar, we needed a mega-sized bank to cater to Islamic and non-Islamic customers,” says Adel Mustafawi, the bank’s Group CEO. “From the very beginning, our strategy was to start from Qatar, then expand to the GCC, other countries in the Middle East & UK, building the real economy through the financial sector.”

Today, Masraf Al Rayan has become one of Qatar’s largest Is-lamic banks, with a market share by assets estimated at 10 percent at year-end 2011. It was the first bank in Qatar to have shareholders from Saudi Arabia, Kuwait, Bahrain, UAE and Oman, in addition to its domestic base of shareholders.

The Doha-based lender makes no secret of its interest in making acquisitions in other GCC coun-tries and beyond.

Currently, it is working on a plan to enter the UK market by acquir-ing a 70 percent holding in Islamic Bank of Britain (IBB), in a deal in which the Government of Qatar would secure the remainder of the shares. This would be the bank’s first advance beyond the GCC, giving it a foothold in the Euro-pean market.

While Mustafawi insists Masraf Al Rayan won’t be rushing into Europe, it could be an attractive prospect for the bank in the longer term, given the potential for Is-lamic banking in countries like Germany and France. In the mean-time, he has noticed an increasing number of international investors

taking an interest in ethical Islamic financial institutions.

“International investors are be-coming increasingly aware of Islamic products,” he observes. “They see it as an ethical, less risky kind of banking that serves to benefit both the client and the financial institution.”

Masraf Al Rayan’s results for the year 2012 show net profit up 7.9 percent to QR1.52 billion ($417.5

million) compared to the same period in 2011. Financing activi-ties increased nearly 23 percent to QR42.76 billion, while customer deposits rose more than 36 percent to QR45 billion, from QR33.06 billion in 2011.

Offering a full range of retail, corporate, private banking and investment banking services, the bank has been creative and innova-tive in terms of its products. “We compete with conventional banks in terms of the type of products that we offer,” says Mustafawi.

It is extending its nationwide branch network and, in the wake of Qatar’s conventional banks being ordered to cease offering Islamic banking services, has launched a brokerage arm, Al Rayan Financial Brokerage Company.

Moody’s Investors Service says Masraf Al Rayan is well placed to benefit from the strong economic growth in Qatar. Recently upgrad-ing the bank’s credit rating to A2 Prime-1 from A3 Prime-2, it cited the quality of its assets, a growing domestic franchise in the corporate market in Qatar, and “strong finan-cial fundamentals, in comparison with its peers.”

Mustafawi says Masraf Al Rayan will be one of the fastest-growing financial institutions in the region, extending its activities across the Qatari economy.

“Our strategy is to link the real economy with the financial sec-tor,” he says. “We are going to ex-pand into other sectors. Today, we are into oil and gas services – we have a joint venture with an inter-national company. We are also in-volved in a real estate development with another international compa-ny. We have a facilities manage-ment company, an insurance com-pany and an industrial company.”

Ambitious plans for growth in the region and beyond have always been part of the plan for Masraf AI Rayan

Steve Troop,CEO of Barwa Bank

CONVENTIONAL BANKING SYSTEM (INTEREST-BASED SYSTEM)

Not based on religious laws or guidelines – only secular banking laws.

Excessive use of credit and debt financing can lead to financial problems.

Not generally available through commercial banks. Venture capital companies and investment banks typically take control of an enterprise for start-up finance.

Trading and dealing in derivatives of various forms is allowed.

This principle is not applied. Returns to depositors do not depend on the bank’s performance. The customer does not share profit beyond predeterminated interest rates.

DIFFERENCES BETWEEN ISLAMIC AND CONVENTIONAL BANKING

CHARACTERISTICS Business framework

Balance between moral and material requirement

Equity financing with risk to capital

Prohibition of Gharar

Profit and loss sharing

ISLAMIC BANKING SYSTEM

Based on Shari’a laws. Shari’a scholars ensure adherence to Islamic laws and provide guidance.

The requirement to finance physical assets through bank ownership prior to resale reduces overextension of credit.

Available to provide equity capital to a project or venture. Losses are shared on the basis of equity participation while profits are shared on a pre-agreed ratio.

Transactions deemed Gharar are prohibited. Gharar denotes varying degrees of deception pertaining to the price and quality of goods received by a party at the expense of the other.

Returns are dependent on bank perfomance and not guaranteed. Risks are managed to ensure better returns than deposit accounts. The profit upside is more equitable than predetermined returns.

“The bank continues to show significant growth, stable and well diversified revenue streams, and positive results.”

Sheik Jassim Bin Hamad Bin Jassim Bin Jaber Al Thani, Chairman of QIB

“Our strategy is to link the real economy with the financial sector. We are going to expand into other sectors.”

Adel Mustafawi, Group CEO of Masraf Al Rayan

Source: Abu Dhabi Investment Bank


APRIL 15-16, 20134

Solidity and growth at the national bankQatar National Bank is on its way to becoming an icon in the Middle Eastern financial sector

Ahli Bank and the results of excellence

It may not be the biggest, but in only 30 years, Ahli Bank QSC has become one of the key firms in the financial sector in Qatar.

The bank was founded in 1983 with the purpose of providing banking services tailor-made for the needs of the country. Ahli Bank boasts a large integrated network of 17 branches in Qatar offering a host of products and services from corporate bank-ing, treasury and investments and retail to private banking and wealth management.

The bank is listed in the Qatar Stock Exchange, with a market capitalisation of nearly QR 6.2 billion or EUR 1.34 billion as at November, 2012.

From the origin of the bank, it was clear that Ahli Bank was born with a strong focus on the corporate and financial seg-ments. Qatar has experienced an economic boom supported by the oil and gas industry. The country needed the help of the financial sector to get funds for developing major infrastructure projects. Some analysts expect that Qatar will still see strong lending growth in the next dec-ade, so the future of the busi-ness of Ahli Bank at home is guaranteed.

According to SICO Research, a division of the Bahrain-based regional investment bank, Se-curities & Investment Company (SICO), Qatar has indicated that it will be undertaking ma-jor infrastructure projects worth QR820 billion or EUR 177 bil-lion over the next five years. This should lead to strong credit demand growth, in the area of 18 to 20 percent compound an-nual growth rate (CAGR) during 2011-2016, the report said.

But Ahli Bank also has a growing retail customer busi-ness. In 2011, the bank reported net profit of QR 442 million or EUR 95 million, the highest in the company’s history until that point. Nevertheless, 2012 trumped that figure, with a more than 5 percent rise in net prof-

it, reaching QR 465 million or EUR 127.7 million.

Ahli Bank has been recent-ly awarded the coveted “Best Commercial Bank in Qatar” by leading international finance magazine World Finance and by Arabian Business at the pres-tigious Arabian Business Qatar Awards. The award comes in recognition of Ahli Bank’s con-tinuous commitment towards providing excellent services to its banking customers, and its vision to implement internation-al best practices to ensure the delivery of trusted commercial

banking services.If we examine the financial

data, these awards come as no surprise. It’s worth noting, for example, the growth in total as-sets, to QR 19.7 billion or EUR 4.3 billion at the end of the third quarter 2012, even after the Qatar Central Bank last year ordered conventional banks to close their Islamic Banking op-erations by the end of 2011. Ahli Bank is the fifth Qatari lender by assets.

The growth of the business has been also healthy. Ahli Bank has a capital adequacy ratio of 22.1 percent NPL (Non Performing Loan). Coverage stood at 99 percent as of December 2011, something far from the num-bers of the banking system in Europe. This performance was recognised by the international rating agencies when Fitch re-affirmed the bank’s credit rat-ing of A- with a stable outlook, only two notches lower than Deutsche Bank, for example.

But even in Qatar, the financial system may face some handicaps. Experts expect some problems to access the funding. Accord-ing to a recent research report by Citi, “as Qatar proceeds with its expansionary strategy, the do-mestic banking system is facing growing challenges to support funding the country’s ambitious growth strategy. Strong credit growth averaging more than 30 percent over the last 18 months, which has largely outpaced that of customer deposits (averag-ing 17 percent over the same period), resulted in a sharp rise in loan-to-deposits ratios (LDR), exceeding 120 percent at end-June 2012,” said the analyst of the bank.

But the executives of the banks expect a very encouraging performance for the bank and they think the business could benefit from the government’s budget spending for the fiscal year 2012-2013. In fact, they see many investment opportuni-ties in the local market.

Since 1983, Ahlibank has served its clients through a full array of products and services within major business segments

2012 was a landmark year for Ahli Bank, as it posted a net profit of some EUR 127.7 million, the highest in the bank’s history

QATAR

If you haven’t already heard of Qatar National Bank (QNB), you soon will, as the lender is quickly expanding its footprint in the Middle East and North Africa (MENA) region. And if it continues to grow at the current pace, QNB will soon become one of the biggest global banks.

QNB was founded in 1964 with one clear objective: to help Qatar reach its potential. Fifty years later, it has become a global bank, offering retail, corporate and investment bank-ing services.

From the start, the lender has had a stable shareholder structure, with a 50 percent stake owned by the Qatar Investment Authority. Over a half century, the bank has climbed to first place in the Qatari stock market, with a market capitalisation of over $25 billion. At the beginning of 2012, the bank announced its new strategic plan for the next five years, which aims to make QNB Group a benchmark in Middle East and Africa.

Already the largest financial insti-tution in the MENA region with total assets of QR367 billion (EUR100.8 billion) at year-end 2012, QNB also has the largest international network of any bank in the region, covering countries in the MENA region, Eu-rope (France, Switzerland and the United Kingdom) and Asia.

And on top of that, QNB has the largest market share in the domes-tic business. The bank’s net profit is equal to nearly half the total profit of the 18 banks in the country and more than the half of their deposits, credit and loans.

The bank’s obsession with growth may have been derived from the need to diversify revenues in order to face the obstacles that may arise in Qatar. According to some experts, the Qatari banks’ margin spreads are expected to come under pressure through 2013, driven by asset spread contraction.

A Citi report suggests “margins are likely to contract by between 20 and 30 basis points in 2012, due to factors which include a lower demand for higher-yielding local currency loans, and a balance sheet shift towards low-er-yielding public sector lending.”

On a systemic level, the report notes, a move by national banks to in-

crease their lending towards the pub-lic sector will negatively impact their asset yields. Coupled with a decline in public sector deposits, and funding through more expensive private sec-tor liabilities, should further shrink banks’ net interest margins.

If QNB continues with its current hunger for growth, its international position will be much larger in the near future. Within the space of a few months, QNB has begun the due dili-gence process to acquire the Egyptian unit of Societe Generale; increased its holding in the Dubai-based Commer-cial Bank International to 40 percent; acquired an increasing stake in Man-sour Bank of Iraq to 51 percent; and

acquired a 49 percent stake in Libya’s Bank of Commerce & Development.

It seems QNB is doing its job well, as the latest results show a robust pace of growth. In 2012, net profit rose to QR 8.3 billion, 11.1 percent higher than the previous year’s figure.

Earlier this year, the bank’s perfor-mance was recognised by the maga-zine The Banker, which ranked QNB Group as the region’s most valued banking brand for the second con-secutive year. In 2012, QNB leaped five places to become the number one brand in the region, and moved up 77 places to 114th amongst the world’s top 500 banking brands. This

year it ranks 120 on the list.In a world obsessed with safety in

the financial sector, it’s worth point-ing out that QNB Group has also been named one of the World’s 50 safest banks, according to Global Finance magazine. The ranking was created through an evaluation of long-term credit ratings – from Moody’s (Aa3), Standard & Poor’s (A+ ) and Fitch Ratings (A+ ) – of the 500 largest banks worldwide.

The quality of QNB’s assets, along with the good projections for the fu-ture, are aligned with its current credit ratings, which are the highest in the region and on a par with the best global f i n a n c i a l ins t i tu -tions.

Ali Shareef Al-Emadi, CEO of Qatar National Bank

Sheikh Faisal bin Abdul Aziz bin Jassem Al Thani, Chairman of Ahli Bank

A non-profit financial institution, QDB is mandated to accelerate the development of the private sector in

line with Qatar’s National Vision.

Qatar Development Bank

Established

1997Total assets (Q4 2011)

QR3.7 bn

Named Best Islamic Bank in Qatar for 2011, QIB holds a 36% share of the Islamic banking market in Qatar,

and a 10% overall market share.

Qatar Islamic Bank

Established


QR73.2 bn

This is one of Qatar’s largest Islamic banks. In October, Moody’s upgraded

Masraf Al Rayan’s ratings to A2/Prime-1 with a stable outlook.

Masraf Al Rayan

Established


QR61.6 bn

The largest bank in the MENA region, QNB was named the region’s Most

Valued Banking Brand by The Banker in 2012 and 2013.

QNB

Established

1964 Total assets (Q4 2012)

QR367 bn



Qatar’s ‘next generation bank’

This past summer, Qatar’s al khaliji surprised the banking world once again by offering three 150-gram gold bars – one a year for three years – to customers taking out a new mortgage loan. The bank’s Golden Reward product empha-sised the exclusive service targeted at affluent and high net worth cus-tomers provided by this leading fi-nancial institution. Indeed, al khal-iji took home the Best Premium Banking Service and Best Struc-tured Product at the annual Banker Middle East Product Awards this year, capping what has been a pio-neering, and highly successful, five years for this young bank.

Launched in 2008, al khaliji pro-moted itself as the “next genera-tion bank”, catching the financial world’s attention out of the gate by offering Qatar’s first eco-friendly ATMs, featuring environmentally friendly nanotechnology screen displays, power and paper saving features. Its Fusion account was the first interest-bearing service to combine the benefits of both a savings and checking account. The following year, the bank launched two more innovative products, both linked to gold prices: the country’s first wealth management guaran-teed structured product and a struc-tured deposit, which was heavily oversubscribed. By early 2010, al khaliji was ranked third in Qatar for performance by CPI Financial.

By 2011, al khaliji had posi-tioned itself at the forefront of innovative banking. Its Qatar-centric, corporate and treasury led approach and customer-focused strategy had resulted in incredible outcomes, and its executives were being sought after in regional and global conferences for their input and expertise. The bank con-tinued to surprise the finan-cial world with its growth, recording a net profit of QR427 million ($117 mil-

lion) for 2010, up 155

percent over 2009. Also in 2011, the bank’s investor website was ranked as number one across the Middle East, and at the beginning of De-cember, Fitch affirmed al khaliji’s Long Term Issuer Default Rating of ‘A-’ with a Stable Outlook, a bank milestone that was awarded at the beginning of 2012.

This trailblazing trajectory was capped by CPI’s award for its pre-mium service this past spring. In fact, the product is a full package of services comprised of seven differ-ent components under one brand: a dedicated relationship manager, access to upgraded and exclusive Premium centres at the branches,

wealth management services, pref-erential rates on all types of loans, family benefits, and complimentary ‘Priority Pass’ membership. Addi-tionally, the premier service is con-venient Doorstep Banking, which provides for residential or place of work visits from the client’s dedi-cated relationship manager, elimi-nating the need for branch visits.

Headquartered in Doha and list-ed on the Qatar Exchange since 2007, al khaliji offers a full range of banking products and services to premium, business, corporate and international customers in Qatar. Its subsidiary in Paris, Al Khaliji France, boasts a network of branches in the UAE covering Dubai, Sharjah, Ras Al Khaima and Abu Dhabi, providing cus-tomers and businesses with local, regional and international bank-ing services. The group boasted QR33.7 billion ($9.26 billion) in total assets and QR17.3 billion ($4.75 billion) in customer depos-its as of 31st December 2012.

From the time it launched opera-tions in 2008, al khaliji has shown growth in every quarter. Manage-ment’s stated intention is to remain focused on major corporate and business clients by offering them financing solutions directed to their particular needs. The bank’s quar-terly results continue to reflect the success of this strategy.

On the release of third quarter 2012 results, in which al khaliji showed an increase in net profit of 5 percent to QR378 million ($103 million), Group CEO Robin McCall comments: “al khaliji’s core business is Qatar-centric with a GCC cover-age model. This single market has experienced robust growth rates and our sentiment for sustained returns remains positive given the strong underlying fundamentals. Qatar’s hydrocarbon wealth and planned economic diversification bolstered by significant infrastructure build-out in the coming years will drive growth in the banking sector.”

Al Khaliji offers next-generation banking by blending tradition with innovation

“Our clear business strategy is aligned to the economic reality of the region.” Robin McCall, Group CEO of al khaliji

Growth that reflectsa robust economy

Commercialbank, Qatar’s largest pri-vate sector bank, has recorded a profit every year since incorporation in 1975. Today, with Qatar’s economy expand-ing at a robust pace, Commercialbank’s sound business strategy and diversifi-cation are allowing it to share in that growth.

The bank’s results for the year 2012 showed a 7 percent increase in net prof-it compared to the year before. Assets rose 12 percent, while loans and depos-its grew 17 and 9 percent, respectively.

On their own, the results were un-questionably solid, but given that 2011 was the bank’s best year to date – with a 15 percent jump in profit – the figures are even more remarkable. His Excel-lency, Abdullah Bin Khalifa Al Attiyah, Chairman of Commercialbank reiter-ated his belief that Commercialbank’s success reflects the strength of Qatar’s economy and the bank’s strategic rea-lignment within it.

The Chairman said the bank has played an integral role in the growth and prosperity of Qatar for several decades, and that it remains committed to playing a central role in the devel-opment and diversification of Qatar’s economy.

“2012 has been another difficult year for the world economy... Against this backdrop, the Qatar economy has continued to grow,” said the Chairman. “Commercialbank has successfully grown its lending and diversified rev-enue streams to deliver a record profit for the full year. Qatar’s economy is expected to be driven by the Govern-ment’s spending programme in 2013 and Commercialbank is well posi-tioned to support the future economic growth of Qatar and to deliver ongoing value to its shareholders”

Headquartered in Doha, Commercial-bank has total assets of QR 80 billion ($21.97 billion) at year-end 2012. The bank offers a comprehensive range of financial services, including corporate, retail and investment services, as well as owning and operating exclusive Diners Club franchises in Qatar and Oman.

A strong capital base and decades of expertise have allowed Commercial-

bank to take a cutting-edge role in Qa-tari finance. The bank currently offers banking services through a network of 29 branches, 162 ATMs, Internet Banking, Mobile Banking and the larg-est EFTPOS network in the country. In 2011 the bank underwent a strategic realignment of its corporate and retail businesses and entered into the bancas-surance market.

These decisions are now paying off, said Hussain Al Fardan, Commercial-bank’s Managing Director. He added, “Commercialbank has successfully achieved strong earnings in a challeng-ing operating environment. The bank has protected its core business in 2012 whilst delivering alternative sources

of income. Our asset quality remains strong and we remain both well capi-talised and funded to target growth sec-tors of the economy in the year ahead.”

A successful diversification strategy has also expanded Commercialbank’s GCC footprint through a 34.9 per-cent shareholding in National Bank of Oman (NBO) in Oman and a 40 percent shareholding in United Arab Bank (UAB) in the United Arab Emir-ates, both of which are strongly posi-tioned to grow their businesses in their respective domestic markets. NBO is the second largest bank in Oman with 66 branches in that country along with three branches in Egypt and one in Abu Dhabi, while Sharjah-based UAB op-erates 15 branches across the emirates.

NBO and UAB contributed QR 259 million to Commercialbank’s net profit, according to the December 31 report, a 19 percent increase from NBO and a 24 percent jump by UAB. Andrew Stevens, Commercialbank’s Group CEO, commented, “Commer-cialbank has maintained the progress seen in the first half of the year to de-liver a record full year profit. The Qatar market has been extremely competitive in 2012 and the Bank has worked hard to maintain market share in a lower margin environment in which pricing pressure has remained... Our affiliated banks in the UAE and Oman have de-livered outstanding financial perfor-mances throughout 2012 with strong growth in lending, operating income and profitability.”

Commercialbank enjoys strong credit ratings of (A) from Fitch, (A1) from Moody’s and (A-) from Stand-ard & Poor’s. The bank is listed on the Qatar Exchange and was the first Qatari bank to list its Global Deposi-tory Receipts as well as bonds on the London Stock Exchange. Additionally, Commercialbank’s Swiss Franc bond issuance in December 2010, listed on the SIX Swiss Exchange, was the first public bond issuance by a Qatari bank in Switzerland. In 2011, the bank was awarded the JP Morgan Quality Rec-ognition Award for Operational Excel-lence for the seventh consecutive year.

Established in 1975, Commercialbank has invested in diversification and human capital, providing a strong foundation for growth

“Our affiliated banks in Oman and the UAE have, again, delivered outstanding financial performances. ” Andrew Stevens, CEO of Commercialbank

Part of the Barwa Group, Barwa Bank is Qatar’s fastest-growing bank. Net profits for 2011 were 882 percent higher than those posted in 2010.

Barwa Bank

Established


QR25.3 bn

Named “Best Commercial Bank in Qa-tar” at the 2012 Arabian Business Qatar Awards, Ahli Bank enjoys a credit rating of A- with a stable outlook from Fitch.

Ahli Bank QSC

Established


QR 20.6 bn

In al khaliji’s second year, CPI Financial already ranked the bank third in Qatar

for performance. In 2012, Fitch gave it a Long Term Issuer Default Rating of A-.

al khaliji

Established


QR33.7 bn

This bank boasts strong credit rat-ings. Fitch, Moody’s and Standard & Poor’s have awarded Commercial-

bank A, A1 and A-, respectively.

Commercialbank

Established


QR80 bn



Qatar’s building industry has enjoyed unprecedented growth in recent years, the result of a buoyant econo-my driven by the oil and gas sectors but with pressing needs to develop major infrastructure, housing and so-cial projects.

As a result, the skyline and even the geography of Doha have undergone a sea-change, with projects such as the new international airport, the Katara Cultural Village and the artificial is-land called The Pearl Qatar, a 4 mil-lion square-metre exclusive property development built on reclaimed land.

Today, the building boom continues but with a different focus. On the one hand, as Qatar prepares for the FIFA Soccer World Cup in 2022, plans are well underway for the construction of hotels, stadiums and other related in-

frastructure. According to a report by Commercialbank Capital, spending on the World Cup preparations could reach as much as $150 billion in the next five to six years.

However, the World Cup won’t be the only catalyst for growth. The Qatari government, having invested heavily in the hydrocarbons sector over the past decade, is now moving ahead with plans to promote non-oil industries.

Investments in tourism, transporta-tion and utilities, including solar en-ergy, will provide opportunities for builders, as will projects in education and health care. The Qatari govern-ment plans to spend $225 billion on construction and infrastructure pro-jects in the 2011-2016 period. Com-mercialbank Capital estimates that the

total construction market size through 2020 could be as large as $315 billion.

Two of the companies which are set to profit from this activity are Velosi and the Qatar Building Com-pany (QBC), both featured on this page. Neither one is a newcomer; each has established itself as a major player in the building sector and has strengths in particular areas, Velosi as a contractor to the oil and gas industry worldwide; and QBC with its history as a civil engineering company which has branched out into building mate-rial supply trading and other areas.

Both are well-positioned to take advantage of the upswing in construc-tion as Qatar’s government seeks to create a sustainable economy with a wide range of sources for producing wealth, apart from just oil and gas.

Qatar builders riding a wave of growthBy 2016, the Qatari government will have spent upwards of EUR 176 billion on new infrastructure and construction projects

QBC prepared for World Cup construction boom

Qatar’s government plans to spend more than $100 billion (£ 63 billion) over the next decade on developing infrastructure for the 2022 FIFA World Cup competi-tion. One of the companies likely to benefit from this boom is Qatar Building Company (QBC).

As the company’s Managing Director Ali M T Mustafawi puts it: “We realise that there will be a lot of opportunities across our divisions. That is why from now until 2022 it is worth making high capital investments.”

He says that for events such as the World Cup, “It is not about how com-plicated a project is, but more about how quickly and efficiently you can build sta-diums of the highest standards, and the necessary community links to them.”

Qatar’s construction industry is fore-cast to grow 12 percent a year through 2015, as a result of World Cup prepa-rations. The building sector will also

be boosted by Qatar’s National Vision 2030, which has a budget estimated at $800 billion to help diversify the econo-my and reduce the country’s dependence on the petroleum and gas industries.

QBC will likely be a beneficiary from all that development spending. A re-cent report by Commercialbank Capital placed the company among Qatar’s top 10 builders in 2011, with $419 million in new contracts.

QBC has already secured itself as the most self-reliant company in the Qatari infrastructure market. Established in 1971 as a civil engineering and build-ing contractor, QBC has since built up a broad client base that ranges from gov-ernment agencies, international contrac-tors, private developers and oil and gas companies.

“We are involved in almost every major public project in Qatar,” says Mr Mustafawi, “whether directly as a con-

tractor, or indirectly by supplying the heavy equipment and machines, or the construction materials such as concrete, asphalt and steel.”

QBC also has different types of col-laborations on a per-project basis with prestigious multinational companies.

When the company was founded by Mr Mustafawi’s father, Mohammed Tayeb Mustafawi, Qatar was enjoying its first development boom, with the construction of schools, hospitals, public housing, and oil and gas projects.

Over the years, QBC has seen con-siderable expansion of its activities, opening its production capabilities in 1981; now, production includes ready-mix and precast concrete, aero-nautical-quality asphalt, steel, and fill, sub-base and aggregate materials. Its trading division began in 2000, when it started selling the world’s leading brands of heavy equipment.

Today, QBC continues to explore new avenues and relationships with technol-ogy-holders to develop its business and uphold its command of the industry.

“What we look for are new areas of business that produce solid, sustain-able ROIs,” Mr Mustafawi says. “We create synergies with reputable com-panies by showing them the platforms we provide in terms of value-added businesses, production facilities and factories, fleet of equipment, engi-neering and market know-how, and the long-established client relation-ships critical for certain projects.”

Mr Mustafawi underscores that QBC uses the latest technology to be more ef-ficient, protect the environment and stay at the industry’s forefront: “We lay em-phasis on the latest technology and sup-port high levels of capital investment.”

The 2022 FIFA World Cup construction spend will likely benefit Qatar Building Company (QBC), the market leader

Raising the standards in oil and gas services

Acquisition of other companies pro-viding complementary services is one way in which businesses can grow, and can be particularly successful when an international market leader links up with a local firm.

That’s the thinking behind the merg-er this year between global inspection, quality assurance, and certification company Velosi and Qatar Center for Career Development (QCCD), spe-cialising in management development and training programmes.

Founded in 1982, Velosi is a lead-ing provider of services to the oil and gas industries worldwide, operat-ing through regional headquarters in the United States, the UK, Malaysia, South Africa and the United Arab Emirates. In 2011 it became part of the Applus Group, turning the Span-ish multinational into one of the larg-est companies in the field of safety and quality.

Velosi has 63 offices in 36 countries worldwide, and in the Middle East employs around 1500 people in seven countries. A market leader in Qatar’s energy sector, its clients include lead-ing national and multinational oil and gas companies, such as Qatar Pe-troleum, Qatargas, RasGas, Qapco, BP, Shell, Exxon Mobil, Petronas, ONGC, and Chevron.

Outside of the energy industry, the company sees huge potential for winning business in the construction sector as major new infrastructure projects get under way in the run up to Qatar hosting the FIFA World Cup in 2022 as Velosi is diversify-ing to infrastructure sector with the help of Applus.

QCCD was established in 2007

to offer government and private sector clients a complete range of management soft-skills training programs, cost-effective human re-sources consultancy, and executive search services.

Following Velosi’s acquisition of around 75 percent of QCCD’s shares, a new entity, Velosi-QCCD, was launched in April last year. Registered

in the Jersey in the Channel Islands, Velosi-QCCD will operate as an off-shore arm of Velosi, Qatar.

“This new venture is set to provide a fresh and innovative concept of hu-man resources, management, execu-tive, and leadership training under one roof,” says Sudhir Pandra, Velosi’s Regional Manager, Middle East said at the time the merger was announced.

“Our combination unites two mar-ket leaders – Velosi and QCCD – in asset integrity, health, safety and en-

vironment, quality assurance, qual-ity control, engineering services, and now all forms of specialist HR con-sultancy and soft-skills management training, and executive development.”

Pandra says that when they were separate companies Velosi and QCCD shared a common objective to ensure absolute customer satisfaction, provid-ing a professional and ethical service.

“We remain dedicated to this objec-tive now that we are operating as one. Together, Velosi-QCCD is privileged to serve more than 200 client organi-zations in more than 45 countries. The depth of our resources and the breadth of our reach are now stronger than ever,” he said.

One of the objectives is to estab-lish an academy to provide training to meet specific human resources needs in support of Qatar’s National Vision 2030.

Dr Shaukat Chandna, Velosi- QCCD’s Managing Director, said, “There is a great need for proper HR consultancy standards to be estab-lished in Qatar to realise the goal set under the National Vision 2030.”

He says the merger of the two market leaders has created an entity with “extraordinary capability” that will provide its clients with access to “world-class HR solutions.”

“We are now uniquely positioned to provide a diversified range of client organisations with the most compre-hensive set of solutions available to extend mission critical services and assure they are managed, secured, compliant, and developed in line with international best practices of man-agement capabilities and values,” Dr Chandna said.

Velosi has emerged as the preferred supplier of management ser-vices in Qatar’s energy sector

Sudhir Pandra, Middle East Regional Manager of Velosi

Qatar’s building industry is expected to grow by 12% a year through 2015



Building a global portfolioEstablished just seven years ago, Qatar Investment Authority (QIA) is on target to become one of the world’s four largest sovereign wealth funds by 2015, along with those of China, Singapore and Abu Dhabi. With an estimated $85 bil-lion in total assets, QIA has a ma-jor role to play in diversifying the country’s revenue sources.

As Qatar’s LNG exports ap-proach their peak capacity, QIA, already the world’s 12th largest sovereign wealth fund, is set to benefit from greater purchasing power. Indeed, the fund and its various subsidiaries (Qatar Hold-ing and Qatari Diar) have had more than $30 billion at their disposal to invest in 2012.

This follows a considerable spending spree during 2010-2011. From retail and real estate to energy and banking, the Doha-based fund continues to build its international portfolio at a remarkable pace.

In May of 2010, QIA purchased the UK’s landmark Harrods Group from Mohammed Al-Fayed for $2.2 billion. Plans are in the works to build a Harrods hotel in Kuala Lumpur (and later in New Y ork City and Paris) next year. This acquisition was followed in September by a $5 billion frame-work deal between QIA and the Greek government paving the way for future investment in sev-eral sectors, including energy and banking. Later that same year, QIA purchased a 5 percent stake in Banco Santander’s Brazilian arm, Banco Santander Brasil, for $2.7 billion.

In 2011, Qatar spent $466 mil-lion on the Shell oil company’s building, Shell Centre in London, a precursor to its purchase of a significant stake in Royal Dutch Shell. Along similar lines, QIA has recently picked up a 3 percent stake in France’s Total and is in talks to buy a stake in Italy’s Eni. The fund has shares in Energias de Portugal and Iberdrola of Spain, as well.

In sports, the year 2011 also had significance for Qatar. One of Eu-rope’s top football teams, FC Bar-celona, began displaying the logo of Qatar Foundation – headed by the Emir’s wife Sheika Mozah; and QIA bought a 70 percent stake in

French football club Paris St Ger-main. This year, the fund swept up the remaining 30 percent.

QIA’s strong incursion into France continued when it snatched up a 26,000 square-meter retail complex on Paris’ emblematic Avenue des Champs Elysé es, for EUR500 million. One of the most celebrated promenades in the world, Champs Elysé es is the ad-dress of luxury brand Louis Vuit-ton, another name recently added to QIA’s portfolio of investments; in March this year, the fund ac-quired just over a 1 percent stake in Louis Vuitton Moet Hennessy group.

In the UK, QIA’s name is linked to various important real estate projects, such as the redevelop-ment of the 95-storey Shard Sky-scraper, London’s Olympic Park and One Hyde Park residences. Qatar’s real estate, banking and in-frastructure investments in Britain top $16 billion.

Headed by the Qatari Prime Minister, Sheikh Hamad bin Jas-sim bin Jabr al-Thani, QIA oper-ates through two major invest-ment vehicles. Qatar Holding, incorporated in 2006, is the main vehicle for strategic and direct in-vestments, while Qatari Diar Real Estate Company is the fund’s prop-erty investment arm.

Established in 2005 and with an estimated $35 billion in assets, Qatari Diar has investments in the UK, France, Thailand, Morocco, Egypt, Oman and Syria, among others. Currently the company has more than 49 projects either un-der development or in planning at home and abroad.

Most of QIA’s high-profile in-vestments, however, have been made through Qatar Holding, in-cluding commitments in construc-tion company Hochtief and auto-makers Volkswagen and Porsche. Focusing on long-term gains and taking advantage of growth op-portunities, Qatar Holding gen-erally makes long-term strategic investments, mixed with the occa-sional opportunistic position from time to time.

Spread across different asset classes, including listed securi-ties, alternative assets and private

equity, investments have tended to be more focussed in Europe and Asia, with a few in the US, and in-clude France’s Lagardere Group, London’s Canary Wharf, Singa-pore’s Raffles Medical Group, and the UK’s second biggest gro-cer, Sainsbury’s.

With its eye on the future, QIA has also invested heavily in the clean technology sector, having created in 2008 a € 287 million fund for low carbon investment, in collaboration with the UK’s Carbon Trust – an independent, non-profit fund set up by the UK government that provides special-ist support to help businesses and the public sector boost returns by cutting carbon emissions, saving energy and commercialising low carbon technologies.

In March 2010, Qatar Holding signed a letter of intent with Qa-tar Science and Technology Park, Porsche and Volkswagen to launch a series of initiatives covering ar-eas such as education, research and commercial applications of a broad range of technologies, in-cluding both engineering and fuel technology.

Qatar Holding has also shown a particular affinity for financial institutions. The company holds shares in Barclays, Credit Suisse and the London Stock Exchange, in addition to shares in the In-dustrial and Commercial Bank of China and the Agricultural Bank of China.

At the end of the day, the fund’s main mission is to use the ex-cess revenues from Qatar’s oil and gas industry to diversify the national economy, help moderate the effects of fluctuating oil and gas prices, and ensure continued growth after hydrocarbons re-sources are exhausted.

Consequently, Qatar Holding also invests in Qatar, and cur-rently owns shares in Qatar Tel-ecom, Qatar National Bank, the Qatar Exchange and various local banks. Through Qatari Diar, QIA has invested in major infrastruc-ture projects such as Lusail City, the bridge between Qatar and Bah-rain, and in a joint venture with Deutsche Bahn, the development of the national railway network.

Qatar Investment Authority looks for quality investments around the world

The Qatar Investment Authority owns London’s Shard, the EU’s tallest skyscraper

Positioning Qatar as a regional financial centre Most people visiting Qatar do so for business reasons. However, this is changing as the tiny Gulf state pursues its ambition to be-come a major player on the re-gional and international tourism scene by turning itself into a cen-tre for meetings, sports, culture, and leisure.

Just how confident the Qatari authorities are about attracting huge numbers of future visitors can be judged by the size of Do-ha’s new international airport, due to open next year. Initially it will cater to 24 million passengers, but further expansion will increase the number to 50 million after 2015. The airport has been designed spe-cifically for the Airbus A380 twin-deck super jumbo, the biggest pas-senger aircraft ever built.

The World Travel and Tourism Council (WTTC) predicts that tourism in Qatar will grow by around 13 percent this year and double over the next 10 years – the fastest growth rate in the indus-try in the Middle East. The Qatar Tourism Authority (QTA) is tar-geting a 20 percent increase in the industry over the next five years.

And that’s ahead of Qatar’s hosting of the 2022 FIFA World Cup, an event that will showcase the country to a TV audience of billions across the globe.

The Qatari government is eager to diversify the economy away from overdependence on hydro-carbons and believes that tourism has enormous potential in this re-gard. This is supported by the in-dustry’s rising contribution to the economy, both directly and indi-rectly – estimated by the WTTC at $5.5 billion last year, and expected to reach $11.25 billion in 2022.

Qatar has invested significantly in the development of its tourism and transport infrastructure, build-ing new hotels, resorts, and cultur-al centers, and the pace of invest-ment will accelerate in the run up to the World Cup. The government plans to spend some $20 billion towards the development of tour-ism projects, and $65 billion on infrastructure to facilitate tourist movement during the event, in-cluding a Metro system for Doha.

Meanwhile, Qatar has been

busy broadening its tourist ap-peal. It has already established a reputation for successfully staging large-scale events – particularly international sporting tourna-ments, attracting large numbers of tennis, golf and athletics fans. Last year, it staged the AFC Asian Cup, and for the mega-championship of 2022 it is building nine spectacu-lar new stadiums.

Cultural attractions in Qa-tar range from museums focus-ing on Arab and Islamic herit-age and art, to the Waqif Art

Centre, Katara Cultural Village, and the iconic Qatar National Convention Centre. Shoppers can head for the traditional souks or buy leading international brands in sleek modern malls.

Business tourism accounted for 72 per cent of the total number of tourists who arrived in 2011, and Qatar is firmly on the map as a destination for meetings, incen-tives, conventions, and exhibi-tions (MICE) tourism. Since open-ing in December last year, Qatar National Convention Centre alone has attracted more than 136,000 visitors hosted to over 200 events, including major international con-ferences.

Overall visitor numbers are still relatively modest compared with some other Gulf nations, but the upward trend is unmistakable and Qatar is determined to grab a ma-jor share of the lucrative regional tourism market.

Last year was the most success-ful yet. According to the QTA, 2011 saw an increase of around 50 percent in visitors from the GCC region, compared to 2010, with some 845,600 arrivals. Interna-tional tourism figures were also impressive, with a 12 per cent in-crease. Asian tourists accounted for 58 per cent of the total, while tourism from European countries was up by 15 percent.

Doha’s hotels enjoyed a record year in 2011, with revenue from four and five star hotels exceeding $1.3 billion.

The number of hotels in Doha has doubled since 2010 to around 12,000. Eight new hotels opened last year and more are under con-struction. Famous international brands like St Regis and Hilton have recently joined brands like W, Four Seasons, Marriott, and Sheraton in the capital.

Hotel occupancy rates across the country peaked at 85 per cent during the recent Eid Al Adha holiday, held at the end of the Hajj, the annual Muslim pilgrim-age to Mecca. With more than 10,300 visitors arriving from all GCC countries for the celebra-tions, Qatar appears to be on track to become one of the main tourist spots for GCC citizens.

Already acknowledged as the best bourse in the MENA region, Qatar Exchange has a new CEO to take it towards its goal

Celebrating its 15th year, the Qatar Exchange was the best performing stock exchange in the MENA region in 2010 and 2011

Qatar Exchange is the first bourse outside the NYSE Euronext family of exchanges to use the Universal Trading Platform

Several GCC-listed companies are actively working towards listing on the Qatar Exchange

At year end 2011, the Qatar Exchange had a market capitalisation of over QR457 billion (EUR 97.4 billion)



Until now, Qatar’s rapid economic progress has largely been centred around the exploitation of vast amounts of oil and gas reserves that the Arab state boasts. With speedy growth comes the challenge of pre-serving cultural traditions and this is a problem that confronts many societies in a swiftly globalising and increasingly connected world.

Qatar’s escalation has created strains between the old and the new in almost every aspect of daily life. In the modern, highly-competitive world, the capitalistic approach to business often clashes with tra-ditional relationships and values. Moreover, the greater emancipation and variety that complement eco-nomic and social progress can pose challenges to deep-rooted social val-ues cherished by a society.

Qatar is trying to mould mod-ernisation around local culture and prove that modern life and tradition-al values can indeed be compatible, and it is doing this through the Qatar National Vision 2030 (QNV 2030) programme.

The QNV 2030 outlines four guiding principles, on the basis of which the state aims to create a sustainable economy and enhance the standard of living of its people. Therefore up until the year 2030, expansion in both the public and private sectors will be centred on human, social, economic and envi-ronmental development.

The main objectives of the QNV2030 are to create a society that is educated, capable of playing a key role in forging global partner-ships, and one that maintains a bal-ance between economic and social development.

In addition to this, Qatar’s govern-ment feels that community develop-ment plays a vital part in obtaining the targets it sets. Any advancement in business or science and technol-ogy that fails to engage with and nurture culture and art will not be fully beneficial to the state – a strat-egy that highlights the importance of culture in Qatar’s present and future.

The Katara Cultural Village will play a significant role in this cultural development. It will exhibit art from Qatar and all around the world, as part of the state’s drive to nurture natural talent by providing Qataris with the opportunity to be inspired by art, both old and contemporary.

In an ever-changing and digital-ised global world, Katara is eager to offer a platform where Qataris can keep hold of their roots and herit-age, while still embracing diversity and rejoicing in similarities with the cultures of the world.

Recently Katara and Blooms-bury Qatar Foundation Publishing (BQFP) announced a partnership to initiate and support cultural activi-ties through the development, pro-duction and circulation of cultural publications.

According to Hanouf Al-Buain-ain, Director of BQFP, Qatar wants to bring culture out to the broader consciousness, and at the same time develop a vibrant literacy publishing scene within the state. He foresees that this joint venture will result in Qatar producing a number of books in English and Arabic in the imme-diate future. He also thinks that the

Culture as important pillar for growth Qatar strives to develop the nation’s potential whilst maintaining culture at the nation’s core, thereby blending modernity with traditions

One of the first sights to be encoun-tered by travellers arriving in Doha in the near future will be the new National Museum of Qatar.

Currently being built at the south end of the Corniche, the striking complex of disk-shaped pavilions will celebrate the culture, heritage and future of Qatar and its people.

The innovative design is the work of renowned French architect Jean Nouvel, winner of the prestigious Pritzker Archi-tecture Prize. Hyundai Engineering & Construction of South Korea was award-ed the $434 million contract by Qatar Museums Authority in 2011, and the opening is scheduled for December 2014.

While the look of the new museum is uncompromis-ingly modern, its scattering

of intersecting disk-like components are designed to echo the petals of the de-sert sand rose. Nouvel, whose declared intention is to reflect the country’s van-ishing Bedouin culture, describes it as “a modern-day caravanserai.”

Built from locally sourced concrete

and steel, the museum will comprise 430,000 sq ft of indoor space, includ-ing 86,000 sq ft of permanent gallery space, 21,500 sq ft of temporary gallery space, a 220-seat auditorium, a 70-seat food forum and TV studio, two cafes, a restaurant, and a museum shop. Sur-rounding it will be a 1.2 million sq ft landscaped park in the style of a Qatari desert landscape.

The restored Fariq Al Salatah Palace, which has served as Qatar’s national museum since 1975, is integrated into the design. Originally built in the early 20th century by Sheikh Abdullah bin

Jassim Al Thani, and for 25 years the seat of government, the pal-

ace is being preserved as the heart of the new museum.

“At this unpar-

alleled new institution, Qataris will be able to discover more about their im-mediate ancestors and their roots in the region, learn about the formation of Qatar’s early cities, and above all be ex-posed to the historical, material culture and intangible heritage represented in the collections,” says Peggy Loar, the National Museum’s director.

However, it is not just Qatari citi-zens that the new museum is intended to attract.

Qatar, which already boasts a Muse-um of Islamic Art, an Orientalist Muse-um, and a Museum of Modern Islamic Art, is targeting 20 per cent growth in tourism over the next five years, and culture will play an important part in pulling in visitors, particularly from other GCC states, such as Saudi Arabia, Kuwait and the United Arab Emirates.

Qatar’s new national museum aims to attract Qataris and tourists

A celebration of culture

Qatar has placed culture and heritage at the core of its develop-ment strategy for the future, thus harmoniously blending tradition and modernity

Katara: living culture

Realised out of a vision to estab-lish Qatar as a cultural beacon of the Middle East, the cultural vil-lage at Katara is a world-class exhibition space that has been designed to spur the participation of Qataris in cultural activities and encourage greater exploration of the emirate’s rich heritage.

A true nation-building endeav-our, the $82-million project is held as a key contributor to the social and human development of the country.

Built on reclaimed coastal land between Doha’s West Bay and The Pearl-Qatar, just to the north of the capital’s city centre, Katara includes heritage centres, librar-ies, art galleries and other aca-demic facilities, in addition to re-tail outlets, coffee shops, museum facilities and market areas.

Katara had a soft opening in October 2010 during the Doha Tribeca Film Festival (DTFF).

According to Marcio Bar-bosa, Managing Director of Katara and former Joint Direc-tor at UNESCO, the cultural village has the challenge of, on one hand, preserving the tradi-tions and historic values of the country and, on the other, “of-fering cultural opportunities” – modern ones through different manifestations, like music, art, theatre and cinema, among oth-ers. “The idea is to show that, in culture, the country has a strate-gy of coexistence of the ancient and the new,” he says.

Many Qatari organisations al-ready have their offices at Ka-tara, including the Qatari Society for Engineers, Qatar Fine Arts Society, Visual Art Centre, Qa-tar Photographic Society, Child-hood Cultural Centre, Doha Film Institute, and the Qatar Music Academy.

The 247-acre cultural village features a massive open amphi-theatre, opera house, cinema that can double as a drama theatre, a multipurpose hall, beach, handi-crafts souq, book market, inter-national restaurants and cafes,

and ample space for visitors to stroll around the different areas of the project.

The themed restaurant area has eateries that are exclusive to the Middle East and Katara’s mina-ret centre is based around three towers, one of which – a hotel – will be Qatar’s tallest.

The purpose-built cultural village of Katara has already hosted various high-profile events and spurred many Qatari organisations to set up there

“The idea is to show that, in culture, the country has a strategy of coexistence of the ancient and the new.” Marcio Barbosa, Managing Director of Katara

partnership will initiate a common cultural awareness that will allow Qataris to appreciate cultures from across the world and will ultimately reinforce the development of a crea-tive and innovative Qatar, as well.

A prominent event on the cul-tural itinerary is the Doha Tribeca Film Festival, the annual cultural showpiece of the Doha Film Insti-tute. Held last year from 17th-24th November, the festival showcased homegrown talent with a selection of 19 films by local filmmakers, including nationals and expatriates based in the country.

The 2012 edition marked the largest exhibition of Made in Qatar films, underlining the significant strides achieved by Qatar’s emerg-ing film industry, with 15 premieres being shown as part of the overall festival line-up. Another 87 films were screened from across the globe. The films competed for the Made in Qatar development award of $10,000, awarded by an inde-pendent jury.

The Qatari cultural revolution now also has a website to act a reference point. The Minister of Culture, Arts and Heritage HE Dr Hamad bin Abdulaziz al-Kuwari re-cently launched the website for the ‘Qatar cultural gate.’ The project forms part of the Ministry’s plan to improve its services to keep pace with the developments in the field of information technology.

The Emir of Qatar accepting the honour to host World Cup 2022

april 15-16, 2013 qatar - globus vision · to the qatar 2022 supreme commit-tee the responsibility...

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