Like clockwork: Capitalising on its time zone, Dubai builds a financial centre

Between the banking centres of Europe and East Asia lies a region of 42 countries, with a population of 2.2bn and a GDP of $2.5trn. This vast swathe of land, stretching from the western tip of North Africa to the eastern edge of South Asia, has until recently been without a major financial centre. Meanwhile, economic growth across the area, fuelled by rising oil prices, expansion of trade, population growth and vast infrastructure projects, has swelled demand for financial services, both from companies and governments.

Financial Gateway

 Seeing potential in its strategic time zone between London and Hong Kong, the UAE in 2004 created the Dubai International Financial Centre (DIFC). The constitution was amended and a federal law passed, creating a financial free zone on a 110-acre plot south of Dubai Emirates Towers. It set up a commission, the DIFC Authority, with the power to self-legislate in civil and commercial areas, and an independent regulator, the Dubai Financial Services Authority (DFSA), to grant licences and regulate financial activities. The authority and DFSA then reviewed the regulations of the world’s major financial centres and, with the help of top professional advisors, devised a legal framework based on the best practices of leading jurisdictions in Europe, North America and the East Asia. The free zone has since become the world’s fastest-growing financial centre, a gateway for regional capital and a platform for tapping the largest emerging markets. It today houses more than 800 companies, including some of the world’s biggest financial firms.

Concepts

 The district was intended to: • Give depth to regional financial markets by broadening the range of financing methods available;

• Attract liquidity back into investments in the region, thus boosting its economic growth;

• Facilitate planned privatisations of state companies and new initial public offerings of private ones, thus aiding deregulation and liberalisation;

• Develop regional stock markets, thus widening the capital and ownership base of private companies; and

• Promote growth in Islamic finance and reinsurance. NASDAQ Dubai, the DIFC’s international stock exchange, will be central to developing the region’s capital markets, attracting regional companies to list their shares. This in turn should attract international investors, and accelerate integration with world markets.

Features

The city complex is designed to meet the demands of the world’s most sophisticated financial institutions and the professionals who work for them. The Gate, its signature building, along with Gate Village and precinct, comprise the first development phase, an integrated cluster that will provide modern housing, offices, apartments, hotels, shops and restaurants. Plans for future phases show a total 371,610 sq metres of modern offices, 31,000 parking spaces and an automated transit system reaching the entire district.

BENEFITS OF SETTING UP IN THE DIFC: undefined • 100% foreign ownership.

• Zero tax on income and profits for 50 years.

• Access to the UAE’s many double taxation treaties.

• Unrestricted repatriation of capital and profits.

• An independent, regulatory agency working alongside other agencies in major jurisdictions.

• International legal system based on English common law (the only such jurisdiction in the region).

• A transparent business environment aligned with internationally accepted laws and best practices.

• An international stock exchange with primary and secondary listings of debt and equities.

• Many legal vehicles with flexible capital structuring.

• A pool of skilled professionals in Dubai and the region.

• Modern transport and telecommunications systems.

• A responsive one-stop shop service for visas, work permits and related requirements. All entities registered in the free zone must ultimately operate from within its borders, but this requirement is waived until the DIFC’s infrastructure is complete.