Ranking the world’s fourth largest economy, the MENA region generated a combined GDP of approximately 3.6 trillion USD in 2012. Having largely escaped the effects of the global financial crisis, the region has emerged as a major global player competing with traditional European and North American markets.
What role will the Middle East play in shaping future investment and global economic trends in the mid-term?
I don’t think that the Middle East completely escaped the recession, or global financial crisis, as you put it, over the last five years. Dubai itself widely acknowledged that with allegiance with Abu Dhabi, in fact, they managed to escape it, but a considerable amount of companies did suffer it.
But in terms of the role of the Middle East in shaping future investments, I think it very much will do so with the amount of investment that has gone into Europe, the Americas and various other parts of the world. The country’s wealth—which is petrochemical wealth mostly—will in fact play a huge role with economies that are further off field and in the Middle East itself.
With Dubai set to hold the World Expo in 2020 and Qatar the FIFA World Cup in 2022, the GCC’s economic momentum is growing exponentially, spurred by reinvestment of hydrocarbon wealth, economic reform and political guidance. Taking into account the four guiding principles of Vision 2030, and the nation’s rapid development in recent years, how will the State of Qatar realize its socioeconomic aspirations?
I think in the Middle East the first thing you have got to understand is that there is a huge amount of competitiveness within the GCC countries. Dubai, for example, has the Expo 2020, and Qatar gets the 2022 FIFA World Cup. I think a lot of people outside the Middle East assume that all the construction going on in Qatar has to do with that whereas, in fact, Qataris will make it quite clear that a lot of the construction going on at the moment has to do with the foundation work of Qatar as a whole and is part of the 2030 Vision; so it has to do with their socioeconomic aspirations rather than just one singular event.
Now, there are pillars or guiding principles behind this Vision and, for example, sports, which is a big one –not just football, but they have also made a bid for the Olympics in the past– they have built a whole area surrounding sport and they in fact recognize that because they are such a small nation they need to bring in westernized influences to be able to promote that and provide these aspirations for the future. And so, therefore, you have got a lot of Western expats –hopefully the best ones available to them– training not only Qatari but also other future national sporting sort of venues and parties that are going to take us through in seeing Qatar being a major player in these sort of events in the future.
You have also got education, and in anything to do with children they are very keen to bring this on; Education City has some huge names in terms of universities and private education. Health is also very important. The Sidra foundation, which is headed by the former Emir’s wife, is another area of influence that the Qatar Foundation is involved in producing.
So, what they can realistically see is that gas and oil are not going to last forever and therefore–unlike a lot of the other Arab nations who have seen this as their sole guiding principle for the future– the Qatari’s recognize that this has a degree of longevity and that they need to make the best of the wealth that has come in from this to aspire to then becoming a country that has its own economic goals and to be self-supporting by 2030. Now, whether they will make it by 2030, I don’t know, but they are certainly making a very, very good try at it.
Foreign direct investment in the Qatari economy peaked in 2009, contributing 8% of the overall GDP of the country, but has depressed in the past 5 years. Many economists have clashing views on the benefits and challenges of FDI. Some emphasize the “crowding out” effect, whereas others underline FDI’s central role in promoting economic growth and international integration. What role do you think FDI has played, and/or could play in Qatar’s future?
I think its like you said: between 2007 and 2009 there was a huge amount of FDI in Qatar, obviously to do with the fact that they had this petrochemical globalization to becoming one of the world’s leaders in gas, which has given them this huge amount of wealth, and obviously they brought in various companies. And if you take the oldest company that did FDI in Qatar for many years, Total, which has been in Qatar for 76 years, one of the things they brought in now is what they commonly call Qatarization. So, what they are really interested in is working with those foreign direct investments in terms of the partners that come in to play in Qatar, is training and getting Qatari partners involved in that business so they can take it forward for the future.
So, at the end of the day, the idea is in place and they have started doing it and the petro-chemical giant Total is an example of that. They have fully integrated this and a few other very large companies here have followed suit with huge success, and hence why you have got the Ras Laffan Gas City area, which is literally meant to be one of the leading gas cities in the world.
Qatar has seen an increase in asset management companies penetrating the market and using Qatar as a regional headquarters. Does Doha have financial services hub potential for the GCC, and due to the country’s strategic location how is Doha situated for asset managers to capitalize on opportunities in Qatar, the MENA region or even Asia?
At the moment it has potential because of the amount of expatriate and contracted wealth that is accumulated here for the changes that they are making to the economy; they are basically building a completely new Qatar. So, at the moment it would be very difficult for me to say this could definitely be a regional headquarters for this or that. Geographically it stands the same chances of being a headquarters for financial institutional wealth and investment as anywhere else in the world. However, it does have this tremendous amount of natural wealth, because of gas reserves and partly because of oil, but also because the construction that is going on here is attracting huge amounts of other companies, which means that there, in itself, is additional investment value for people like financial services, investment managers, and banks.
You have got a population in excess of 2.1 million in Doha, of which the local population is somewhere in the region of just over three hundred thousand. That gives huge opportunity of capturing investment wealth from all the other parties that are there.
Doha could be a financial capital in terms of its location and in comparison to its neighbors. What do you think of Doha being a capital for Islamic finance?
I think it is certainly there. Doha has a high level of popularity with a lot of the Muslim population; they have brought in to play a number of Muslim banking situations in London itself backed by Qatari investment. So, yes, they definitely have got far more potential in the area of Islamic finance.
A commitment to independent financial advice has seen AES International win over 20 financial awards in the last 5 years, including Best International Financial Planning Firm of 2013 and Best Private Wealth Manager Adviser in the United Arab Emirates. Please share with the readers of The Times the genesis of AES International here in Qatar.
We came about with the sole mantra ‘to positively change international financial services’ by challenging the status quo of the poor services that traditionally are in the world today. Trading since 2004, bringing UK best practice abroad and regulated by the Financial Conduct Authority in the UK, we provide that honesty and integrity that is so lacking in the international financial services environment. We do this through the knowledge and experience of our advisers and staff. We are now in 35 countries around the world and growth with service and client focus are some of the aspects of AES International which has won us so many accolades and awards.
We have a unique private banking off-shore arm, in the Isle of Man which sets us apart from most other financial services firms in the Middle East as they have to go through second or third parties to do that. This means that we have the ability to advise people with a secure, flexible and liquid solution that is so different from other more traditional products that are sold en-mass in the international market place. So if you like, we can offer our clients more of a choice. Primarily though, what sets us apart, is that we are completely focused on our clients being the primary interest rather than AES, which sadly is so lacking in today’s environment overseas.
What is your number one focus for clients, whether in Doha or any other country that you are working in?
It is really to grow our clients wealth and grow it in a manner that is going to be aligned with current taxation regimes and estate planning, in a way that is going to be tax centric and focused towards what mostly tends to be professional service expatriates. We act on behalf of all nationalities of clients with the primary focus being their personal growth of wealth, current advice and high level of service.
Why did you establish here in Doha?
We came to Doha because we could not ignore the fact that, per capita, it is the richest city in the world and, therefore, as wealth managers, it would be very silly of us to ignore that. So having done a research study on it, the demographics were such that this also had a very high conurbation of professional services expatriates by comparison to the amount of financial services on the ground. Given that we want to practice and preach proper financial services with UK exported best practice, we thought that this was a very good and viable opportunity. So therefore the amount of potential clients that would be available was our biggest factor, and was a good business opportunity.
MSCI’s index pushed Qatar forward from frontier to emerging markets. Keeping that in mind, do you think there is going to be an influx of other financial services from the UK?
That will very much depend on the global economic market at the time. People tend to dip their toes in the water when things are going well at home, maybe because they have enough money to do that. So, if at the end of the day there is a bit of stability in Europe or in America, maybe they will be able to have a look at a market that has just gone from frontier to emerging. If it’s not the opportunity they thought, then I think most companies have learned their lessons over the last five to ten years and probably will not make the move.
Why would these expats want to come and use your services and what is it that you would like to offer them?
Most people that come here are earning substantially more income, tax free than they would be earning in their home domicile. So there is a far higher proportion of residual income, and at far greater sums, and it is very easy to get into a situation where this income is spent on a more lavish lifestyle. So you spend perhaps 3 or 5 years here doing the job that you are doing, earning a considerable amount of wealth and living a very fine life. However, at some stage or another you have to apply your mind to the fact that you may well be going back home or retirement and to have missed that opportunity of having saved some money, or built some wealth to be able to retire or have the things that you want to have can be a harrowing thought. So we will try and point people towards that general direction with knowledgeable insights into current ways and practices that they can apply to make the best financially of their future.
By our approach being so very different, and genuinely focused on our clients first and foremost, we tend to get a pretty good reception out here.
AES International recently launched expat mortgage offering for high net worth individuals living and working overseas. Could you share more about this new expansion in your services and how it will benefit the investment portfolios of your expatriate clients?
Through our off shore banking arm, which is based in the Isle of Man, we offer mortgages to expatriates looking at purchasing in the UK in excess of two hundred and fifty thousand pounds. With recent regulatory changes in the UK mortgage market, traditional lenders have left the expat mortgage market and therefore there is literally only a handful of lenders who have this solution. We have numerous unique features such as being able to offer finance against cash or other securities (such as shares or investments) which can be used to go with the mortgage and therefore demonstrate a higher level of borrowing against investment property which in itself may reduce someone’s tax liability.
It’s very popular and completely white labeled to the individual at exceptionally competitive interest rates and cost is the most important thing. So, in other words, where you would normally go to a bank or lending name that you would expect to have a fixed interest rate, we instead will look at each individual situation so, from one person to another we would treat them possibly different according to what assets they had or what their individual circumstance was, and we would offer them facilities based upon what they are coming to the table with. So, it is truly a very unique, ‘old fashioned banking’ service.
Working in a dynamic market specializing in an often complex international asset management environment, what are the biggest challenges AES International faces?
I think logistics. I don’t think that is confined to AES, I think it applies to companies in general and individuals as well. There are logistical things that cover the whole of the Middle East, there are some that are very particular to Qatar that you need to adjust to. These may have to do with visas, housing (the fact that at the end of the day it’s no secret that housing is nearly 50 percent of someone’s income in Doha and that is a huge differential from where they may be coming from), medical, getting about (driving in Doha can be an interesting experience), etc.
Getting accurate and correct data is a problem in any frontier market, because you get some people coming in for a fixed contract of a year or maybe two years and then they go, so actually finding out where that person is or who they are connected with, if for nothing else just to be able to get in touch with services, can actually be a struggle sometimes. And although it doesn’t sound like a lot it can be very frustrating and time consuming at times.
The United Kingdom is the 3rd largest HNWI market in the world. At the end of 2013, there were approximately 840,000 HNWIs living in the United Kingdom, with a combined wealth of US$3.5 trillion. On the other hand, it’s no secret that Qatar, as the world’s wealthiest country in terms of GDP per capita, has in recent years been a prolific investor in the UK—with investments ranging from The Shard, to Heathrow Airport. But in 2013 relations were taken to another level after The Financial Times reported that the State had allotted 10 billion pounds for British infrastructure investments. Why do you think Qatar has had this flourishing attraction to investments in the UK?
Well, partly because of the history between the Qataris and the British. Britain has made a very big push to have this special relationship with Qatar, which has gone on for some time. More recently, in the sixties with the geological survey they actually discovered oil for the Qataris when looking for water. Now, going on from there, Britain has the biggest western expat community here, with some 20 thousand expats, which considering the size of the “island” and the amount of people here is actually quite considerable.
I think in terms of what the Qataris saw was that our trade and industry people have made a very big push in this area and that London was a good investment for many Qatari’s. Buying property or investing in London has paid huge dividends for both countries, well in excess of 20 percent some years.
So, that aside, this strong relationship has been built and I have to say the British and Qatari people have tried very, very hard to make sure this happened, and it is a true success story. Remember both the current Emir and his Father attended The Royal Military Academy Sandhurst, and we have many members of our ex-services and serving armed forces helping the Qataris with theirs. In business we have the Qatar British Business Forum, (QBBF) who have been operating for over 22 years and have some 530 membership British business out here in Qatar who are a very strong voice for the UK here.
Which do you see as the greatest investment or partnership opportunities for British individuals or companies in Qatar today?
I think trade and industry along with education, sport, financial services and banking.
As general manager here at AES International in Qatar and as an expat yourself, why come to Qatar to live and do business here?
I think you need to have a challenge; if you thought you are just going to come abroad because it’s a job, you would possibly struggle a bit. I think most of the people you meet here that succeed as an expatriate do so because they get involved in the country they are living in, they take hold of the challenges –and there are challenges here– but there are also rewards: the income, in terms of the high net worth earnings that are available, the lifestyle, and the country and culture as well. But you are not going to get those just standing on the side line, most people here expect and understand that they work hard and play hard. A lot of people worked for 6 or maybe 7 days a week for quite a long time when they first arrived here, so it is not all just coming out here and lulling around in the sun, a lot of people at home may think that, but it is not. At the same time, there is a chance to lead an exceedingly good life and, if you work hard, there is no reason why the rewards shouldn’t be yours as well.