Would a free zone benefit Qatar?


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Free zones have long been at the centre of the economic development debate. The Gulf has several: for example, the Dubai International Financial Centre and, in Qatar, the Qatar Science and Technology Park. But the Qatar Financial Centre (QFC) has a different approach as an onshore centre. Shashank Srivastava, CEO of the Qatar Financial Centre Authority, is clear as to why that is the most suitable strategy for the QFC.

“A free zone is by definition only for export purposes. If you set up in that zone you cannot do business domestically, it’s only for export, it has nothing to do with your local economy,” says Srivastava. And his opinion matters, given that he is the CEO of the Qatar Financial Centre Authority (QFCA).

The Indian national, who joined the QFCA in 2006, is keen to make his point. He doesn’t refer to Dubai’s DIFC, which has attracted many of the global finance industry’s biggest players, but it’s clear that Srivastava is drawing a comparison.

“It doesn’t impact your local economy; the companies export from there, they make money that you don’t even tax, so I don’t see an impact on the local economy except that you are creating real estate and selling it,” Srivastava says.

Not everyone agrees with the QFCA chief’s views, however. According to Joe Maalouf, chairman of the Qatar chapter of the Middle East Investor Relations Society and head of investor relations at Al Khaliji Bank, free zones create several advantages, including increased production, efficiency, consumer satisfaction and exports, plus the creation of jobs, stronger economic growth and foreign exchange gains.

The main disadvantages, according to Maalouf, are potential money-laundering, customs fraud and the reduction of government revenue.

“If we compare advantages and disadvantages, I believe that free trade zones are ultimately one of the fairest ways for developing world economies so that they can begin to compete on global scale,” says Maalouf. “I believe that a lot of opportunities in Qatar still need to be identified and grabbed for the benefit of the country and of its citizens, and then a free zone will be a plus at a later stage.”

But if you ask around, it’s hard to find one company in Qatar that is not hoping to see a free zone in Doha.

“You can ask those same companies how they do business in Malaysia and in other countries in which you need a 51 percent local partner,” Srivastava argues. “If they are saying this about Qatar, how do they do business in Malaysia, in Thailand, in Vietnam, in Tunisia, and in Africa? It’s not a strange thing around the world, companies are aware of it, lawyers are aware of it, senior managers are aware of it, so it’s a philosophy of economic development.”

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Please post responsibly. Commenter Rules

Posted by: Ali

There is a misunderstanding and mistatement re Malaysia. There are two types of investments that foreigner can invest in Malaysia:
a) normal investment where one need to adhere to the Foreign Investment Committee (FIC) and under this application, investor may be required to have at least 30% bumiputera investment. However, exemptions may be given by the FIC if the investment merits the exemptions; and
b) investment under certain schemes for e.g. foreign investment in financial industry, where under such schemes, the investors can own 100% of their investment and operate in Malaysia. However, the setting up of such companies, in line with the government policies requires compliance with certain policies for e.g. employment qouta etc.

It is critical to consider many factors before proposing any schemes. The ability to allow foreigners to own a business without local participation but the regulations must be condusive for all.

Posted by: Jitesh

I am sure Qatar is ready for the FREE ZONES.
First let Qatar Crawl and Walk before it wants to RUN.
I fully endorse the view of Mr.Shashank Srivastava, CEO -QFCA on the Freezones in Qatar.

Posted by: Yusuf Jehangir, Head of Marketing & Corporate Communications, QFCA

Arabian Business recently published an article, entitled "Would a free zone benefit Qatar?" Contrary to the impression created, Shashank Srivastava, CEO and Board Member of the Qatar Financial Centre Authority, is not against free zones. Unlike the Dubai International Financial Centre, which is a free zone, the Qatar Financial Centre has taken a different approach as an onshore centre, as part of its strategy to develop the financial services sector in Qatar. In fact, Qatar already has a free zone, the Qatar Science and Technology Park. The context in which this article arose was an interview which largely discussed different economic development strategies. To suggest that Mr. Srivastava opposes free zones in Qatar is a rather one dimensional view of the issues covered.

Posted by: Yusuf Jehangir

Arabian Business recently published an article entitled ?Would a free zone benefit Qatar?? Contrary to the impression created, Shashank Srivastava, CEO and Board Member of the Qatar Financial Centre Authority, is not against free zones. Unlike the Dubai International Financial Centre, which is a free zone, the Qatar Financial Centre has taken a different approach ? as an onshore centre ? because this is most suitable for Qatar?s strategy to develop its financial services sector. In fact, Qatar does have a free zone, the Qatar Science and Technology Park. The context in which this article arose was an interview which largely discussed different economic development strategies. To suggest that Mr. Srivastava opposes free zones in Qatar is to give a one-dimensional view of the issues covered.

Posted by: Patrick

The initial results from the QFC are hardly stellar, so something does not add up!!!

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