Opening financial doors: A new economic centre will attract regional and international players

Dubai has made great strides in opening up new avenues for economic growth. Over the last decade, it has developed itself into a strategic centre for international businesses to tap opportunities in the fast-growing emerging markets surrounding it. This development has been guided by a comprehensive economic diversification plan focused on developing key sectors that can accelerate economic growth, not only in the UAE, but also in the wider region.

Dubai International Finance Centre (DIFC) is an initiative launched to harness the potential of the region’s financial services industry. Ideally located to bridge the gap for a global financial centre in a time zone between London and Hong Kong, DIFC has developed into a gateway for regional capital and investment and a platform for tapping the largest emerging market for financial services. Today, DIFC is a community of over 800 companies. These include some of the world’s largest financial services firms.

At the heart of the concept of DIFC is an independent regulator, Dubai Financial Services Authority (DFSA), which grants licences and regulates the activities of financial institutions in DIFC. DIFC has been granted authority to self-legislate in civil and commercial areas. An amendment to the UAE Constitution and a resulting federal law concerning financial free zones have allowed DIFC Authority to create a legal framework based on the best practices of leading jurisdictions in Europe, North America and East Asia.

Both DIFC Authority and DFSA have reviewed the laws and regulations of the world’s major financial centres, and with the assistance of leading professional advisors, have adopted and blended various best practices to produce clear, flexible and practical legislative and regulating frameworks.

GATEWAY TO REGIONAL CAPITAL & INVESTMENT: undefined Between the financial centres of Europe and Southeast Asia, lies a region comprising 42 countries with a total population of 2.2bn people and a combined economy worth $2.5trn in terms of GDP. Yet, this vast region, consisting of North and East Africa, the Levant, the Caspian Sea, the Indian subcontinent and the GCC states had, until recently, been without a world-class financial centre.

With the recent economic development – fuelled by the significant increase in oil prices, rapid expansion of trade, population growth and the immense infrastructure projects currently under way – there is a growing need for a financial centre to serve the expanding needs of institutions and governments in this region. The concept of DIFC has evolved as a means of:

• Providing depth to the regional financial markets by broadening the range of traditional methods of financing currently provided by regional banks;

• Attracting liquidity back into investment opportunities within the region, thereby contributing to its economic growth;

• Facilitating planned privatisations in the region and enabling initial public offerings of privately owned companies, thus providing impetus to the programme of deregulation and market liberalisation throughout the region;

• Contributing to the development of regional stock markets, which, in turn, will contribute towards broadening the capital and ownership base of private sector companies; and

• Promoting the growth of Islamic finance and the development of the region’s reinsurance sector. Nasdaq Dubai (formerly Dubai International Financial Exchange), an international stock exchange located in DIFC, plays a major role in the development of regional capital markets by attracting key regional companies to list their shares and other issued securities on the exchange. This is expected to attract international investors and encourage additional portfolio flows to the region, thereby accelerating the process of the region’s integration into world markets.