First with Financial Comment from Arabia

New boss for DIFC as Dubai hosts World Economic Forum

with 2 comments

This weekend Dubai is hosting a plenary session for the World Economic Forum that sculpts the agenda for the famous Davos event. There has also been the announcement of a new governor for the Dubai International Financial Centre who is charged with developing this landmark project over the next five years.

Ahmad Humaid Al Tayer is a safe and very experienced new governor of the DIFC. He is a sixty-year-old former UAE minister and presently chairman of both Emirates NBD Bank and the Commercial Bank of Dubai. He replaces the popular Dr Omar bin Suleiman. The reason for his departure is unexplained.

Doubtless Mr. Al Tayer’s initial task will be to formulate a new business plan to advance the DIFC whose firms have suffered in the global financial crisis, although the number of professional staff employed in the centre has been disappointingly low in comparison to the 300 financial firms that have signed up.

Expansion plans

The DIFC will want to welcome even more firms to its attractive, purpose-built complex in downtown Dubai, and critically to support them in both expansion locally and employing a very much larger number of people. These high-spending expatriates are a vital part of the future of Dubai as well as the business their firms conduct here.

This is the time for bold thinking and bold initiatives. Here are a few ideas for how to make the DIFC work better. They are controversial and only suggestions. It will be for Mr. Al Tayer to make his recommendations for action.

First, the firms in the DIFC complain that they are unable to conduct business in dirhams in the UAE. For a financial centre not to be able to do business fully in its own location seems an anomaly. The Qatar Financial Centre has made this work, why not the UAE?

Secondly, the Nasdaq Dubai is the jewel in the DIFC. But could it not be merged with the local Dubai Financial Market and the Abu Dhabi Exchange to create a much bigger, more liquid and transparent Nasdaq Emirates?

It is anomalous that a small country like the UAE has three trading platforms. Qatar has the Qatar Exchange with NYSE Euronext as a shareholder, why not the Emirates Exchange with Nasdaq as a shareholder?

Thirdly, if you want to think really radically, should the DIFC not be transformed into the Emirates International Financial Centre and be seen more as a resource for the whole country?

Radical agenda

This is all of course much easier to say than achieve in practice. It throws up as many problems as it hopes to solve. Who would be the regulator? Would the UAE Central Bank function be combined in some way with the DFSA? Would international banks accept this?

Rome was not built in a day and the DIFC has come a long way from its foundation five years ago. But the arrival of a new governor with a long and distinguished record of commercial and public service is a chance for a rethink.

It may be that on reflection the current business model for the DIFC is still the best. It is hard to know without a seat at the top tables. But there is an opportunity for major changes here.


Written by Peter Cooper

November 21, 2009 at 8:44 am

2 Responses

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  1. It a very prudent suggestion indeed and this is the level of integration Dubai and Abu Dhabi should have if they really want to flourish. My first question when I started trading on DFM in 2004 was why the hell do we have two distinct platforms in a country as small as UAE?
    This country can achieve a lot more if each emirate is focused on a specific industry, but unfortunately they always end up competing for the same business e.g Emirates and Etihad,DFM and ADX…and gthe list goes on

    Having said that, I strongly doubt that this integration is possible ….Ego is the biggest barrier


    November 23, 2009 at 3:40 pm

  2. Bold move indeed – but what would happen to Sowwah Square?

    “one of Abu Dhabi’s foremost commercial projects and the flagship development on Sowwah Island. The 585,000-square-meter mixed-use complex, anchored by the distinctive new headquarters of the Abu Dhabi Securities Exchange”


    November 22, 2009 at 9:38 am

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