Dubai’s financial centre is to refocus on its core business of attracting financial institutions as the indebted emirate seeks to shrug off past excesses, according to its governor.
Ahmad al-Tayer, a former finance minister who has gained influence as Dubai seeks to revive its economy, said the tax-free Dubai International Financial Centre was to restructure to boost competitiveness.
This process , moulded by a report from McKinsey, the consultants, has included dozens of redundancies as the DIFC tries to keep costs down. But it will be complemented by attempts to attract financial institutions by pledges of a more competitive leasing structure.
Dubai, the Gulf’s business services hub, has been affected by a real estate crash and a towering debt pile estimated at more than $110bn. But officials hope the city’s attractiveness to foreign groups, thanks to stellar infrastructure and cheaper prices, will result in a resurgence. Mr Tayer, 59, a critic of the emirate’s boom-time extravagance, is to launch these changes to prevent a re-run of the excesses that characterised the six-year boom that ended in late 2008.
“There has been a global crisis – the biggest perhaps since the 30s,” he said. “Of course there is an impact. In these cases, you don’t stand still – you review your plans and strategies.”
DIFC Investments , whose interests include Dubai real estate projects and a luxury retailer, has had to book impairments of about $560m.
“Today no one is talking about outside investment, given market conditions. We want to improve our assets, but our main focus is on our core business,” said Mr Tayer.
The DIFC will seek to take advantage of rising taxes on banks and the wealthy in other financial cities, Mr Tayer, added. He is also chairman of the United Arab Emirates’ biggest bank, Emirates NBD. It will also offer more competitive rents, especially to tenants with substantial staff numbers.
The DIFC has not witnessed a mass exodus, despite the stronger growth rates in competing economies, notably Abu Dhabi, Saudi Arabia and Qatar. But many banks have been trimming staff.
“People are looking for a competitive place, people are moving, there is beauty in the centre and it being in Dubai, we are a centre for tourism, logistics, trade,” said Mr Tayer. “We have infrastructure for communications, transport, aviation, port, airport; this takes us 20 years into the future. We want to take advantage of the infrastructure.”
Mr Tayer pointed out that Dubai continued to witness growth in sectors such as aviation and tourism. Emirates Airlines, for example, continues to expand rapidly as it links Asia with Africa, Europe and the Americas. And the DIFC, said its governor, is being increasingly used by Chinese groups to service Africa. “We’re a centre that brings together east and west,” he said.
Mr Tayer has become a trusted aide to the ruler, Sheikh Mohammed bin Rashid al-Maktoum. He took over the DIFC after last year’s removal of Omar bin Sulaiman, who has since been detained and released after repaying Dh50m ($14m) in bonuses.
The move against Mr bin Sulaiman formed part of a broader purge of former officials that raised concerns. Critics said it spread fear and paralysed decision-making by state-linked companies.
Mr Tayer said there would be no impact from the scandal around his predecessor, a younger, flashier figure who has come to represent the ancien regime in Dubai. He insisted the investigation of former officials was healthy and would boost the emirate’s credibility.
Government-related authorities and companies are to introduce stronger forms of oversight, including more experienced boards, he said. “This is public money. And if there was abuse or waste of public money, it’s like taxpayers’ money, and there is justice, there is transparency . . . This is a healthy phenomenon and it gives credibility to Dubai and its institutions.
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