Dubai financial hub sees growth from Asia links



REUTERS

Published — Friday 15 February 2013

Last update 14 February 2013 9:28 pm

| نسخة PDF Print News | A A

DUBAI: The Dubai International Financial Center, a business zone, says it aims to double the number of companies there over five years by serving as a base for business with China, south Asia and Africa, not merely the Gulf.
With political unrest plaguing parts of the Middle East and Western financial firms still retrenching because of debt problems in their home markets, the business environment is challenging for Dubai.
But Jeffrey Singer, chief executive of the DIFC Authority, which manages the business zone, said Dubai could keep expanding rapidly as the Gulf’s main financial center by becoming a conduit for trade and investment with a larger region.
“Increasingly institutions are using Dubai not just as a base for business in the Gulf, but as a base to access a much wider area,” he said.
The DIFC, opened in 2004, is one of the United Arab Emirates’ “free zones,” offering foreign investors 100 percent ownership of their ventures and business-friendly regulation.
The number of registered firms operating in the DIFC rose 7 percent last year to 912, while workers at those firms jumped 16 percent to 14,000. The DIFC has declared it wants to double its size in the five years from 2011, when it had 848 companies.
The DIFC has had to contend over the past year with the shrinkage of some of its top US and European clients. Citigroup Inc. this week began laying off investment bankers across its Europe, Middle East and Africa division, with 50 positions to be eliminated in the near term.
But Singer said that overall, cutbacks of investment bankers and back-office staff at Western institutions in the DIFC had been more than offset by their expansion in other areas, as foreign firms tried to capture part of the Gulf’s infrastructure spending boom.
In some cases, retrenchment by foreign firms in the Gulf has prompted them to bring staff back from other parts of the region to Dubai, actually boosting their presence in the DIFC.
“The European presence has grown every year in terms of both employment and the number of firms here,” said Singer, an American who took his job last July after heading the NASDAQ Dubai exchange.
Much of the DIFC’s future growth is expected to come from Chinese institutions. Assets at Industrial & Commercial Bank of China’s (ICBC) Middle East unit, which operates from Dubai, soared 128 percent from a year earlier to $ 6.1 billion in the first half of 2012.
Four Chinese institutions — ICBC, Bank of China, Agricultural Bank of China and Petrochina — now have presences in the DIFC. Singer said the DIFC was discussing the possibility of others coming, but declined to elaborate.
Trade in the Chinese yuan by banks in Dubai has been increasing; ICBC said it conducted $ 2.1 billion of yuan transactions in the interbank money market in the first half of 2012, up 58 percent. Last week Emirates NBD, Dubai’s largest bank, said it had started offering yuan accounts.
Dubai may struggle to become a major market for trading the yuan, however, if it does not arrange for clearing of trades to be done locally.
Yuan clearing is conducted in Hong Kong and Taipei, and last week China named ICBC as the clearing bank for yuan business in Singapore, but Singer said any similar arrangement for Dubai would depend on discussions between UAE and Chinese authorities.
“Banks in the DIFC would like to have yuan settlement occur here but that is an issue for the UAE central bank to handle,” he said, without predicting when that might happen.
Risks for the DIFC include political instability in other Arab countries, which Singer said could deter foreign investment throughout the region, and any major slowdown in the Gulf’s infrastructure spending.
The DIFC also faces competition from nearby financial centers, particularly Qatar, but it has maintained its lead over them in recent years. The Qatar Financial Center Authority’s register lists about 140 active, licensed firms.
Bahrain’s status as a financial center has been hurt by political unrest that erupted there two years ago. Some financial operations moved to Dubai from Bahrain for that reason, though Bahrain has been successful in preventing a mass exodus of financial firms, Singer said.
Some fund managers complain that new UAE investment fund rules introduced late last year could hurt the DIFC by placing a bigger burden of regulation on it and making it harder for funds to market themselves in the wider country outside the free zone.
The DIFC is continuing to hold discussions with the UAE Securities and Commodities Authority on how to apply the rules to the DIFC, Singer said.

What's happening around Saudi Arabia

JEDDAH: The Kingdom and Namibia have signed a protocol to establish diplomatic relations between them.According to SPA, the protocol was signed on Tuesday by Saudi Arabia’s Permanent Representative at the United Nations Abdullah Al-Mouallimi and his...
JEDDAH: Official reports reveal nationalization levels of medical and health workers in the Kingdom remain low, with Saudi nationals making up only 21.7 percent of physicians, 31.8 percent of nurses, and 67.4 percent of ancillary staff.According to t...
JEDDAH: The Saudi Food and Drugs Authority (SFDA) will begin receiving clearance applications for medicines and medical supplies, including drugs containing narcotic or psychotropic substances, for Haj missions or other government bodies on Saturday....
JEDDAH: Saudi importers of cattle said the Haj season this year will not see an increase in the price of livestock due to the stability of the local market and the available supply.There are also guarantees from exporting countries that required quan...
JEDDAH: At the upcoming elections the national identity card will be the only approved document used for identifying voters of both genders and allowing voters to exercise their electoral right, provided all statutory requirements are met.In a press...
JEDDAH: Education Minister Azzam Al-Dakhil has spoken of a new education policy which emphasizes the importance of harmonizing admission policies in universities with the needs of the labor market.Al-Dakhil made these remarks during a meeting with un...
JEDDAH: Local bottled water consumption during the summer, Umrah and Haj seasons this year will increase by 10 percent.“This translates into an annual growth rate of between 4 percent and 5 percent,” Rashed Bin-Zouma, a water industry expert, was qu...
RIYADH: Four Saudi secondary students including a young woman from the Eastern Province have received prestigious medals at the 47th International Chemistry Olympiad (IChO), which concluded in Azerbaijan last week.The winners of the four bronze medal...
JEDDAH: The UAE’s decision to lift fuel subsidies beginning in August has raised the possibility of other Gulf states following suit.Economists suggest a wide disparity of prices of gasoline in the Gulf countries will lead to more petrol smuggling op...
DAMMAM: The tourism industry in the Kingdom is witnessing great interest by authorities to develop the archaeological areas, promote their support services and create the best environment for tourism products, said businessman Abdul Mohsen Al-Hokair....
JEDDAH: The ongoing World Circus at north Obhur has brought smiles on the faces of orphans, with its show of acrobats featuring 20 performers and clowns.The orphans of Al-Rawdah district charitable organization said they found the circus entertaining...
RIYADH: The Nepalese ambassador to Saudi Arabia, Udayaraj Pandey, thanked the Kingdom on Thursday as he ends his four-year tour of duty in Saudi Arabia.Earlier in the day, he called on Riyadh Gov. Prince Faisal bin Bandar to pay him a courtesy call a...
RIYADH: Movies produced by young and amateur Saudi filmmakers will be shown on Saudi Television starting in the middle of next week.“The films will be shown daily to encourage young Saudi filmmakers,” said Abdulaziz Fahad Al-Eid, senior broadcaster a...
RIYADH: The King Abdul Aziz City for Science and Technology (KACST) signed a memorandum of understanding on Thursday with the Saudi Electricity Co. (SEC) and Taqnia Energy to launch the first standalone 50MW solar power station at Al-Aflaj.KACST also...
UN Secretary General Ban Ki-moon and Saudi Arabia’s permanent representative to the UN Abdullah Al- Muallami unveiled a beautifully framed old kiswa (covering) of the door of the Holy Kaaba at one of the newly refurbished halls of the world body. The...

Stay Connected

Facebook