Asian firms, fintechs boost Dubai’s DIFC to best year ever

Some 23,604 people worked in the DIFC at the end of 2018. (Shutterstock)
Updated 05 March 2019
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Asian firms, fintechs boost Dubai’s DIFC to best year ever

  • Some 437 companies set up in the center last year
  • Many take advantage of new regime for financial tech

DUBAI: The Dubai International Financial Center (DIFC) investment hub reported its best-ever year for new company registrations in 2018 on the back of strong interest from Asian firms and fintech (financial technology) companies.

Some 437 companies set up in the center last year, a 39 percent increase and the highest number in its 15-year history, with the growth in new registrations split equally between financial and non-financial firms, both 15 percent up on the year.

Essa Kazim, DIFC governor, said the result represented a significant step toward its 10-year strategy of tripling in size — in terms of the number of firms, employees and assets under management — by 2024.

“Over the last 15 years, we have achieved the scale, flexibility and sophistication of the world’s most advanced financial ecosystems, bolstered by the Dubai Financial Services Authority, our internationally recognized regulator, and the Dispute Resolution Authority, our platform for delivering legal excellence in the Middle East,” he said.

He also unveiled strong financial figures for the year, with an 11 percent rise in net profits to $88 million, and a 3 percent increase in the value of investment properties, at $3.03 billion.

Some 23,604 people worked in the DIFC at the end of 2018, a 6 percent rise over the year, in 4.15 million square feet of leased space.

Of the new companies, 64 percent came from the Middle East, Africa and South Asia regions. A large number of them are fintech firms, taking advantage of the DIFC’s new regime for financial technology.

Arif Amiri, DIFC chief executive, said: “We have seen increased momentum across all our key sectors, and particularly in fintech, wealth management and aviation financing, all benefiting from the evolving legal and regulatory environment we offer. The new partnerships we have forged around the world, and the existing relationships we have strengthened, ensure the transfer of knowledge and continuous development of human capital in the region, which remains a priority for us in the year ahead.”

Overall, the geographic representation at DIFC remained broadly consistent year-on-year, with a majority of member firms from outside Europe and the US.

Around 36 percent originate from the Middle East, 33 percent from Europe, 11 percent from Asia, 10 percent from the US and 10 percent from other countries.

Despite the greater presence of non-Western firms, the DIFC last year managed to pull in two major US investment names: Berkshire Hathaway Specialty Insurance and State Street Global Advisers.

Kazim also gave further details of the expansion program under the DIFC 2.0 plan, which aims to again triple the size of DIFC by 2030. The total cost of the project had not yet been evaluated, he said, but some of it could be met from DIFC’s own resources.

Two other projects, the Exchange Building and Gate Avenue, were funded from DIFC’s cash flow, but DIFC 2.0 was another level of funding, Amiri explained.

The collapse of the Abraaj business last year led to speculation that DIFC business would suffer as a result. 

But Kazim said: “I do not see any sign of the center being impacted as a result of Abraaj.”

He added that weakness in Dubai equity markets and property would not distract DIFC from its long-term strategy, and were part of the normal business cycle.

The DIFC has been rising consistently in the annual rankings of global financial centers, reaching 15th in the Global Financial Centers Index last year.


Foreign investors hope India dials back policy shocks after Modi win

Updated 23 min 29 sec ago
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Foreign investors hope India dials back policy shocks after Modi win

  • Modi’s pro-business image and India’s youthful population have lured foreign investors
  • After Modi’s win, about a dozen officials of foreign companies in India and their advisers said they hoped he would ease his stance and dilute some of the policies

NEW DELHI: Foreign companies in India have welcomed Prime Minister Narendra Modi’s election victory for the political stability it brings, but now they need to see him soften a protectionist stance adopted in the past year.
Modi’s pro-business image and India’s youthful population have lured foreign investors, with US firms such as Amazon.com , Walmart and Mastercard committing billions of dollars in investments and ramping up hiring.
India is also the biggest market by users for firms such as Facebook Inc, and its subsidiary, WhatsApp.
But from around 2017, critics say, the Hindu nationalist leader took a harder, protectionist line on sectors such as e-commerce and technology, crafting some policies that appeared to aim at whipping up patriotic fervor ahead of elections.

Opinion

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“I hope he’s now back to wooing businesses,” said Prasanto Roy, a technology policy analyst based in New Delhi, who advises global tech firms.
“Global firms remain deeply concerned about the lack of policy stability or predictability, this has sent a worrying message to global investors.”
India stuck to its policies despite protests and aggressive lobbying by the United States government, US-India trade bodies and companies themselves.
Small hurdles
Modi was set to hold talks on Friday to form a new cabinet after election panel data showed his Bharatiya Janata Party had won 302 of the 542 seats at stake and was leading in one more, up from the 282 it won in 2014.
After Modi’s win, about a dozen officials of foreign companies in India and their advisers told Reuters they hoped he would ease his stance and dilute some of the policies.
Other investors hope the government will avoid sudden policy changes on investment and regulation that catch them off guard and prove very costly, urging instead industry-wide consultation that permits time to prepare.
Protectionism concerns “are small hurdles you have to go through,” however, said Prem Watsa, the chairman of Canadian diversified investment firm Fairfax Financial, which has investments of $5 billion in India.
“There will be more business-friendly policies and more private enterprise coming into India,” he told Reuters in an interview.
Tech, healthcare and beyond
Among the firms looking for more friendly steps are global payments companies that had benefited since 2016 from Modi’s push for electronic payments instead of cash.
Last year, however, firms such as Mastercard and Visa were asked to store more of their data in India, to allow “unfettered supervisory access,” a change that prompted WhatsApp to delay plans for a payments service.
Modi’s government has also drafted a law to clamp similar stringent data norms on the entire sector.
But abrupt changes to rules on foreign investment in e-commerce stoked alarm at firms such as Amazon, which saw India operations disrupted briefly in February, and Walmart, just months after it invested $16 billion in India’s Flipkart.
Policy changes also hurt foreign players in the $5-billion medical device industry, such as Abbott Laboratories, Boston Scientific and Johnson & Johnson, following 2017 price caps on products such as heart stents and knee implants.
Modi’s government said the move aimed to help poor patients and curb profiteering, but the US government and lobby groups said it harmed innovation, profits and investment plans.
“If foreign companies see their future in this country on a long-term basis...they will have to look at the interests of the people,” Ashwani MaHajjan, an official of a nationalist group that pushed for some of the measures, told Reuters.
That view was echoed this week by two policymakers who said government policies will focus on strengthening India’s own companies, while providing foreign players with adequate opportunities for growth.
Such comments worry foreign executives who fear Modi is not about to change his protectionist stance in a hurry, with one offical of a US tech firm saying, “I’d rather be more worried than be optimistic.”