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New Dubai financial centreout to claim trillion-dollar piece of puzzle
Picture taken27 August 2002 shows a board (L) advertising construction plansfor the Dubai International Financial Center (DIFC) on SheikhZayed road in the Gulf emirate, which will go live in October.DIFC officials said the center will not be a brass-plating exercisefor offshore banks but an attempt to net one trillion dollarsworth of trade that falls between the markets of Europe and theFar East. AFP PHOTO/RABIH MOGHRABI
DUBAI, (AFP) - Dubai's ambitious plan toset up a regional financial centre will not be a brass-platingexercise for offshore banks but an attempt to net one trilliondollars in trade that falls between the markets of Europe andthe Far East.
"The basic premise is that there isa piece missing in the puzzle. There isn't a financial centrebetween Frankfurt and Singapore," said Dubai InternationalFinancial Center (DIFC) spokesman Geoff Rapp.
"We are not about brass plating. Weare creating a market. It is not an offshore centre," Rapptold AFP. "Demand has been overwhelming from all institutionswe've so far approached."
The Gulf emirate is also banking on DIFC,which will be launched in early 2003, to double to 20 percentthe contribution of the financial sector to the gross domesticproduct of the United Arab Emirates (UAE) by 2010.
"The long-term impact will be substantial,"said DIFC board chairman Anis al-Jallaf.
"DIFC was not developed for the generationof profit for itself, but to create and facilitate the right environmentto attract the top financial institutions of the world to Dubai,the UAE and the region," Jallaf said.
DIFC was unveiled last February with theaim of generating capital flow and investment in a region stretchingfrom the Gulf and Africa to Central Asia and the Indian subcontinentworth one trillion dollars.
It entails a multi-billion-dollar real estatedevelopment on 4.8 million square feet (432,000 square metres)of desert sand featuring a 50-storey headquarters and up to 14other skyscrapers.
DIFC is one of a raft of pioneering schemesthe government of Dubai, one of the seven city states that makeup the federation of the UAE, has launched in a bid to establishitself as the Gulf's business and leisure hub, as oil resourcesrun out.
One Dubai-based fund manager, however, describedthe initiative as "another example of the government parcellingup the desert."
"Any initiative has to be welcomedas a step in right direction, but it seems at the moment thatit's another real estate venture whose only added value will bean alleviation of the country's red tape situation."
Officials refuted claims there had beenany problems convincing institutions of Dubai's credibility inthe face of bad publicity over money laundering in the wake oflast September's terror attacks in the United States and its proximityto Iraq.
"Companies can see the Dubai government'strack record and potential, because most firms are here in somecapacity. The issue is that there are no laws or regulatory bodies,"Rapp said.
Steve Martin is spokesman for British-basedbanking giant HSBC Holdings plc (HSBC), lead manager of Malaysia's500-million-dollar floating rate bond, which is set to be thefirst listed on DIFC when the market goes live in October.
He says DIFC was a "logical step forDubai in developing itself as a regional hub.
"DIFC will help attract investors andfinancial institutions to Dubai," which will host the jointannual meeting of the International Monetary Fund and the WorldBank in September 2003, Martin told AFP.
"It will incorporate regulations tobring the serious players here and establish the mechanisms thatthey expect to be in place to launch financial instruments."
DIFC will start taking applications in Octoberin parallel to the first draft of the body's regulatory and legalframework.
"We are in talks with a certain numberof clients that will be operating from day one," Rapp said,adding that DIFC was "very close" to naming a foreignstock-exchange operator.
"We have pretty much shortlisted tothree, and we expect to make an announcement in the next coupleof months."
One Dubai-based Western banker said a stockexchange stood to reap massive benefits "if more Arabs fundsare withdrawn from the US market amid the ongoing tension betweenthe United States and the Arab world, and brought back here andinvested in the region.
"One thing DIFC can offer is a unifiedstock exchange because if it brings together the region's marketsone by one, there will be increased liquidity in a pan-Arab bourse,"the banker said.