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Friday, November 21, 2014, 11:02

Oasis of promise

By LEI XIAOXUN in Beijing

Hosted by the government of Dubai, the BFA conference demonstrates the city’s increasing significance as a global financial hub and gateway for China and wider Asia into key markets.

Dubai’s selection as host city is also a recognition of its status as an emerging financial center in the Middle East and across the rest of the world. Its geographical location is also advantageous for its status as a trade and cargo transport hub, as well as for its advanced shipping, tourism, and exhibition industries.

Located at the crossroads between East and West, Dubai is within a four-hour flight from one-third of the world’s population, and has a key role to play in supporting Asia’s growth momentum, said Cong Hongbin, managing director of Invest Dubai, part of Falcon and Associates, a strategic advisory firm facilitating the conference.

The Dubai forum, to be held at hotel resort Atlantis, The Palm, will also focus on financial cooperation across sectors such as energy; the opportunities presented by Islamic finance and Dubai as an international financial center; financial market innovations; and how infrastructure connectivity propels economic growth.

Other topics will include regional investment vehicles such as the expected China-UAE cooperation fund; opportunities arising from China’s proposed AIIB; more inclusive methods for finance to meet the demands of Asian economies; and a better understanding of capital flow to benefit Asia following the US’ withdrawal of quantitative easing.

"Financial cooperation is pivotal to regional and international economic integration,” said Yang of the BFA Institute.

High-level dialogue and exchange present significant opportunities for those involved, he said. “We can discover mutually beneficial outcomes and ways to work together to develop Asia’s financial ties with Dubai, and the many markets it connects,” said Yang.

Chirag Shah, chief strategy and business development officer at the Dubai International Financial Centre, has highlighted the strengthening economic ties between the emirate and China. The latter is well on track to become Dubai’s number one trading partner after trade volume hit $21.9 billion in the first half of this year, which sees China overtaking India.

"The forum is recognized as the most prestigious forum in Asia and holding it in the Middle East for the first time demonstrates the growing importance of the relationship between Dubai and China and other sub-regions of Asia and the impact it has on economic development,” said Shah.

Dubai has become a crucial outpost for China. Of the more than 4,200 Chinese companies registered in the UAE, 2,500 are in Dubai. The emirate is now home to more than 200,000 Chinese residents, and was the destination of 275,000 Chinese tourists in 2013, up 11 percent year-on-year.

The Chinese are also bringing in more investment and the momentum is staying strong, said Cong of Invest Dubai.

"In the past two years, we have seen a number of big investments from China into Dubai,” Cong said.

He cited two examples in the real estate sector: “A Chinese private loan company invested in building 3,000 villas in Dubai and another investment of $1 billion was made by China State Construction Engineering to build hotels, serviced apartments and commercial facilities at the Palm Jumeirah,” he said, referring to a man-made archipelago with luxurious beaches and five-star resorts.

"We also learned recently that Chinese individuals have bought $350 million worth of villas and homes in Dubai.”

These current levels of investment are, however, disproportionate to the levels of trade volume and links between China and Dubai.

In 2012, investment from China to Dubai amounted to $110 million. Investment activity is definitely increasing, Cong said, but if both sides could achieve better mutual understanding, more active investment can be expected.

Another benefit the UAE, Dubai in particular, presents to China, is by serving as an essential gateway to the Africa-Asia trade route.

Hamad Buamim, president and CEO of the Dubai Chamber of Commerce and Industry, has pointed out that trade between Africa and China was not simply one-way traffic, with around 10 percent of China’s global exports heading to the continent.

"China understands how Dubai can be a gateway to the Middle East and Africa, and we are working with them to expand our relationship further,” said Buamim. He added that this is a big opportunity for Dubai’s foreign exchange business, according to Swift, a global financial messaging service company.

"The UAE is the only country in the Middle East that has a currency swap agreement with the Chinese,” he added. “This can become an opportunity to strengthen the relationship between Asia, led by China, the Middle East, led by UAE, and Africa.”


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