Financial Centres: Dubai’s Increasing Competition

Over the last ten years many financial centres have risen and fallen throughout the Middle Eastern countries. Formerly, Beirut was considered the area’s banking centre and also Manama was once viewed as the most reliable financial hub throughout the Gulf region. However, due to political instability they experienced during the years both hubs have suffered tremendously. Problems of credibility have surfaced due to their unstable infrastructure leaving investors, bankers and business people with no choice than moving on.

At present, Dubai InternationalFinancial Centre (DIFC) is considered as the top financial hub. The DIFC opened in 2004 and is now the home to hundreds of registered companies that focus on services. The DIFC’s success is attributed to its stable regulatory structure, which consists of a court system founded on international common legislation, Dubai’s stable and strong infrastructure and its strategic position as a regional centre of trade, tourism and other business orientated sectors.

Nonetheless, it is safe to say that generally the financial industry is known to be inconsistent, and companies are always in search of anything that may offer even the slightest advantage. Today, there are many emerging hubs trying to attract banks, investors and other business companies away from Dubai.

One of Dubai’s most promising competitors is the Qatar Financial Centre (QFC). QFC is not totally considered as a free trade zone, but it offers the majority of benefits Dubai’s free zone offers. Licensed firms are at liberty to conduct business both inside and outside of Qatar, and they are not limited to a specific location in Doha. QFC also offers low tax rates and its legal system, as DIFC, is founded on English common legislation.

Previously, the QFC concentrated on just a few principal sectors like asset management, reinsurance and captive insurance. Today, the QFC’s focus seems to be changing, and is attempting to explore new sectors, especially non-financial service companies that do not need the QFC Regulatory Authority’s approval and  permission to operate, nor does it have to regulate the companies. A representative of QFC recently stated that over the past year the QFC has registered an increased amount of non-regulated firms which consist of business and professional services, management offices, company headquarters, trust and holding companies.

Abu Dhabi’s new financial hub will be a foil to Dubai. It is a fact the two leading emirates are Abu Dhabi and Dubai, which generate most of the UAE’s economy. Consequently if one of the two emirates thrives, the other will follow and vice versa of course.

Naturally, there will be economic sectors that both Abu Dhabi and Dubai will offer since both financial hubs aim to cover a diverse variety of services. However, differentiation between the two hubs will also exist. For instance Abu Dhabi will specialise and focus on oil, gas, commodity trade and currency, which are the sectors it knows best. Its financial influence and affluent wealth may also appeal to leading financial companies especially in the fields of asset management, private banking and brokerage.

These results should offer a real enhancement to the new region and Riyadh’s financial industry. Conversely speaking, the region has a thriving regional financial hub that can sustain itself. This is the reason the Saudi authorities have not shown great eagerness concerning the creation of a new regional financial hub. 

Group Recognizes DMCC Free Zone as Best for Small and Medium Enterprises

The financial magazine FDI has named DMCC, Dubai’s new free trade zone as, "Global Free Zone of the Year for SMEs" through their ranking awards of 2014. The DMCC was created with the intention of marking Dubai as the best international hub for commodity trade and enterprise.

The FDI’s award has proven even further that Dubai is in fact the most prominent and suitable destination and home for SMEs.

Dubai’s DMCC was selected by the FDI after its judges examined its overall performance during the previous year. They reviewed features like the increase of tenants, its growth percentage and how it introduced new motives and incentives so as to make the free zone competitive.

The award indicates that the DMCC is not only considered the best financial hub within the MENA, for SMEs but also across the globe. Although DMCC offers services to all sized-corporation, the FDI judging committee regarded that the free zone is especially strong and attractive for SMEs. The rate in which new companies are registering in DMCC only goes to prove that it is the most attractive free zone internationally.

it is a known fact that the free zone market is especially competitive throughout the globe, even more in the Middle Eastern countries and Dubai. Thus, it is a great honour that DMCC was awarded as the most elite and attractive free zone trade for SMEs, as it proves its position and strength on an international spectrum.

The FDI reviewed forty-five free zones across the globe, including seventeen free zones that also participated in the FDI Middle East and North Africa Free Zones of the Year 2014 in the beginning of the year.

At present, DMCC’s registered SME companies amount to 70% of its member companies. These SMEs are involved in many sectors like trading, shipping and recruitment, advertising, fashion and technology. DMCC is home to an abundant of diverse companies. The free zone is also home to a plethora of leading and large corporations like Alcatel Lucent Middle East and North Africa, 7-Eleven, Nutricia Danone, LVMH and Carrera Y Carrera.

DMCC:

the DMCC free zone, was set up in 2002 by the government of Dubai. The main aim was to create the required physical, market and financial infrastructure so as to establish a commodities market in Dubai. DMCC is home to many leading companies within the commodities sector, but also supports industries that are linked to finance, insurance and logistics. DMCC is viewed as a strong and vigorous free zone, with a strong infrastructure which includes free zone benefits and status, trade networking platforms, built storage facilities and secure vaults. Registered and resident companies enjoy the attractive benefits offered by the free zone, which comprises amongst other, 0% corporate and income tax for 50 years, 100% foreign business ownership, complete possession of business premises and a secure controlled environment. DMCC has also introduced a compliance policy, which is based on the compliance legislation and regulations of the UAE Federal Government and proficient international entities. The free zone is the owner of three completely operational towers that offers most of the physical, market and financial infrastructure. The towers include the facilities of Jewellery & Gemplex, the expert diamond and pearl traders and gold vault.

Dubai’s Economy

The whole world has noticed how rapidly Dubai has improved its economy and made its mark. The economy of Dubai has improved to such an extent that Dubai has been chosen by international leading businesspersons to set up their regional or worldwide-central base, and is now recognized internationally as a business hub.

In the past, Dubai’s economy was almost wholly based on oil. At present matters have changed, and Dubai’s depends on oil revenues for approximately 4% of its GDP. Today, visitors are astonished by Dubai’s thriving economy when visiting, since the entire region reveals the amount spent on infrastructure, such as the roads, airports, residential regions, hotels and attractions. The amount that will be spent over the following five years is estimated to amount to $21 trillion US dollars across the GCC, which the majority of the sum is destined for Dubai.

Dubai’s Economy in the Future

Today most of Dubai’seconomy is based on trade. According to the Dubai Strategic Plan, which Dubai’s government strives to achieve by 2015, the plan accentuates how diversification of the economy is the main strategic objective and intention. Consequently, Dubai is moving towards a more diversified economy based on a more knowledge and service economy, thus establishing its position as a pioneering tourism, financial and business, and real estate centre.

The main objectives include maintaining an 11% pa economic growth rate to reach a GDP of 108 billion US dollars by 2015 and to raise real GDP per capita to 44,000 US dollars. Dubai hopes to achieve its goal by centering on tourism, transport, trade, construction and financial services. It is vital to mention that during the last six months, major leading banks have been relocating to Dubai, in spite of the influential financial crisis that hot the entire world. Consequently, this fact is proof that the Dubai Strategic Plan is working wonderfully. 

According to Al Mansouri: UAE-US trade relations to grow stronger

The UAE Minister of Economy, Sultan bin Saeed Al Mansouri with pleasure announced that the UAE and the USA’s trade and investment collaborations have shown an increase and are bound to grow even more. Both nations are willing to strengthen their relations since profitable and unexploited opportunities are presumed to continue coming their way.

Sultan bin Saeed Al Mansouri is preparing to assign to the USA an attractive UAE business project to discuss prospects with senior officials.
 

The Minister explained that both nations agree that it is upon their interest to encourage cooperation between them and undertake new opportunities that will benefit both nations. He added that the countries have strong and stable economic and commercial ties, which is evident from the $26.9 billion they received through their non-oil trade activities during 2013. Furthermore, he added that the UAE is still the biggest export market for USA goods and services among the Mena-region countries.

The Minister continued and explained that during the fifth Economic Policy Dialogue held between the two countries in Abu Dhabi in April 2014, the bonds between the countries grew closer and they discussed about how to create stronger profitable and commercial links between the nations to meet their future goals for the future. Finally, the Minister added that during their present scheduled meeting the two parties would discuss on how to cooperate in vital sectors of the economy such as energy, aviation, information technology and healthcare.

a variety of senior officials and executives from the UAE state and private-sector corporations will attend the meeting. These include high-rank officials from the Ministry of Economy, Dubai Exports, Sharjah Investment and Development Authority, Dubai Outsource Zone, Dubai Internet City, Sharjah Tatweer Forum, Mubadala Aerospace, Abu Dhabi Department of Economic Development, Abu Dhabi National Oil Company, Abu Dhabi Technology Development Committee and the Information and Communication Technology Fund.

During the meeting, the parties will discuss potential projects they can undertake and invest which can benefit both nations. In addition, the officials and executives will discuss ways to increase the trade between them, at both the government and private level. During their stay in the USA, the UAE will visit a variety of cities including Washington DC, Seattle, Palo Alto, Silicon Valley and Los Angeles.

The UAE Ministry of Economy shares the same vision as their leader and hopes the UAE will increase their GDP by at least five percent by the year 2021, by shaping a knowledge-based economy as stated by Al Mansouri.  He added that this is their precedence concern, and so they wish to draw all their attention on promoting and cultivating new ideas that will aid them expand in a variety of economic sectors but simultaneously continue improving their competitiveness on the global level. The USA houses the largest international corporations and the most innovative and technological organizations and companies, so for this reason while the UAE officials are visiting the USA the aim to create strong partnership ties and learn from their partners.

in line with the Ministry of Economy, the UAE marked an increase of 12% in foreign trade, increasing at an impressive rate of 12.6% from 2010 till 2013 where it nearly reached $300 billion.

Apart from the monetary gain that resulted from the two nation’s partnership, both countries experienced several other benefits. For instance, more than two-hundred thousand people were employed in the USA, whereas the direct investments made by the UAE to economic markets in the USA and its economy increased by more than $21 billion.

In accordance with facts and statistics taken from the Ministry of Economy, more than one-thousand USA companies are located in the UAE and more than sixty-thousand USA citizens reside in the UAE.