By Steve Martin
Head of Corporate Communications and Marketing,
Qatar Financial Centre Authority

Not much more than a decade ago Qatar was seen as a small peninsular in the Arabian Sea struggling to balance its budget and to meet its obligations. Today it is one of the world’s wealthiest countries with a GDP per capita that is considerably more than that of the US, the UK or Japan, and closing in on the top spot.

Qatar is rapidly becoming a key player in the global energy supply chain and because of its increasing wealth (principally from natural gas) and its investment and development strategy it is also working to develop its financial sector. This is why the Qatar Financial Centre was established in 2005. But why have another regional financial centre, when there has been one for over 30 years in Bahrain and Dubai has been making waves since 2003 with the Dubai International Financial Centre? Can the region sustain all three, or even more?

The answer, seen from a communications point of view, depends on where you are based. A journalist in Dubai will say no, and Dubai is now well ahead on points. Bahrain will argue that it has been the traditional centre for finance and Dubai is as much noise as substance. And a journalist from Europe or the US will probably be a bit patronizing and say only time will tell for any of them.

What many journalists are failing to see (including domestic journalists in the region) is that there is something else going on. It is not a three horse race, and it is not a straight sprint to the finish. There are many factors in play now that were not there as little as three years ago. Choice, for one. An international bank looking with increasing interest at the Middle East may take up to a year to actually locate an office there. Some that started looking at this possibility only had two choices when they started the process. Then along came the QFC. So they are licensing in two centres, and a few in all three.

But – in so many respects – the region is maturing. Everything from the latest gadgets, to a complete range of the world’s most luxurious cars, to banking products (both conventional and now increasingly Islamic) are in increasing demand. Dubai is seeing a serious beefing up of the international media coverage of the region – not just sales offices but real journalists, reporting for top titles on politics, business and lifestyle. That shows that there is a lot more interest in what is going on in this region, not just conflict and tension (though there is still plenty of that) but financial stories like Sovereign Wealth Funds, the price of oil, the emergence of new markets like Qatar, and what the Gulf is really about.

Will three or more financial centres survive in the Gulf? The subjective answer is they will, partly for their own reasons and partly for the greater good of the region. Maturity will help them to specialise and deepen, as well as share and possibly even combine. Looked at today one might guess Dubai may end up as the regional centre for investment banking, and possibly the largest regional bourse, while Qatar may be the region’s insurance and asset management hub, and perhaps Bahrain morphs from offshore finance to fund administration and Islamic finance. But don’t forget Saudi Arabia, which has the capacity to out-invest all of them. And where might the recent investments by Dubai and Qatar in the London Stock Exchange, Nasdaq and OMX lead?

In a handy piece of timing for this article, the FT reported recently that even the world’s leading financial centres were realizing that “even as the two cities were competing for financial services, they have quietly started a dialogue to help the world’s largest financial groups do business more efficiently in both places.” Customer driven, now that’s the ticket!