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HE Ahmed Humaid Al Tayer
Governor, DIFC
Speech notes for Welcome Address at the inaugural MENASA
Forum
24 May, 2010
Your Highness Sheikh Maktoum Bin Mohammed Bin Rashid Al
Maktoum, Deputy Ruler of Dubai and President of the Dubai
International Financial Centre, Your Excellencies, Distinguished
Guests, Ladies and Gentlemen,
On behalf of the Dubai International Financial Centre, I am delighted
to welcome all of you to the first MENASA Forum.
It gives me great pleasure to see so many business and thought
leaders from across MENASA here today.
I would like to welcome the delegates who have come from various
parts of MENASA as well as the UAE. I hope that those visiting from
abroad will have the opportunity to stay longer after the Forum to
explore the UAE and enjoy the hospitality of its people.
The countries that comprise the MENASA region have a long history
of trade, investment, political and cultural ties. To this day, they share
significant cultural, political, and economic relations, which have led
to strong trade links, labour mobility and investment opportunities.
Over the last decade, the MENASA region has played an increasing
role in the global economy. The region is right at the centre of a shift
in the balance of global economic power towards the east, a shift that
has gained speed following the global economic crisis.
The MENASA region’s real economic growth rates are currently only
second to that of China, while the region’s GDP is on par with the UK
and China. According to Goldman Sachs, the region is expected to
overtake the US as the world’s second largest economy by 2050
The robust economic fundamentals of the countries in the region
have enabled them to be resilient to the impact of the global financial
crisis.
In addition, the prompt roll-out of fiscal policy measures by
governments across the region has played an important role in
stabilising and stimulating their economies.
In the UAE, the government introduced fiscal stimulus measures
amounting to almost 7 per cent of the GDP - among the biggest in
emerging markets. The timely financial support provided by the UAE
Central Bank was instrumental in preventing problems in the banking
system.
The UAE Central Bank deployed bank liquidity support facilities and
lowered interest rates while the Federal Government provided 50
billion dirhams in term funding to banks. The government guaranteed
all deposits including inter-bank. It also set up a 50 billion dirhams
emergency liquidity facility and deposited 70 billion dirhams in local
banks. In general, the UAE adopted a counter-cyclical fiscal policy,
which proved vital in avoiding a disruption in economic activity.
In addition, the UAE is introducing a wide-ranging programme to
address regulatory and legal short-comings in our financial system.
Although we expect a return to high economic growth, it is critical that
we urgently address the deeper risks and challenges that the
economic crisis has revealed.
In the coming years, fiscal policy measures combined with systemic
reform will be vital to ensure that the recovery becomes firmly
entrenched in MENASA and that our growth remains strong,
sustainable, and balanced.
Ladies and gentlemen,
To come back to the growth prospects of the region, despite the
challenges we face today, the vast potential for MENASA’s
development is undeniable.
The region has a population profile that is creating huge new demand
leading to production growth and greater diversification. The region’s
large and mostly young population of 1.6 billion people is expected to
grow at a rate of 1.4 per cent over the next decade. Per capita
income is increasing, leading to the development of larger consumer
markets.
The region’s vast oil and gas-based liquidity promotes vast wealth
creation, economic growth, and infrastructure development.
It is estimated that at an oil price of 50 dollars, the present value of
the GCC’s oil and gas exports is $18.3 trillion dollars - larger than the
2008 GDP of the US. If oil prices were to average 100 dollars per
barrel and gas 15 dollars, the value of GCC energy exports will be
37.7 trillion dollars. This is equal to the world's total stock market
value at the end of 2008!
On another front, governments across the region are focusing on
reform, liberalisation and diversification programmes. Regional
governments are pushing non-oil sector diversification and looking to
encourage greater private sector participation. The privatisation
pipeline in the region is expected to be more than 900 billion dollars
in the next ten years.
In addition to this, the development needs of the MENASA region are
massive. Historic under-development in key sectors has created huge
demand and high growth potential.
Over the course of the Forum, we will explore the prospects of the
MENASA region in five critical areas - Capital Markets; Infrastructure,
Energy & Environment, Islamic Finance and the Developmental
Model of the Region. In many ways, these five areas will define the
region’s economic surge over the next decade.
The Forum will take a close look at the opportunities that the
changing global financial structure is bringing. The world is going
through massive economic transformation. MENASA countries are in
many ways driving and leading the major shift in the balance of global
economic power. India and the GCC region are now net suppliers of
capital to the world economy thanks to their large current account
surpluses.
In this context, the Forum aims to bring to the fore the potential for
enhanced capital and investment flows between MENASA countries.
There are vast new opportunities for the investing the wealth being
generated in the MENASA region within the region itself. Enhancing
investment flows in the region can transform MENASA in a dramatic
way.
The Dubai International Financial Centre was created to serve as a
gateway for financial institutions and governments in MENASA
countries to find capital from within the region.
DIFC has developed into a global financial centre that is catalysing
financial, capital and investment activity in the MENASA region and
has created a bridge between the capital markets of the East and
West.
As a financial centre, DIFC is unique in that it has all the key
elements of a financial industry ecosystem. Each of these elements
has been modeled on world-class systems and meets the highest
global standards.
DIFC has invested significantly in building an independent regulatory
framework and judicial system, a financial exchange and a physical
infrastructure. In addition, we have created a whole array of
institutions and services to support financial and capital market
growth.
At the heart of the DIFC model is an independent risk-based
regulator, the Dubai Financial Services Authority (DFSA), whose
regulatory framework is closely modelled on legislation used in
London and New York. The DFSA has played a major role in
providing financial companies in DIFC the confidence that they have
a sound, stable, secure and growth-oriented platform for their
business.
Furthermore, the establishment of NASDAQ Dubai within DIFC has
provided a powerful catalyst for capital market growth in the region.
Nasdaq Dubai provides access to a deep pool of liquidity for the
primary listing and secondary trading of sophisticated financial
instruments. NASDAQ Dubai has also established high global
standards in the regulation of issuers and post-listing disclosures.
We have also created a globally-benchmarked insolvency and
creditor rights regime, another critical element for promoting growth
and instilling market confidence.
DIFC is also actively working to support the development of various
financial sectors. In addition to the major mainstream sectors, we are
particularly focusing on promoting the growth of Islamic Finance,
which is attracting global attention as an alternative financial system.
One of MENASA’s fastest growing financial sectors, Islamic finance is
providing many quality alternatives to the financial products and
services available in international markets today.
Since its inception in 2004, DIFC has today developed into one of the
largest clusters of financial services companies. Over 900 companies
are based in DIFC including 20 of the world’s top 25 banks and six of
the world’s 10 largest asset managers.
DIFC’s growth has made it a significant force for economic growth in
Dubai and the UAE. In 2008, its nominal Gross Domestic Product
(GDP) grew 47.1 percent to reach 2.8 billion dollars. This accounts
for 3.4 per cent of Dubai’s GDP of 82 billion dollars. Apart from its
direct contribution to the GDP, the DIFC sub-economy has a
significant 'multiplier effect' on the economy of both the UAE and the
wider region.
During the course of the Forum, we hope to share ideas with you on
how DIFC can contribute to facilitating greater capital flows and
integration in trade, investment and finance between MENASA
countries.
Ladies and Gentlemen,
I am confident that 2010 will be a year of greater transformation for
MENASA. Over the next decade, the MENASA region will play a
more central role in shaping the future of the global economy, with a
more assertive role in the international stage. Supported by greater
mutual cooperation among MENASA countries, I believe we can
meet and overcome any challenges that stand in the way of our
progress.
We in Dubai and the UAE are determined to work with the rest of the
region to make this happen — for MENASA, and for the world.
Thank You Very Much