Move for $5bn specialist financial body in Qatar
Doha, September 15, 2013
A leading financial expert has proposed setting up a specialist institution based in Doha with an initial capital of not less than $5 billion that will specialise in financing massive infrastructure projects.
The proposal to create the International Infrastructure Investment Bank (IIIB) in Doha and London by 2015 was made at the recent "MEED Qatar Banking Summit 2013."
The initial capitalization is $5 billion which is expected to increase to $15 billion over the next five years thereby giving a balance sheet capacity of circa $300 billion, said Anthony Holmes, the co-founder and director of Institute for Infrastructure Studies.
"The establishment of the IIIB which will be instrumental in arranging and participating in the funding of large scale, complex infrastructure projects globally, stated Holmes making the proposal during his presentation entitled "How the Global Infrastructure Bubble Provides a Significant Opportunity for Qatar’s Financial Sector" at the seminar.
"The IIIB’s mandate will be confined to financing the development phase (i.e. construction through to the commencement of operation) of major complex infrastructure projects globally," he explained.
"New thinking is required to address the projected global demand for infrastructure investment. We would like to emphasize that the demand for finance probably exceeds supply by a significant amount and, if current practices continue, the projected investment of $50 trillion might increase to $70 or $ 80 trillion if the tendency for projects to exceed their original budget is allowed to persist,” he added.
According to Holmes, the IIIB is envisioned to become the global centre of expertise in this substantial asset class and utilise its knowledge base and balance sheet to command a leading position in the syndicated financing of these major assets.
“There can be no doubt that this is an asset class of importance to global social and economic development that has expanded beyond the capacity of the established institutions to address in a piecemeal manner,” he pointed out.
In his presentation, Holmes said that the World Bank will continue to provide assistance to those countries that are developing but are devoid of sufficient economic resources to provide even the most basic infrastructure.
Qatar, he stated, finds itself in the unique position of being able to use its considerable investment in domestic infrastructure to dominate this asset class and to profit from the constraints and impediments likely to be experienced by established financial institutions.
The MEED Qatar Banking Summit 2013 held at the Renaissance Doha City Centre Hotel focused on capital markets and initiatives to develop Qatar as the leading financial hub.-TradeArabia News Service