Bahrain this month brings in a trust framework allowing for the establishment of Reits and private p...
Bahrain this month brings in a trust framework allowing for the establishment of Reits and private pension schemes.
The laws will ensure there is no income or withholding tax payable on the trust structures.
Abdul Rahman Moh'd Al Baker, executive director of financial institutions' supervision at the Bahrain Monetary Agency (BMA), said: "Reits are an area we are looking closely at. Real estate is very important and continues to grow."
He believes Reits would be ideal for both retail and corporate investors and anticipates commercial property will be the main area of take-up. He also noted there has been much demand for private pension schemes in the Middle East.
"There is a new generation looking for a flexible retirement plan and the best structure to do this through is a trust," added Moh'd Al Baker. "We would like to introduce trust business in the Middle East and the best way to do this is to have our own trust structure in place. By introducing trust law we will be able to take advantage of a growing and signficant area."
The implementation of a trust regime will also allow the development of securitisation. Moh'd Al Baker said: "There is huge growth potential for Sukuks (Islamic bonds)."
In a separate development, the BMA, the jurisdiction's regulator, has introduced a professional investor scheme, allowing for the provision of hedge funds and other higher risk funds to be targeted at high net worth individuals and institutions.
These have been brought in at the same time as the BMA revamped the licensing framework for banks in the kingdom (see page 9). Moh'd Al Baker believes forging closer links with offshore centres should help Bahrain to develop the concept of an Islamic trust for the future.
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