Boao Forum countdown: Chirag Shah

The Boao Forum for Asian Financial Cooperation Conference takes place in Dubai in November. The three-day event will see government, public and private sector leaders convene to debate the most pressing issues facing Asian countries, and promote economic integration among member states. Chirag Shah, chief strategy and business development officer, Dubai International Financial Centre (DIFC), discusses the strong business and trade ties between Asia and Dubai, and describes his hopes for the forum

Vision: What impact has Asia’s economic success had on Dubai’s financial sector?

Chirag Shah: When DIFC was launched a decade ago, more than 75 per cent of our firms came from Western Europe and North America. Today, it is 50 per cent. Twelve per cent of firms are from Asia, and Middle Eastern firms – including startups from the UAE – account for 30 per cent. Far more firms from Asia, Africa and the Middle East are using DIFC as a platform, and that is reflective of what’s happening globally in terms of changes in trade flows and economies. We are a gateway to the Asian continent, and a platform for firms looking to do business in the Middle East and Africa.

We see the world of finance being dominated by Asia, rather than the West, so we would welcome more interaction on that front

There has also been a change in not just the number of firms we’ve seen come to Dubai, but also the significance of the operations they launch. We host China’s top four banks, Japan’s top four banks and Indian’s top 10 banks. Most have fully-fledged banking licences; it’s not just a man with a briefcase. These financial institutes are coming here to do real business with a lot of depth.

Its been suggested that GCC economies have yet to see significant FDI flows from Asian economies. Do you see that increasing in the near future?

A key driver for foreign direct investment (FDI) is a deficit of capital. That’s not really an issue here. China and the Asian economies are also looking specifically for high-growth, high-return markets and, for them, that’s well represented in the African continent, among others.

It’s also true to say that both Asia and the GCC have grown so rapidly, that they’ve not really needed to look at investment opportunities elsewhere. As they globalise and their financial institutes expand abroad, the opportunities for overseas investment will increase. Financial institutions are key to increasing trade flow.

Shah states that the increasing use of DIFC by Asian firms is reflective of a more global trend

How important is DIFC as a platform for foreign firms seeking to tap Asia and Africa’s fast-growing economies?

On a practical note, we offer everything firms need to do business. But connecting people is really what we are about; we enable people to exchange ideas. Just a few weeks ago, we hosted an event between Dubai Mercantile Exchange and a new energy exchange being set up in Shanghai that plans to trade sour crude in renminbi. Crude oil is currently produced in the Middle East, consumed in Asia, but priced in New York in dollars. It doesn’t make sense. Dubai Mercantile Exchange is now working with this exchange, which is promoting the use of renminbi as a settlement currency and a pricing currency to provide sour crude futures. That’s a significant development, and it is what the DIFC is all about; bringing elements of the financial community together to do business and connect the region with the rest of the world.

What do you hope to gain from the upcoming Boao Forum for Asia Financial Cooperation Conference, taking place in Dubai in November?

The exposure offered by the conference is very important. It allows Asian companies and economies to understand and exploit the opportunity offered by the infrastructure here in Dubai. Equally, it allows local firms here to understand the scale of the opportunity available in Asia. Companies can become very insular, and these events help to offer a broader perspective. We see the world of finance being dominated by Asia, rather than the West, so we would welcome more interaction on that front.