LOCAL WEALTH MANAGEMENT IN THE MIDDLE EAST.

http://www.mei.edu/content/wealth-management-industry-middle-east-boon-or-bust

The other key to developing the local wealth management industry, and thus, economic development, consists of encouraging ultra-high net worth individuals to bring their money home. As shown on the right-side panel of Figure 8, Middle Eastern countries which have easier business index scores (as measured by the World Bank’s Doing Business database) tend to have more patient investors. The Bahraini investor will have a longer time horizon, because doing business is easier. The Kuwaiti will have very short time horizons, partially because leaving his or her money tied up too long exposes him or her to all kinds of regulatory and business risks. Saudi Arabia proves the exception — they have short time horizons and business regulations which making doing business very easy. Making business easier should also lengthen time horizon, because Saudi, Omani, and Qatari investors know that their investments will not stagnate in a bureaucratic mire.
Changes in investment law clearly affect the ease of business and the development of a local wealth management industry. Figure 13 provides an assessment of the development of a local (national) wealth management industry — looking only at black letter banking and securities law. Not exactly surprising results emerge. Prospects look best in countries — like Jordan, Saudi Arabia and Turkey — which already have relatively well-developed financial sectors. The analysis suggests that countries like Tunisia and the UAE could develop more quickly if they generalised their zona franca approach to finance. Both countries have a financial centre with relatively few restrictions (Tangiers and Dubai respectively). Their zona franca status has allowed both countries to become wealthy quickly. However, to continue growing their wealth, and thus, their wealth management industries, they will need to extend reforms beyond isolated geographical areas. Countries like Yemen, Oman, Algeria, and Syria require nothing less than a full-scale rewriting of their banking and securities laws.