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Dubai Int'l Financial Centre opens for business

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Sept 22: The Gulf emirate of Dubai took a major step this week towards achieving its goal of becoming a financial hub between European and Far Eastern markets by declaring its international financial centre open for business.

Standard Chartered Bank was one of three institutions granted a licence Monday following the formal establishment last week of the Dubai International Financial Centre, its regulatory authority, the DIFC Financial Services Authority (DFSA) and other bodies.

"Dubai is at the centre of major emerging markets ... Throughout the region you're talking about 1.8 trillion dollars of wealth and yet there's no financial centre to serve this area, except those in the West, Hong Kong or Singapore.

So the DIFC is here to fill that gap," DFSA chairman Habib al-Mulla said. "For the first time ever in the region we find a regulatory scheme which is parallel to what exists in the major financial centres in the world ... And that's something the region has lacked until now. There hasn't been any legislative regime equal to what the DIFC has created in the past few months," Mulla said.

The DIFC laws cover the full range of commercial and civil activities, he added.

DIFC entails a multi-billion-dollar real estate development on a 110- acre (445,000-square-metre) swathe of desert, or 150 per cent of London's Canary Wharf, and will comprise up to 40 buildings and an estimated 50,000 employees.

The main premises will be the virtually completed Gate Building into which the main DIFC bodies will move in December.

The end of 2006 should see the completion of about 40 per cent of the site, which will also hold the world's largest car park, able to accommodate 37,000 vehicles.

Some 50 applications for licences are currently in various stages of being processed, said DFSA Chief Executive David King. Up to 20 more are expected to be issued by the end of this year.

"From today, Dubai will supply the missing link in the global economy," King said.

"Now at last, we have a market with the world class legal framework, transparent operations and independent regulation that will attract the attention and confidence of the global investment and business community."

DIFC, which King said will generate money for the region and is likely to raise its standards, plans to cover asset management, wholesale banking, securities trading and reinsurance. It will also set up an international financial exchange.

"But additionally, in the heart of one of the world's largest Muslim communities, we've designed an Islamic financial business law, crafted ... to meet the needs of the region," he said.

This is intended to attract participants wishing to invest in accordance with Islamic law "in an environment on their doorstep," King said.

Asked about possible concerns of institutions about the credibility of the United Arab Emirates, from where much of the cash used by terrorists to finance the September 11, 2001 attacks on the United States was reportedly transferred, King stressed that "very strict procedures" had been put in place.

The standards set will "reduce the potential for adverse activities and crime to take place," he said.

Post 9/11, he said, "a lot of money that was in the States is being repatriated to the region," and Dubai is attracting that money "because it's a very stable environment."

DIFC is one of a raft of pioneering schemes the government of Dubai, one of the seven city states that make up the UAE federation, has launched in a bid to establish itself as the Gulf's business and leisure hub, as oil resources run out.

September 27, 2004 at 07:46 AM in Financial Services | Permalink | TrackBack (9) | Top of page | Blog Home