By Daniel Shane
Chief economist says China using centre as platform for Africa; contribution to UAE GDP up 7 percent
Dubai International Financial Centre (DIFC), the emirate’s onshore financial hub, has an increasing number of Chinese firms using the freezone as a platform to access markets in Africa, the centre’s chief economist said on Wednesday.
“China is the biggest investor into Africa, and much of that activity is now out of Dubai - it’s very much the chosen platform for Chinese companies to invest into Africa,” DIFC chief economist Dr Nasser Saidi told reporters at a press conference in Dubai.
Chinese Overseas Direct Investment into Africa stood at US$14.7bn in 2011, up 60 percent from 2009, according to data from China’s Ministry of Commerce, while bilateral trade reached US$166.3bn.
A number of large Chinese firms have a presence at DIFC, including Industrial and Commercial Bank of China and oil giant Petro China.
“There are 200,000 Chinese residents in Dubai. That is close to ten percent of the population,” Dr Saidi added. “Increasingly, the UAE is going to be part of China’s global supply chain.”
Dr Saidi said that there had been a “big shift” in 2009 during Dubai’s financial crisis, when firms in China and other Asian markets began ramping up their investments in Dubai. “This trend will continue,” he said.
During 2011, DIFC research showed the financial centre increased its economic value-add to the UAE’s gross domestic product (GDP) by seven percent to US$3.13bn, or 1.4 percent of the Gulf state’s non-hydrocarbon GDP. The rate of growth in GDP contribution was higher than that of key financial centres in the US and UK, but behind that of those in Singapore and Hong Kong.
The total assets of active registered entities at the financial centre stood at US$115bn at the end of 2011, including US$109bn in financial assets.
Dr Saidi declined to give growth projections for DIFC for 2012, but said that for the year so far “2012 looks better than 2011”.
“Trends are continuing, if you look at the UAE as a total: high oil prices, substantial growth of trade and business services, tourism to Dubai, and we’re seeing the same thing in DIFC,” he added. “The additional factor that helps DIFC is the safe haven aspect. We’re seeing more companies establishing in DIFC because of the political stability. That effect that we saw in 2011 will continue into 2012.”
According to DIFC CEO Abudalla Al Awar, the centre’s occupancy rate presently stands at “around 95 percent”. At the end of 2011, there were 518 active companies registered at DIFC, up 5.7 percent from the year prior.
DIFC, established in 2002, lists zero taxation and 100 percent foreign ownership among its key attractions for businesses.
@daniel shane "emirateâ€™s onshore financial hub" ..? It's actually the offshore hub.