Sheikh Mohammed announces creation of DMCC
At a press conference on Wednesday, Dubai’s Crown Prince Sheikh Mohammed bin Rashid Al Maktoum, often referred to as the CEO of Dubai Inc., announced plans to create the Dubai International Metals and Commodities Centre (DMCC).
At a press conference on Wednesday, Dubai’s Crown Prince Sheikh Mohammed bin Rashid Al Maktoum, often referred to as the CEO of Dubai Inc., announced plans to create yet another venture that will offer a broad range of services, helping Dubai capture 50% of international gold business through the creation of the Dubai International Metals and Commodities Centre (DMCC), a trading, refining and storage hub focusing on the gold, diamonds and commodities businesses.
The new venture comes on the heel of the recent announcement to establish Dubai International Financial Centre (DIFC) that aims to make Dubai a regional financial hub, by the side of the existing internet and media cities as well as the investment and festival parks.
Officials on Wednesday said that the centre’s main concern is to cultivate the gold portion of the business and amplify Dubai’s role in international gold trade. Second to that will be the diamond and commodities components. At present, Dubai holds 10% of global market share with some 2,300 tons of gold flow through the business-minded emirate every year.
“The whole point is to create a cluster for trading, by bringing all the players together,” Hamed Kazim of Anderson Dubai, the centre’s financial advisor told reporters after the press conference. That means attracting the banks involved in the gold trade, such as Standard Bank and J.P. Morgan, boosting gold refinery operations and encouraging more jewellers and coin dealers to operate in Dubai, he said.
Dubai faces an uphill struggle in its ambitions, analysts say. Its importance in the global gold business has tailed off in recent years, since India deregulated its gold export business in 1998, cutting off Dubai’s monopoly on trading in Indian gold. The incentives on offer to local and foreign companies include 100% foreign ownership, a 50-year tax holiday, international regulatory standards, Kazim said. “The regulations will enhance the reputation of Dubai as a global, not a local, player. This is a key factor - the regulations will be world class, transparent and flexible,” said Kazim, adding that the centre would take at least a year to start operations.
Standard Bank London’s Terry Smeeton, the bullion business veteran who will head up the centre’s Gold Management committee, also focused on the standards that the centre would uphold. “There is no doubt that the introduction of higher standards will contribute to growth of the (Dubai) market,” said Smeeton. The new centre in Dubai is likely to draw its own regulations on the established system of the London Bullion Metals Association.
Smeeton acknowledged that the view of gold as a secure investment has suffered as a result of adjustments in interest rates by western central banks. Yet, he expressed optimistic as to Dubai’s prospects. DMCC will be built near Dubai’s Jebel Ali port, accommodating three gold refineries that will be constructed and operated by established local gold businesses.