Your hub or mine?

Barely a year has passed since Dubai announced it was setting up an international financial centre. Now, Bahrain has decided it wants one too, but for half the price of Dubai's US $2 billion DIFC

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By  Massoud Derhally Published  December 4, 2002

|~||~||~|The Bahrain Financial Harbour (BFH) wants to cater to Bahrain's established financial community and attract other international and regional entities by leveraging its strong reputation of having a sound financial regulatory authority, the Bahrain Monetary Agency (BMA). The project intends to consolidate Bahrain's position as the Gulf''s banking and financial centre by targeting several asset classes of the 100 banks, 48 offshore banking units and 40 Islamic and commercial banks already in the kingdom.

"We sat with the BMA to look at their vision and what they intend to be do in the coming five to ten years, what the horizon is and what types of asset classes they want to attract," Essam Janahi, chief executive of Gulf Finance House, which holds 60% of the joint venture project, told Arabian Business.

"At the end of the day, in order to attract financial institutions, the name of the game is rules and regulations. If you invite big institutions and you don't have a strong supervisory level it is difficult to attract investment," he added.

ReeMoon Business Development Consultants and Ahmed Abubaker Janahi Architects are the other partners in the venture. The remaining 40% of the project is with the Bahrain Government.

But some say there is more to the venture. While, "Bahrain is already a financial centre the concern is that the advantage it currently has in the region will be challenged, particularly by Dubai," says Adel Satel, an analyst with Moody's Investors Service. "The clear advantage is that it is a regional banking centre and it has proven this in terms of its regulatory environment. Its weakness is in terms of the resources it can allocate to compete with Dubai."

Janahi says BFH has an attractive value proposition that will entice other entities to come and guarantee success. "We don't have tax, we have a liberal environment and at the macro level we have a stable economy," he says.

According to Janahi, the amalgamation of a state of the art strategic business environment and competitive pricing models will make it difficult for the investment banks, offshore banks, asset managers, insurance companies, commercial and Islamic banks, re-insurance companies, fund managers, legal advisory services and financial consultants not to take notice. "We already have one client who wants one of two towers," he says.
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BFH is not just a financial endeavour but also a real estate project. The project will occupy 203,000 square metres built around what was once a focal point of trade and commerce at the Manama Harbour.
"It's a revolutionary real estate project to handle a sophisticated community that is made up of insurance, banking and financial institutions and put them under one roof," says Janahi. He says the idea is to leverage Bahrain's reputation as a financial centre and merge that with what he terms as business parks, like the Washington Harbour, and La Defense in Paris. "The strategic intent of the project is to enhance and leverage Bahrain as a financial centre and provide a one-stop shop of total financial advisory services," says Janahi.

Besides the normal benefits to Bahrain, the project has an added value to the kingdom's economy. It is expected to create 16,000 jobs over the coming six years. These will include 3,000 new jobs in the banking and financial sector.

"The majority of these positions will go to Bahrainis," Bahrain's Labour and Social Affairs Minister Abdulnabi Al Sho'ala told a news conference. "Our ministry is now drawing up a strategy to equip young Bahrainis with the necessary skills so as to make them employable in the new complex. We are co-ordinating our efforts with the Bahrain Institute of Banking and Finance, Bahrain University, the Education Ministry and various training institutions."
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The major attraction of the project is a massive financial hall, a twin tower, a 500 room hotel and a convention centre with a seating capacity of 2,000. "This is a community development for Bahrain," said Ahmed Abubaker Janahi Architects' chairman and chief executive, Ahmed Janahi. "It will comprise of multi-storey towers, corporate accommodations, financial mall and other developments." Construction work is expected to start in the second quarter of next year and should take six years to complete.

The project consists of 25 internal developments, which are all open to bids from regional and international companies and work will be done in two phases with the first focusing on land reclamation and infrastructure. The second phase will concentrate on the financial hall and towers. There will also be recreation and leisure activities, maritime and waterway access, health and education facilities and logistical business support services.

"We are trying to develop a successful model and we have benefited from the SWOT analysis of others, be it EMAAR, the Palm Island project, or Solidere," says Essam Janahi.

Bahrain's recent brush with democracy is also considered an added benefit for the project. "Bahrain has always been an attractive place for business in the region and the lack of a parliament has never been an impediment in this regard," says Satel of Moody's Investors Service.

"The parliamentary election sends a positive signal as to the country's commitment to democracy, which remains today in its early stages of development. The fact that Bahrain went ahead with elections and the establishment of a parliament even though some in the opposition boycotted the elections is very important." Massoud A. Derhally||**||

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