Good morning Ladies and Gentlemen,
I am delighted that Sibos is being held in Dubai, UAE for the first time which reiterates Dubai’s emergence as a global hub for trade and finance and the importance of GCC as a politico economic bloc in the emerging markets.
Today, I would like to briefly touch upon the following 4 areas which make UAE and the GCC as the preferred trade and financial centre in the region.
These are turbulent times and the Middle East region is daily in the news for the wrong reasons.
The media coverage of turmoil and unrest in certain countries in the MENA region clouds people’s view about the whole region.
I am happy that by coming to the UAE you have got first hand opportunity to see that GCC - in general, and UAE -in particular, is an oasis of stability and growth within this troubled region.
The remarkable social and economic transformation of our region in the last few decades is an outstanding success story of what political stability, good governance, and the pragmatic economic policies can do to the growth of the region.
Of course we have been blessed with natural resources in the form of oil and gas which has helped us to accelerate the economic growth.
However, the transformation we have gone through in such a short time would not have been possible without the visionary leadership and the stable political system.
Governments of GCC are close to its people and have a traditional open communication where citizens and residents have access to all quarters within the government.
The safety and security of its residents and their welfare has been the highest priority of the state.
Today GCC has established itself as a tolerant cosmopolitan society which attracts not only global business but also knowledge workers from around the world.
2. Economic growth:
As I mentioned earlier, GCC has an advantage of being the key producer of oil and gas which has given its economy a strong base.
With our GDP at US $ 1.56 Trillion, GCC is the 12th largest economy in the world.
Though oil and gas continues to be the mainstay of GCC economies, over the last few decades all countries within the bloc have made very conscious and successful attempts to diversity the economies.
For example, in the UAE non-oil economy constitutes over 65% of its annual GDP.
Tourism, transportation, manufacturing, retail trade, services and real estate are major contributors of non-oil trade in the region.
In 2008 when the global liquidity crisis peaked with the bankruptcy of Lehman Brothers, its after-effects impacted the global economy sending US and Eurozone economies in crisis.
The GCC economies remained largely unscathed as governments took immediate and necessary steps to ensure its stability and growth.
Thanks to their effort, GCC economies bounced back in 2010 and since then have been growing at a respectable rate.
GCC exports have doubled since 2009to reach US $ 1 Trillion mark.
By 2020, GCC is projected to be US $ 2 Trillion economy supplying 25% of the world’s oil supplies, and tourist arrivals to the region will reach AED 64 Million a year.
Thus the current and future growth of economic activities in the GCC region presents to investors and prospective trade partners an opportunity which is second to none.
3. World-class infrastructure:
The economic and social development of GCC started with the infrastructure building in the 1970s.
However, UAE stands out in the region for building a world-class infrastructure in a very short time.
The principles of good governance and visionary leadership, I referred to earlier had been at its best when revenues flowing from the oil boom were invested to create a network of roads, best-in-class airports and seaports, electricity and water facilities and telecommunications network.
Jebel Ali port in Dubai and Shaikh Khalifa port in Abu Dhabi are the most sophisticated and are capable of handling the largest ships and bulk carriers.
UAE is home to Emirates Airlines, and Etihad Airways, the fastest growing and highly efficient airlines of the world.
Our roads and telecommunication systems are the best in the region and are of the highest quality.
The planned railway grid which will run across the country will open a new chapter in the connectivity and movement of goods.
UAE Developmental spending for the last five years was close to US$ 51 Billion and planned projects for upgrading transportation systems is close to US$ 15 Billion.
The strategic location of UAE between East and West had an inherent advantage which has been further enhanced with excellent air connectivity, and availability of high quality business and leisure accommodation.
Last year, Dubai International Airport gained the distinction of being the secondbusiest airport in the world, and it is aiming to take the first spot in the next two years.
UAE was the first country in the GCC to set-up a free zone in the early eighties when Jebel Ali Free Zone was established.
Since then numerous free zones have been set-up in the country. Some free zones target to attract a particular cluster of business or economic activity.
These free zones provide very attractive options for prospective investors to set-up a new business venture in the UAE with 100% ownership.
The availability of skilled human resources and conducive labor policies further add to that advantage.
4. Robust Financial sector:
Though the UAE economy is the second largest in the Arab world, the banking sector is the largest in the Arab world and its banking sector Assets are 1.3 times of its GDP.
We all know that a robust financial sector is the lifeblood of any economy. The economic crisis in any market generally starts and ends with the financial sector.
The economic crisis of 2008 was no different and it affected the banking sector across the globe.
UAE was not immune to that.
However, since UAE governments have always been very supportive of their financial sector they were fast to react, and took required actions ranging from injecting liquidity to market to providing additional capital to banks.
The Ministry of Finance disbursed US$ 19 Billion as subordinated deposit to UAE banks which provided the required liquidity to the market and boosted capital adequacy ratios of the banks by at least 5%, which took UAE banks’ capital adequacy to close to 20%.
The UAE Central Bank set up an additional liquidity facility of US$ 14 Billion available to banks in case of need.
Their instant actions stabilized the banking sector quickly and protected it
from further shocks of global economic meltdown which continued to jolt the global banking sector for the next few years.
As the UAE economic growth bounced back in 2010, the banking sector was the first one to recover and since then has been growing steadily.
Most of the banks have already returned the subordinated deposit of the Ministry of Finance and liquidity facility made available by the central bank was sparingly used.
UAE Central Bank had been a very proactive and effective regulator. They conduct regular dialogues with the UAE Banking Federation to ensure that banking regulations not only ensure the health of the banking system but also protect the consumers and help the economic growth of the country. Central Bank always maintained high standards for capitalization of the UAE banking system, and has encouraged the banks to maintain higher than minimum required capital.
The minimum regulatory Tier-1 capital requirement of 12% for UAE banks is one of the highest in any banking system but the average Tier-1 capital of UAE banks in 2012 was 17.6% which reflects the strength of UAE banking system.
With Total Assets at over US$ 515 Billion, the UAE banking sector has been a major contributor to the economic growth of the country. There are 51 banks operating in the UAE and out of that 28 banks are foreign banks which reflect the openness of the system. The onshore banking is complemented by offshore banking by Dubai International Financial Centre (DIFC) which is home to nearly 400 financial institutions.
DIFC is the preferred destination for international financial institutions as it provides an opportunity to operate in the Middle East under a jurisdiction with an international legal system and independent regulatory framework.
To conclude, I would like to reiterate that, GCC as an economic bloc, and UAE as a country, has all the ingredients to be a global centre for trade and finance.
It is an ideal destination for those of you who want to participate in the growth of this region, and benefit from the opportunities it provides.