Business | Economy
Dubai signs trade deal with Hamburg
The Dubai Chamber of Commerce and Industry yesterday signed a strategic partnership agreement with the Hamburg Chamber of Commerce in line with efforts to boost business and economic ties between the two cities, especially in the grip of the financial crisis.
- By Suzanne Fenton, Staff Reporter
- Published: 23:45 December 18, 2008
Hamburg: The Dubai Chamber of Commerce and Industry yesterday signed a strategic partnership agreement with the Hamburg Chamber of Commerce in line with efforts to boost business and economic ties between the two cities, especially in the grip of the financial crisis.
The agreement was signed by Hamad Bu Amim, director general of the Dubai chamber; Hisham Al Shirawi, Vice-President of DCCI; Frank Horch, president of the Hamburg Chamber of Commerce (HCC) and Hans-Jorg Schmidt-Trenz, chief executive officer of HCC.
Al Shirawi said the UAE is currently going through a tough time, but has not yet felt the full impact of the global financial crisis.
"This financial earthquake will reach us. We have not yet seen the full impact of this and the worst is yet to come," Al Shirawi said during the opening day of the Dubai-Hamburg business forum.
Local and regional banks have lost billions of dollars, Al Shirawi said, and it is vital that the UAE avoid the repercussions that the US is currently experiencing, such as the massive loss of property and savings.
The fact that Dubai, while not immune to the events taking place in the global economy, has not yet felt the true impact, is reflected in that trade is up 40 per cent on last year, said Bu Amim.
Other DCCI figures show that the insurance sector in Dubai is still immature and is valued at $3 billion (Dh11 billion) and has recorded a growth of 25 per cent annually.
The UAE banking sector, however, is rocketing and is valued at around $410 billion as of last June. This represents 6 per cent of the UAE's GDP, said Belaid Rettab, head of data management and research at the DCCI.
Net foreign investment grew 417 per cent in 2007 which Rettab described as "exceptional", although the econ-omic worries have significantly reduced the bulk of investment.
Rettab said the UAE was definitely not over-banked and there is still room for new players.
The Islamic banking sector is growing 15 per cent per year.
Islamic banking has gained a lot of ground in the last five years and growth has almost doubled in this time, said Khalid Al Kamda, chief executive officer of Dubai Islamic Bank.
"This is because it depends on true assets, not paper assets and that is why most Islamic financial institutions have weathered the sub-prime as it did not involve itself in paper assets," Al Kamda said.
General liquidity
However, general liquidity is still short in Dubai as the $100 billion foreign investment in the local market, especially real estate and stock market, has now been taken out by worried investors.
"They [foreign investors] have had to firefight at home, so rather than keep the money in the UAE, the short-term interest for them has gone. So the loss of this huge financing has created a gap. This year will be the mark, [against which] 2009 will be measured," Al Kamda said.
Although growth for next year may slow to double-digits, growth will still occur, added Al Kamda.
Schmidt-Trenz said what the world is seeing now is the result of a "misled US economy" and described the US decision to cut interest rates to 0 per cent is "clearly an act of desperation". He also said if Germany did not have the euro, the effects in the country would have been much more severe.
"Dubai has developed at a breath-taking speed and the relationship between the two cities has also developed rapidly... Business will decrease in the short-run, but our partnership rests on a solid foundation," said Axel Gedaschko, Hamburg state minister of economic and labour affairs.
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