By Sarah Townsend
DIFC insists it will be able to withstand any future competition from the new Abu Dhabi Global Market
The financial free zone set to launch in Abu Dhabi next year poses no threat to Dubai International Financial Centre, the DIFC governor stated on Wednesday.
The DIFC has its “own regulations” and its own “unique offer”, according to Essa Kazim, who is also chairman of the board of DIFC Authority.
He told a press conference outlining the DIFC’s ten-year growth strategy from 2014 to 2024 that he had no concern that the new Abu Dhabi Global Market (ADGM) would compete with the DIFC for tenants. Even if it did, he said, the market is “big enough for two [financial free zones in the UAE].”
Abu Dhabi announced plans in 2013 for a full-service financial zone on an island near its downtown district. The free zone is intended to have its own administration, court system and tax incentives to attract banks and other firms from across the world.
The flagship building is under construction at present and ADGM, whose chairman is Ahmed Ali al-Sayegh, is expected to publish the final set of draft regulations for free zone occupiers for consultation in July.
Its expert advisory panel has included large global financial institutions and high profile individuals such as Sir Hector Sants, the former chief executive of the UK’s Financial Services Authority (now the Financial Conduct Authority).
Commentators have said that the new free zone could place Dubai’s status as the Middle East’s top financial centre under pressure – particularly as Abu Dhabi reportedly bailed Dubai out with $10 billion of emergency loans during the global financial crisis.
Jim Krane, Gulf economic analyst at Cambridge University's Judge Business School told Reuters in 2013: “If Abu Dhabi plays tough, giving banks an ultimatum - move to Abu Dhabi or else - few of them will be able to resist, given the much larger economy and liquidity pool across the border.”
But Kazim dismissed the prospect of a tie-up with ADGM in future. “It is good to build two financial clusters in the UAE. Look, we decided back in the 1980s/1990s to invest in developing two UAE airlines [Emirates and Etihad] – and decades later they are both expanding and doing very well.
“Scale is important for the region, as well as the activities covered. But DIFC will continue to focus on its own strategy, independent of ASGM, and we are happy with the growth we are achieving.”
Dubai has always been seen as a safe haven for overseas companies to do business in, Kazim said – “I can’t read the minds of foreigners but I am confident this will always be the case.”
He added that the DIFC is in a particularly strong position financially since its investment arm DIFC Investments issued a $700 million 10-year sukuk last November. Its earnings before interest, taxes, depreciation and amortization (EBITDA) were $150 million in 2014.