Dubai: Dubai Economic Council, in association with Deloitte, on Tuesday unveiled a detailed report “Financial Sector Development for Promoting Investment and Sustainable Growth in Dubai” which outlined policy recommendations to develop Dubai into a leading global financial and trading hub.
The report said Dubai has succeeded in building an impressive physical infrastructure within a short period of time which enabled a massive development of a wide range of economic activities. However, in order to sustain its economic growth and competitiveness, Dubai’s next challenge would be to continue to develop its soft infrastructure and regulatory framework as outlined by the Dubai Strategic Plan 2015.
“Financial sector development is one of the key centrepieces for achieving the three overarching objectives of the plan: consolidation, sustainability and high productivity growth. Moreover, the recent potentially transformational initiative of ‘Dubai as a Capital of Islamic Economy’ hinges on turning Dubai into an international hub for conventional and Islamic finance alike,” said Hani AI Hamli, Secretary General of Dubai Economic Council.
This report focuses on the key factors that would enable Dubai, as a financial and trading hub, to reach the next level in terms of sustainability and competitiveness, in order to attract investment at the regional and global stage and promote export-oriented growth, especially in skill-intensive small and medium enterprises (SMEs) that could generate opportunities for nationals.
In addition to financial sector development issues, the report also analyses other related areas of public policies, such as further enhancing the regulatory system, developing the trading system and building the capacity of SMEs.
Despite impressive overall performance, Dubai is still facing some challenges in its regional competitive position while aspiring to catch up with advanced economies. Currently Dubai is ahead of its regional and other Arab economies, in both current and sustainable competitiveness but still lags behind advanced economies. Similarly, the other regional economies such as Qatar, Kuwait and Saudi Arabia are not very far behind Dubai and could pose a challenge to Dubai’s regional dominance as financial and trading hub.
“Although Dubai currently surpasses its neighbours there are further opportunities for development to enable it to compete more effectively with other leading global hubs such as Singapore and Hong Kong,” said Humphry Hatton, CEO, Deloitte Corporate Finance Limited, Middle East Region.
Policy recommendations
To improve the global competitiveness of Dubai, the DEC report has come up with five policy recommendations such as support the creation and growth of start-ups and SMEs; improve trading capability; develop the financial services industry; enhance capital market activity; and formalise and mainstream the regulatory framework.
To support the creation and growth of start-ups and SMEs, the report has recommended introduction of government funding, loan schemes and loan guarantee schemes for SMEs.
To improve trading capability, the report said Dubai needs strengthen trade and investment relationships with key trading partners, such as India, China and Africa.
“Improving further the business environment impacting trading businesses, focusing on easing foreign ownership restrictions, efficiency of settling disputes, bankruptcy regulation and access to trade finance could increase investment further;” said Panos Stavropoulos, Manager, Transaction Services, Deloitte Middle East.
The report said initiatives such as development of derivatives market, introduction of mortgage-backed securities, developing Dubai’s capability as a regional clearing and settlement centre for Chinese Yuan and developing the appropriate infrastructure and regulatory framework to regulate Islamic financial products could contribute to developing the financial services industry further.
