Celebrating a decade of growth

On the eve of the Dubai International Financial Centre’s 10-year anniversary, Governor HE Essa Kazim looks back over the decade, and reveals new plans in the pipeline

Colourful examples of modern art, some depicting Arabic calligraphy, decorate the management offices at Dubai International Financial Centre (DIFC). The view from the offices, perched above the emirate’s bustling financial free zone, is equally lively and a reminder that much has been achieved in the decade since DIFC’s establishment. It is a pleasant landscape: with views of modern archi-tecture, busy cafes and retail outlets, and a handful of bespoke art galleries, not to mention some of the biggest names in the world of finance.

On 10 November DIFC will celebrate the 10th anniversary of its foundation. The man responsible for overseeing its tremendous growth is aware of the progress the DIFC has made in this time, and the responsibility it bears for the ongoing diversification of the emirate’s economy.

“We’ve been extremely successful during a very short period of time,” says His Excellency Essa Kazim, Governor of the DIFC. “The DIFC has always been viewed as a strategic initiative to support the process of development [in Dubai], and it has managed to become one of the engines in Dubai’s economy, to support growth in a different way. Although Dubai has always been known for trade and tourism and its transportation activities, this dimension is different in terms of its value-added activity.”

The Chinese are concentrating on taking their activities overseas, not only to the Middle East but also to Africa as one of the areas of interest to them, and the DIFC would be the best place for them to create that link

His Excellency Essa Kazim, Governor of the DIFC

Over the past 10 years, Dubai has managed to double the contribution of the financial sector to its GDP, from five to six per cent to around 12 per cent. Today, the DIFC is home to branches of 21 of the world’s top 25 banks and 11 of the world’s top 20 money managers – and the number of people working at the DIFC from the financial and services sector grew from just 75 in 2004 to 16,500 by mid-2014.

“Today, as we look at not only the contribution of the DIFC to Dubai’s total GDP, but also in terms of establishing a centre between Europe and East Asia, it has been recognised by major global financial institutions,” he says. Some of the global heavy hitters to have established offices at the DIFC include Julius Baer, Franklin Templeton Investments, AIG, Deutsche Bank, Barclays Bank Plc, Credit Suisse, and Goldman Sachs. For Kazim, the DIFC’s status as the only financial centre in the region operating to global standards and regulations has been a key factor in attracting such key industry players.

“Companies always faced difficulties in the past, especially when it comes to financial institutions,” he says. “They need an environment that is really friendly and in line with international standards, that understands regulations, and a judicial system that would support them if there was any dispute.”

In May, Kazim led a trade delegation to Beijing in a bid to reinforce the increasingly important trade partnership between the UAE and China and to highlight DIFC’s role as the key business and financial hub for the Middle East, Africa and South Asia (MEASA) region.

The UAE has become a key location for Chinese companies seeking to access markets in the Middle East, Europe and Africa. Chinese-UAE trade has grown rapidly over recent years, reaching US$36.7bn in 2013. The DIFC has already attracted China’s four biggest banks – Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China and China Construction Bank – and the UAE is now home to more than 200,000 Chinese nationals.

DIFC
Essa Kazim is looking to Chinese financial institutions as a possible passage for growth

During its initial phase of development, the DIFC concentrated on attracting North American and European financial institutions, says Kazim. However, as growth shifted, the financial hub has also changed it focus.

“We are now looking at the Far East and the growth of emerging markets in this part of the world, whether it is the Middle East or Africa,” he explains. “So DIFC’s future strategy is to consolidate and concentrate on creating the link between the two blocks of activities where growth is presenting itself in the Far East – represented by China and to some extent also India – [and] linking that through the Middle East with Africa.

“China is very important,” he continues. “It’s the world’s second-biggest economy and the Chinese are concentrating on taking their activities overseas, not only to the Middle East but also to Africa as one of the areas of interest to them, and the DIFC would be the best place for them to create that link.”

Chinese firms often prefer to build their own, familiar, “ecosystem” around their operations, Kazim suggests. This could represent an opportunity to see growth in support services around major Chinese financial institutions. “We hope that other financial activities, such as wealth and asset management, and maybe even private equity, could also be attracted to DIFC to compliment the banking activities they are currently doing,” he ventures.

A number of banks with offices at the DIFC, including Chinese and Korean institutions, have also shown interest in taking their businesses to the next level, either by changing their status from a subsidiary to a branch office, or by switching to a higher category in order to expand their business – the DIFC offers firms different categories, from one to five, depending on their activities and capital allocation.

Ten years on from launch, the DIFC will now focus on diversifying its geographic and product mix, by attracting more companies from growth markets and linking emerging markets with China and India, as well as introducing changes to fund management in order to promote that activity.