London City Corporation Chairman (policy& resources committee) Mark Boleat is in Mumbai to attend a roundtable organised by the Maharashtra government on how to make Mumbai a global financial hub, where he shared his experience on how London is one. Boleat said Mumbai is a major financial centre but suggested that opening up the market is key for the development of the city as international finance centre. In an interview with Sanjay Jog, Boleat expands on the issue.
Q: What has really gone into London's emergence as a global financial hub?
A: I would not say we made it a global financial hub. It evolved as an international centre before we started doing much. You cannot create a global financial centre out of nothing, it takes time to develop . London was a financial and business centre for hundreds of years and developed into a leading international financial centre over the past few decades.. London is a very open economy, supported by an efficient and robust regulatory regime a well structured tax system and English law. It is well connected internationally. What we try to do now is to further strengthen connectivity. A financial hub does not need only banks and financial institutions but requires lawyers and professional services as well..
Q: How are foreign investors able to do business in London. Do you offer any special incentives?
A: London does not give tax sops. London has been pretty open as we do not have any restrictions on banks and the same law applies to all. Any bank from any part of the world can start its operations in London. It does not need to do a particular type of business but can do any business. We welcome more banks from other countries including India. The banks have to comply with capital and liquidity requirements to do the business. Banks need to comply with requirements applicable to any British Bank.
This also applies to insurance companies and fund managers. We have a tax system that is predictable and have a regulatory system which is onerous and it works.
UK offers a level playing field, offering an equal opportunity to all international businesses.. The same law is applicable to everyone. To be an international finance centre you need to have diversity.
Q: What are the challenges currently faced by London and how are they being addressed?
A: The biggest challenge is the rising cost of housing in London. For average people working in the city, the cost of living is quite high. Many have to travel long distances similar to Mumbai. Therefore, attempts are being made on to how to make affordable housing available for the average working community in London. Besides, airport capacity is another issue, with a new runway being planned for Heathrow. For improved transport connectivity, Crossrail the new high frequency, high capacity railway for London and the South East is being built. In order to have a successful global financial centre, you need to take a holistic approach. Therefore, when you have to get 10 things right, completing just two is not enough for a successful global financial hub.
Q: What are your suggestions for converting Mumbai into international finance centre?
A: I cannot advise what India needs to do, but what I can say is that for an IFC 'being open and international' to the rest of the world is absolutely critical. Mumbai has been a major financial centre, major financial institutions, businesses are all located here. To be a global financial hub you have to be completely open that is the key point. In Britain we do not mind from where institutions come from, there are American, German, Singaporean, Chinese banks and financial institutions. We have all the major international; law firms are accountancy firms.
To develop an international finance centre you need international legal and professional services to support financial services.
I will repeat that for Mumbai to be the global financial hub, it needs to be o open and international.