Singer, who celebrates his first year as CEO this August, is responsible for the DIFC shift from a reactive model to a more proactive go-to-market strategy, with the aim of boosting the number of companies in the free zone, while also increasing the growth of firms already present in the DIFC.
Before joining the DIFC, Singer served as CEO of NASDAQ Dubai, a position he held from July 2008. Before his time in Dubai, Singer headed NASDAQ International, where he was responsible for the stock exchange’s global business development, which focused on managing international relationships with companies outside the Americas.
Asharq Al-Awsat met with Singer during a visit to our London headquarters for an in-depth interview.
Asharq Al-Awsat: August 1 this year will be your one-year anniversary as CEO. What have been the biggest challenges you have faced in the position so far?
Jeff Singer: We have focused on reshaping our go-to-market strategy around two key areas. One is to grow the number of companies coming into DIFC, and the second is to grow the presence of the firms already present in the centre.
This approach requires us to send representatives outside UAE to interact with the industry, as well as to have internally-focused people that work with the companies already in DIFC to ensure they’re receiving the right level of support.
Refining our approach to business development has been my focus for much of my first year.
Beyond our go-to-market strategy, we’re also looking at the broader strategy of the Centre. When I joined DIFC last year, the board had already approved a two-year strategy and planned how we’d execute against that. The strategy we’re working on now will guide our next phase of growth, through 2016.
Q: Competition is a healthy aspect of any economic activity. How does the DIFC compare with other finance centers in the Middle East, particularly Saudi Arabia and Qatar?
DIFC is home to over 900 companies, 345 of which are regulated, and 450 non-regulated, plus we have 117 retail outlets. Aside from scale, DIFC has also grown in diversity; a broad cross-section of the financial services industry is represented in the Centre. Our clients employ over 14,000 people, and occupy over 2 million square feet.
Our clients have made DIFC a tremendous success, and they favor DIFC for two reasons. First is that we have what I consider to be the best value proposition in the Middle East. DIFC is something of a financial Vatican: we have our own commercial laws, our own regulations, and our own courts. Our infrastructure enables business, provides the certainty of justice, the rule of law, and well-understood regulations from around the world. The free zone concept is not a new concept to the Gulf. There are many free zones in Dubai; the main benefit of a free zone is that foreign companies are allowed 100% ownership. We provide that, of course, but the financial services companies wouldn’t come into the DIFC if it was only about ownership. They need certainty around their contracts, around the deals they are doing. Therefore, the DIFC, with its own laws and its own regulations, has been recognized as a very strong value proposition.
That’s half of it. The other half we call “lifestyle”. If you’re a firm from anywhere around the world coming into the Middle East and you compare Dubai and UAE with other parts of the region—you quickly see that Dubai is easily the best choice. Dubai provides access to great schools, hospitals, roads, housing, and what many consider is the most liberal and most accepting culture in the region.
If you look at the evolution of the DIFC, when people first started coming into it in 2004, it was all about servicing the UAE. Now, nine years later, they’re coming into the DIFC because they’re using that as a headquarters or a base for their MENA and Indian subcontinent business.
You can get to anywhere from Dubai. I heard this yesterday at the conference: you can get to more places in Africa from Dubai than you can from Africa. You can get to get to more places from Dubai into India than you can from India itself. The infrastructure in Dubai, its commitment to trade, is unparalleled for the region.
Q: There are some banks based in the DIFC who have complained about unequal treatment from the UAE central bank. What’s the DIFC doing to help with that?
Last month the Securities and Commodities Authority (SCA) clarified through a board resolution that if you want to serve the retail market then you need a license from the SCA or through the central bank; or you could go through a local partner to service your products. But if you’re serving the wholesale market, then a license from DIFC’s regulator, the Dubai Financial Services Authority is sufficient.
Most of the firms coming into the DIFC are serving the wholesale market, so that ambiguity has been cleared up.
Q: Islamic Banking is gaining popularity globally. What is the DIFC doing to facilitate those transactions in Dubai?
DIFC is has been embracing Islamic finance since 2005/6. Recently, Sheikh Mohammed’s announcement that he wanted to create Dubai as an Islamic affairs hub—not just for finance, but for all things Islamic—has really changed the enthusiasm around Islamic finance in Dubai. Because we had an early start on the laws and the regulations around them, many firms have located in the DIFC to do Islamic finance. Our regulator has been set up; the DFSA has also created methods and processes to ensure they know how to regulate Islamic finance. We have many products that are being created out of the DIFC that are for Islamic investors that are then being regulated by the DFSA. We have Islamic banks that are in the DIFC that are servicing the markets. We have Islamic re-takaful, we have two Islamic re-takaful (re-insurance) that are being done from the DIFC.
There are many products, many companies, and many aspects. The regulations and the laws are already there. What we’re going to do now with this renewed commitment from Sheikh Mohammed on the Islamic economy—and we’re just the is finance piece of it—is we’re going to look at how we can further promote Islamic finance from the DIFC. The key for us will be the laws and the regulations, and we’ll go from there and make it very, very easy to do Islamic finance from the DIFC.
Q: Dubai has a lot of naysayers. When it comes to the DIFC, some observers say it has moved more towards property development, rather than being a hub. The DIFC was split in two, into a property side and an authority side. Has the property side surpassed the authority side?
No. The reason it was split in two is that you fundamentally have two different skill sets, in terms of either running the authority or running the properties. The DIFC property is 110 acres; we have 2 million square feet completed. We have third party buildings: we have other companies that have built within the DIFC. The DIFC still has nine uncompleted properties. The question is, what do you do with this?
You also have the 2 million square feet that we’re running right now: the leases, the facilities management, all that kind of stuff. As they were looking at skill sets to run properties and the authority, they realized it was two different people, two different backgrounds. So a separate properties division was made, and Brett Schafer was hired a few weeks ago to run DIFC properties. He’s just going to focus on building up the complete DIFC master plan, as well as the facilities management of the DIFC. My responsibility is on the authority, on the growth and development of the DIFC, and the policies and regulations that support that growth and the companies that are there. It’s two different areas. Brett and I work closely together; both of us report to the board. Ultimately, the president of the DIFC is Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, the Deputy Ruler of Dubai. Honestly, if there are naysayers around now that’s a pretty miniscule issue. Dubai typically has been focused around property only, and Dubai is really good at building things.
The question for the DIFC and the free zones will how to go from Version 1.0 to Version 2.0. Version 1.0 is the buildings—it’s the infrastructure, the schools, the roads, it’s everything. It’s how you create a livable city. Version 2.0 is how to create true hubs within the city. What are the rules and laws that support the firms that are already there? If you look at the DIFC, you’ll say, ‘Ok, the evolution of growth has been just firms that want to be part of the deal flow within the Middle East, and now increasingly the region, and so they locate there—and that has typically been their sales offices and their distribution offices.’ But if you really want to create a hub, you have to get people to transact business there. You have to get them to broker business there. You have to get funds to manage the funds and invest into the region from DIFC.
Asset management has to book the business in the local currency and then be able to hold that currency locally. Right now, many of the asset management firms are booking their business in London or in Zurich. There hasn’t been any true destination within the DIFC for this, and if you look at the trading of the firms, you have the DFM [Dubai Financial Market] and the Abu Dhabi stock exchange—which in 2007/8 were extremely liquid, but today they haven’t been as liquid as they were in the past. How do you increase trading of the local shares? How to do you get the family companies and the semi-governments and even the governments to go enlist part of their shares and create a dynamic capital market? Off that capital market is how you share the wealth into the region; it’s how you create wealth in terms of a middle class being able to invest into these companies.
That’s part of the next step of the DIFC, to create a vibrant capital market in Dubai. What laws do we have to have to support that; what kind of regulations will support that? I’d say those would be the longer-term aspects of creating a hub. You have to be business friendly. Not just from the infrastructure—not just, ‘My family can be here, we have schools, we have good health care, we can drive around, we can live a comfortable life here,’ right? That’s the first aspect, but the second aspect is, ‘I want to do a deal, I want to sign a contract, I want to be able to conduct business here locally,’ and right now a lot of that is being outsourced.
Q: At the moment, the DIFC is pursuing China and Asia aggressively. Why?
What we’re seeing is an influx of Chinese firms that are going into the Gulf, the subcontinent, and most particularly—more than anywhere else—Africa. You’re seeing the Chinese go into Africa. With that move of Chinese firms exporting their businesses outside China into other locations, you’re going to need Chinese financing. The most poignant example I can give you of why a Chinese bank needs to be in the DIFC is from Africa a few years ago. You had two people who went into an African country to look at a mine that they wanted to purchase. They did a weeks’ worth of due diligence—if this was a Western firm, they’d take a year. A week later, they came back and signed the terms sheet without any changes—which is also unheard of—and the only requirement they had was to have 250,000 visas to be able to run the mine. They would export 250,000 people into Africa.
So the question I have for you is who’s going to finance that? Do you think JP Morgan or City or RBS are going to take that? No way. The only people who are going to finance that are Chinese banks. The Chinese banks don’t want to go into Africa. There just isn’t a regulatory or legal environment to support them there, so they looked at the region and they found that the DIFC was the natural place for them to locate for all the reasons I just outlined. So you see a lot of these Chinese banks coming into Dubai.
Q: So it’s not to offset any loss in Western clients?
No, no. We have a few that have gone—Morgan Stanley, JP Morgan and Citi have all announced layoffs—but for the most part it’s not to offset that. But all those firms I mentioned? They’re staying; they’re strong. They’re doing deals in the region. It’s really just this wave of Chinese companies coming into the Gulf and into Africa that require support from China, because they’re not going to get it from the firms that you and I know.
Q: At Harvard business school event, you said that in the next ten years the region will require USD 4 trillion in investment. How much of that is the DIFC going to capture?
The USD 4 trillion is really about how much infrastructure has been announced over the next ten years.
Gulf, not MENA—just Gulf. Of that USD 4 trillion—that’s a huge, huge number—my guess is that Saudi will probably finance a lot of that USD 4 trillion, but there’s going to be a lot of building in Qatar, Jordan, Yemen, Oman, and of course in UAE. That’s going to require external financing. I believe DIFC will play a role with many of the banks that will be coming over, and with the laws and the regulations needed for those deals to be transacted. A lot of that’s going to be trade finance oriented, so you’ll have Standard Chartered and HSBC playing a huge role.
Both of them have a strong presence in Dubai. Standard Chartered, as I mentioned, has their regional headquarters in the DIFC. So you’ll see the way that Dubai takes advantage—or at least the DIFC takes advantage—of that USD 4 trillion is the deal flow. It’ll be companies that come to set up and be part of the growth and the development, as opposed to a portion of that money physically being used to develop out the DIFC. That’s not the way we grow. We grow by the companies locating in the Centre: they pay us a lease, and we use that lease to further invest into the DIFC.
Q: Do you hope to double the size in ten years?
That’s the goal, that’s the goal.
Q: Are you worried about Turkish Prime Minister Erdoğan’s project, the Istanbul International Financial Centre, from a competition perspective? Or perhaps because Turkey might be perceived as offering a better quality of life?
Turkey’s a great country, and right now it has a very vibrant economy. I know that Turkey has aspirations of coming into the Eurozone and becoming more a part of the European equation. Do I have an eye on it? Of course I do. But the reason people come to Dubai is not really to serve Turkey or the European area. They come for the Gulf, India and Pakistan—the subcontinent region—as well as Africa. So if you look at where our growth and our development is coming from, it’s not from Turkey. There are some people that go up into Turkey, and there are people that come down from Turkey into Dubai—but that’s not where our growth and development is, that’s not where our focus is. We’re really on that east—west corridor, and the north–south isn’t as prevalent.