Dubai Government

“Financial Sector Development” report launch seminar

December 10, 2014

H.E. Hani Al Hamli, Secretary General at Dubai Economic Council (DEC) stated that Dubai has succeeded over the last years to turn to ‘model’ economy for many countries worldwide. Thanks to strategies advocated by the Government of Dubai under the directives of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President Prime Minister of the UAE and Ruler of Dubai. The strategy envisaged: diversification, restructuring the economy from oil-reliance to non-oil economy, capitalizing in several financial and non-financial industries, in addition to the art-of-the-state infrastructure. This has contributed significantly to turn the city to be a regional and global hub for trade, logistics, transportation, real estate development, tourism, and retail, among others.  
  
However, in order to sustain its unprecedented economic growth, Dubai’s next challenge is to continue to develop its soft infrastructure and regulatory framework as underpinned by Dubai Strategic Plan 2021. “This entails, among other factors, the fiscal consolidation and budgetary reforms, streamlining the regulatory framework, reforming the labor market and enhancing productive job opportunities for nationals and addressing sector-specific challenges”, he added. 

Al Hamli also stressed that the Government of Dubai has adopted rational fiscal policies in bar with the federal financial framework. It also consolidates the financial institutionary framework through establishing DIFC, an onshore financial centre strategically located between the east and west. Additionally, the Government has formed the Supreme Committee of Fiscal Policy which is mandated to enhance the financial sustainability in Dubai. 
This comes in his welcome note delivered at the opening ceremonies of seminar to launch “Financial Sector Development for Promoting Investment and Sustainable Growth in Dubai” report in strategic partnership between Deloitte Corporate Finance Limited (Deloitte), and Dubai Economic Council (DEC) held yesterday at the Intercontinental Hotel Dubai Festival City. 

Humphry Hatton, Chief Executive Officer of Financial Advisory Services in the Middle East at Deloitte stated in his opening remarks that Dubai has been an extraordinarily successful economic success story over the years and as we gather here today, it is only too easy to take for granted the amazing city and state we are surrounded by – the result of amazing vision, perseverance, strategic thinking and direction.

He also said that the Dubai economic model is one that is unique – as indeed is the wider economy of the UAE and it is therefore important to ensure that economic recommendations take into account the very special features of this economy.  What works elsewhere may not be as effective here and vice versa, and we need to take account of this in our analysis. 

“However, we take these successes for granted at our peril.  In a competitive globalized economy there is no room for complacency, and no prospect of maintaining our position in the world if we simply stand still.  Other nations, even hungrier for success and opportunity, will overtake those that are not prepared to embrace change, and we can see many of examples of that happening around the world today” he said.  
“What is more, the speed of change is now faster than it has ever been, requiring countries to be reactive and nimble, and able to move fast to seize opportunities to take advantage of new markets, new technologies, new products and new services” Hatton added. .

When looking at what is driving successful economies today, three things stand out.  They need to have world class infrastructure, in areas such as transport, energy and telecommunications.  They need to have a highly educated workforce, able to cope with the demands of technology-enabled business with its lack of respect for time and place.  

They need to have a business-friendly environment, which makes it easy to set up and do business, supports innovation, entrepreneurship and wealth-creation, and enables surplus savings and investments to be deployed efficiently to enterprises that require funding in line with the risk appetites of investors and lenders.

The expert teams from both DEC and Deloitte have jointly presented the “Financial Sector Development” report. Chaired by Prof. Abdulrazak Al Faris, Chief Economic Counselor, Dubai Economic Council. Introducing the report: Dr. Ibrahim Elbadawi, Director, Macroeconomics & Forecasting, Dubai Economic Council and Mr. Rajeev Patel, Director, Transaction Services, Deloitte Middle East. Presenting the report: Dr. Mohamed Trabelsi, Senior Economist, Dubai Economic Council, and Mr. Panos Stavropoulos, Assistant Manager, Deloitte Middle East. 
A roundtable discussion has conducted on the side-line of the seminar focused on the role of financial sector in strengthening SMEs in Dubai. Moderated the panel by Trevor McFarlane, Founder & Chief Executive, EMIR, and panelists are experts from various sectors. 

Dr. Magda Kandil, Chief Economist and Head of the Economic Research Department, Central Bank of the UAE, said: Dubai has succeeded in creating a specific model for her, however it needs to sustain this performance. Concerning the SMEs, there are some driving forces: e.g., education growth; deep capital market and easy access to finance. She also pointed that the volume of finance to SMEs is less than other countries in the region and in the world. She suggested to provide incentives to the banks to encourage them to fuel the SMEs , e,g., through special guarantees, “however, there is another challenge, which is the comprehensive institutions and support”, she concluded. 

Marios Maratheftis, Global Head of Macro Research, Standard Chartered Bank provide insights from global perspectives. He said what is going on in the global economy might be in favour of the UAE and other regional countries. “Oil falls is not necessarily and always bad, in conversely, low price of oil would help hiking the global economy growth and many non-oil countries” Maratheftis claimed. “Specifically, China and other non-oil rising economies will find it an opportunity to breathtaking from soaring prices the globe witnessed over the last three years.. that would enhance her growth, hence push the global economy ahead” he added”. 

In the other hand, Maratheftis calls for creating debt capital market nominated by local currency instead of dollars. “There is a bundle of huge infrastructure projects already in the pipeline and thus who will gona finance them unless there are financial entities lending in dirhams” he said. Maratheftis also stressed to strengthen and deepening the financial institutions to be in bar with the global ones “One of the significant and constant problem is that the local banks still lend depending on their current accounts rather than long-term deposit accounts”.. that might jeopardize the financial sustainability of local banks particularly during inverse global circumstances” he concluded.   

Alexandar Williams, Director Strategy and Policy Division, Dubai SME: he made a comparison between SMEs in Dubai and those in Singapore. 

Bryan Stirewalt, Managing Director, Supervision, Dubai Financial Services Authority claimed that banks need to return to the basics of banking community. He also argued that there is another sources of finance to SMEs not necessarily banks.  

Dr. Narjess Boubakri, Professor of Finance, American University of Sharjah claimed to build confidence and credibility between financial sector and SMEs. 

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