lunes, 12 de marzo de 2012

Dubai's DIFC aims to be the bridge that links East with West

Abdulla Mohammed Al Awar has been the chief executive of the Dubai International Financial Centre (DIFC) since 2009.
The centre is widely regarded as the premier financial hub in the Gulf region, but it has faced challenges as a result of the global economic downturn as well as the financial legacy of rapid expansion in the emirate's boom years.
The Arab Spring has also thrown up new opportunities for the DIFC, as Dubai seeks to promote itself as a haven compared to areas that have experienced civil unrest.

At a time when global economic power is generally regarded as shifting from West to East, Mr Al Awar outlines his view of the DIFC's role in the international financial system and talks about its ambition to double in size in the next five years.
q: Much has changed in the three years since you have been chief executive of the centre. Can you explain the current strategy?
a: The DIFC is built on the "cluster concept" to encourage an environment for financial services. I like to think a lot of work gets done in the cafes like Caribou and the Dome, as well as in the offices. We act in the role of facilitator for our firms. The intention is to bridge the gap between international financial centres and create a platform where there are laws, regulations and the infrastructure to enable business to be done.
q: Big global financial centres such as London, Hong Kong and New York all have vibrant stock markets as their hub. What about DIFC?
a: Nasdaq Dubai satisfies the requirements of a big financial market, and it has the platform and regulatory system to be as attractive as them. But you have to ask yourself how a financial centre excels. One factor is as the location for a liquid capital market, but it is not the only one. There also has to be the other elements that make London or New York excellent financial centres, like a business-friendly government, good geographic location and connectivity. If you have a liquid capital market and lack these others, it is quite difficult to be successful whatever the capital market is like.
The DIFC free zone is physically here in Dubai, of course … it's almost like a "carve out" from the city of Dubai. But the area of influence is much wider, stretching from Hong Kong to London, across 42 countries.
The DIFC involvement with the UAE capital markets is indirect, but we always have a focus on the other parts of the market, the regulator and the local stock exchange. Our role is to encourage these separate parts of the Dubai business community, without encroaching on their independence.
q: What's your view on the possible unification of the stock markets in the UAE?
a: We see merits in further consolidation of financial markets in the UAE, and would support a move by the federal Government to achieve this, but we are not in a position to make that happen. That is not our role. The fact there are three markets in the UAE has not inhibited our development. It has grown consistently and significantly since 2004, even during the crisis years.
Nasdaq Dubai was set up not just for UAE investors, but for regional and international investors. Over the past year, an analysis of the figures shows that 36 per cent of financial firms in the DIFC are from the Middle East and Asia, the same as from Europe. Four or five years ago the figure would have shown less than 10 per cent from Middle East and Asia.
q: So the DIFC is becoming an Asian financial centre?
a: That doesn't mean there is no new interest from Europeans and other traditional places like the US. In fact, we have seen an expansion of business here by western firms that have left other Gulf centres because they regard Dubai as more secure. But the shift has definitely been eastwards.
I saw Jim O'Neill [the Goldman Sachs economist] recently said Dubai could be the "capital" of the fast-growth countries that he calls the "N-11", and I can see why. We're four hours' time difference from both London and Hong Kong, and Emirates Airline can get you to both in about the same time.
q: Is the DIFC a Gulf financial centre, or a global financial centre?
a: All these factors make it sensible, even inevitable, to pursue international alliances, and the DIFC has been doing this in two ways. The first is through regulatory links with other exchanges and the DFSA [Dubai Financial Services Authority]. There are around 50 of these involving memoranda of understanding [MoU] to share information and ideas. We have also been increasingly pursuing direct contacts between the DIFC and other financial centres. We have sought to identify the opportunities that exist between financial centres with a similar global perspective. We've recently signed MoUs with Hong Kong, Paris, Shanghai, Madrid, Luxembourg and London, among others.
We're looking to create opportunities, and tell these international centres about the opportunities that exist in DIFC. The "Knowledge Series" of events in Dubai is one way of doing this. Representatives from international centres come to Dubai for an intensive, half-day forum on a particular area relevant to the DIFC. We'll run five or six of these this year.
q: How do you measure progress at DIFC against its original ambitions?
a: It's been seven years since the DIFC was set up and there has been quite aggressive development since then. We reached a crossroads in 2010. We had achieved many of the original ambitions and it was time to revise the strategy.
The centre also makes a valuable contribution to the economy of Dubai. McKinsey, the management consultants, calculated that for every dollar spent in the DIFC, US$17 (Dh62.44) gets spent in Dubai.
We need now to encourage member firms to extend the breadth and depth of their activities here. Increasing licensing capacity by extending firms' range of activities is a good indicator. This is a key priority for DIFC, to get firms to upgrade their capacity.
q: You have said you want to see the DIFC double in size in five years. How will you do this?
a: We have the physical capacity. Three buildings within DIFC jurisdiction developed by private third-party investors are already completed, and lettings and marketing are at advanced stage: Currency House is 97 per cent let, Currency Tower is 59 per cent occupied and Liberty House is 44 per cent let. New capacity consists of the Park Tower, the EFT building, where leasing has begun already and Index House, where all floors have been pre-sold to investors. These will add [167,225 square metres] of capacity. Daman Tower and Central Tower are also part of this new phase of expansion. What remains to be done is not on the physical side, but consists of the software infrastructure for the DIFC. Now we need scale, not just sales.
q: Until a couple of years ago, "DIFC Week" was an annual international showcase for the centre. Are there any plans to revive it?
a: DIFC Week was an appropriate event for its time, but in 2010 we decided to redefine the strategy and went ahead with the Knowledge Event series. But if and when we decide on a bigger event again, we are very dynamic and can proceed very quickly.
q: The centre's investment arm has to meet a $1.3 billion bond repayment in June. Can you give an update on that?
a: Our intention remains the same, to meet our debt obligations in full.