New Abu Dhabi financial free zone could pose as direct competition to the Dubai International Financial Center (By IFN)

New Abu Dhabi financial free zone could pose as direct competition to the Dubai International Financial Center

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UAE: Competition or complimentary to the Dubai International Financial Center (DIFC)? These are the two views currently circulating on the set up of the Abu Dhabi World Financial Market, a financial free zone set up on Al Maryah Island in the emirate, following the passing of legislations this week allowing for its establishment. According to industry players, emirati investors and international financial institutions have welcomed the news with open arms. “All the big international financial institutions would love to be in Abu Dhabi because of its stability. There is a general perception that they can seize opportunities in terms of business,” a banker said. Speaking to a Gulf daily, Dr Habib Al Mulla, the founder and executive chairman of UAE-based law firm Habib Al Mulla commented: “This is positive news for the UAE. The development of capital markets and financial institutions is of critical importance to the wider economic development of the country. This will ensure that national companies have access to advice, execution and trading platforms within the UAE, rather than seeking it overseas. The new financial free zone in Abu Dhabi would complement the DIFC.” The Abu Dhabi World Financial Market is slated to be launched in the coming weeks, however, it is still unclear whether the financial free zone will be regulated as a separate entity, similar to the DIFC, which is governed by the Dubai Financial Services Authority. At present, there are over 40 multinational companies along the financial district of Sowwah Square, including Booz & Co, JP Morgan, Deloitte, Macquarie Bank and General Electric. Abu Dhabi has been a constant source of support to Dubai, following its largesse in lending up to US$20 billion to the emirate during the 2009 crash. However, investor confidence in Dubai is beginning to peak again after the refinancing and payout of US$3.75 billion in debt by state-linked companies last year. The Bank of America also recently issued a statement predicting Dubai to pay off its debt to Abu Dhabi by next year in light of the emirate’s steady economic recovery.