Trevor Norman, Volaw’s Director of Islamic Finance and Fund Services, describes his recent eventful visit to the Middle East as part of a Jersey Finance delegation.
Having been involved in Islamic finance work since 1995, a visit to the Kingdom of Saudi Arabia, the spiritual home of modern Islamic banking, was long overdue. So when the promotional body for Jersey's finance industry, Jersey Finance ("JFL"), announced they were planning a delegation to the Kingdom at the end of February, I was one of the first to register my interest in participating.
I flew into to Jeddah from Abu Dhabi on Etihad Airways, who were upgrading their reservation systems that same day and announced a recommended minimum four-hour check-in. After an early start to reach the airport in good time, I was told the switch over wasn't until the evening, which was rather frustrating. Next stop, literally, was passport control. The immigration systems in Abu Dhabi had no record of my UAE residence permit having been cancelled in February 2009, in spite of many trips to the UAE since then. So I found myself being escorted to the police office, where an officer loaded up several computer screens and must have found the missing record because he stamped my passport and boarding card before waving me on my way.
The following morning the sun was shining and we commenced our visit with a briefing from the British Consulate in Jeddah and representatives of a Big Four accountancy firm and a City law firm based in Jeddah. The primary objectives for the JFL delegation were to:
• Gain a better understanding of the evolving regulatory environment;
• Meet with connectors and service providers, such as banks and law firms, thereby building Jersey’s profile;
• Demonstrate commitment to the Kingdom and position Jersey as a long-term strategic private wealth jurisdiction;
• Understand the commercial and cultural factors necessary to do business in Saudi; and
• Build the business for further representation in Saudi (JFL specific), but of relevance to Volaw too.
This was the perfect introduction for us all, whilst various members of the delegation had been to the Kingdom before, having such a clear summary of the business environment and opportunities for JFL members set the scene for the rest of the visit. Our first visit of the day was to the headquarters of the largest construction group in the Kingdom still in private ownership. The visit included details of the work they are doing to expand the Grand Mosque Al-Masjid al-Haram in Mecca to allow for almost three times the number of visitors during the Hajj period.
In the afternoon we visited an investment management group with whom Volaw has been working. We had a very useful discussion with them about the use of Jersey regulated funds for distribution to investors within the Kingdom. In particular we discussed the local licensing requirements and the attitude of the Capital Markets Authority to Jersey funds; a point the JFL team would be discussing with the CMA when we were in Riyadh. The day finished with us all attending a reception being hosted at the British Consulate for one of London's oldest law firms who were opening an office in Jeddah, which was a good opportunity to meet some of the wider local business community.
The next morning we flew to Riyadh and after a somewhat hair-raising drive through that city we had a very informative lunch with five senior staff from a Big Four accountancy firm. This developed on the themes of our briefing in Jeddah, and explored some of the differences between doing business in the three centres we were visiting. We also expanded on the regulatory points we'd discussed the previous day, and I managed to clarify some of my own questions on Zakat.
The following day we had a very informative lunch with several members of the Riyadh Group for British Business, most of whom have spent many years in the Kingdom and which gave us a slightly different angle on living and working there. This was followed by a trip to Kingdom Tower to meet with local representatives of another law firm who gave us very useful advice and pointers on regulatory issues, which had been prompted by a visit to the CMA earlier in the morning. The CMA had suggested JFL may need to register to promote the distribution of financial services, although they weren't very clear on the category of the regulations that might capture JFL (and member firms') activities.
Our final meeting of the day was at a local investment bank, situated in the older part of Riyadh which meant another frantic drive across the city. In arriving at the bank we were confronted by the usual secuity gate, but none of the guards spoke English, which made entry somewhat difficult. Eventually, following the intervention of one of our delegates who spoke Arabic, we managed to get past security and to our meeting. This meeting was particularly informative and thought-provoking in the area of the use of Trusts and Foundations. Our hosts identified a need for a greater understanding by the potential end users of how such a structure could assist them in managing their wealth: a point we discussed at some length and agreed that there was no quick fix to this problem.
That evening we flew to Al Khobar, the main business capital of the Eastern Province. The next morning, our final day in the Kingdom, started with a briefing from the local Head of the British Trade Office and two representatives of the Chamber of Commerce. This was particularly useful in highlighting the industrial nature of the Province and suggesting ways to meet with the main local families that may need our services. Following that we had a meeting at a regional bank which was extremely useful in confirming much of what we had been told in the briefing earlier that morning, although the delivery of the message was somewhat more colourful.
Overall the visit was very successful both as a cultural learning experience as well as from the perspective of increasing our understanding of the potential areas of business that Jersey firms should be aiming to offer to prospective clients in the region.
For further information on Volaw’s Islamic finance services, please contact Trevor Norman of Volaw.