DIFC chief says it is essential to address risks, challenges

Dubai: While there is little doubt about the potential of the Menasa region, it is imperative to be aware of the risks and at the same time be creative in the aftermath of the financial crisis. This is not just to ensure that the recovery is on a firm footing, but also to realise that potential.

That was the message from both official and international observers at the start of the second day of the Menasa Forum organised by the Dubai International Financial Centre. In fact, the role of the DIFC serving as a gateway for financial institutions and governments in Menasa countries was highlighted.

In the context of the region's continuing recovery and its place in Menasa, the Governor of DIFC pointed out while the country and other governments in the region have taken adequate fiscal policy measures to stabilise and stimulate their economies, it is critical to urgently address the deeper risks and challenges that the crisis revealed.

"In the coming years, fiscal policy measures combined with systematic reform will be vital to ensure that the recovery becomes firmly entrenched in Menasa and that our growth remains strong, sustainable and balanced," said Ahmad Humaid Al Tayer.

Regulatory and legal shortcomings in the financial system comprise some of those challenges, he said. To address those, UAE is introducing reforms, which is likely to have a discernible impact on the future of the Menasa.

The role of innovation to emerge out of the crisis was underscored by Daniel Doctoroff, president of Bloomberg LP, who delivered the keynote address.

"I believe innovation that is a prerequisite for success is really a just a function of three other factors," Doctoroff said. For a financial centre to thrive on a global basis, it has to be first open, and as a result diverse; second, have consistent and predictable regulation, including a high level of transparency, and third, in a world and markets that are increasingly interconnected, it needs to offer access to a broad range of products and markets.

Since its inception DIFC has made great strides in becoming an international financial centre, said Doctoroff.

DIFC, said Al Tayer, has developed into a global financial centre that is catalysing financial, capital and investment in the Menasa region and has created a bridge between the capital markets of the East and West.

But quoting from a recent Hawkamah, the Institute for Corporate Governance, Doctoroff reminded the audience that there is substantial room for improvement for corporate governance and disclosure.

"And of course [in this regard] the government needs to take the lead," he said.

Finally, a third condition to building a financial centre is building a robust market across all asset classes, Doctroroff said. The DIFC has achieved a great deal in a relatively short period of time, he said, and now needs to build on its investments in innovating and expanding the number on financial instruments in the market, especially improved access to debt market, which is currently negligible in size.