Abu Dhabi & Dubai, September 27, 2014: Greater integration and convergence between the banking industry and the trading and manufacturing sector is key to unlocking the full potential of GCC economies and facilitating opportunities for sustained growth and economic diversification. This was the clear message emanating from the Industry & Trade Conference held in Dubai and Abu Dhabi, which gathered top experts from the region across the banking, trade, manufacturing, logistics, and legal sectors.
Organized by Doha Bank, the conference was held at The Grand Hyatt Hotel in Dubai on the 22nd of September, and at St. Regis Abu Dhabi on September 23rd.
Emphasizing how trends such as globalization and deregulation are reorganizing the regional economic paradigm, Dr. R. Seetharaman, Group CEO of Doha Bank, noted that the GCC financial system’s inherent strength has allowed regional economies to consistently rise above challenges. “The GCC financial markets have demonstrated enormous stability and resilience, bouncing back admirably from the global economic downturn of 2009. Even as the world at large undergoes a geopolitical churning, economies in the region continue to post consistent growth - led by the visionary leadership in countries such as the UAE and Qatar. In order to consolidate this growth and make it sustainable, there is a need for greater substantive convergence between the banking sector and trade, industry and supply chain, as well as legal and currency risk management. New approaches to regulatory alignment are also required.”
The need to plug the gap between the banking industry and the trading and manufacturing sector, particularly small and medium enterprises (SMEs), was brought into sharp focus by Mohammed Ali Al Kamali, Director of Export Markets at Dubai Exports, during his presentation on “Trade Trends in the GCC”. “The banking industry has a huge opportunity in financing small business, which hasn’t been exploited anywhere near optimal. My personal request to the banking sector would be to look beyond sales targets, which they are invariably focused on, and support SMEs to achieve business growth and expansion. The support and backing of the banking sector is vital for the non-oil sector to grow, especially in view of the tremendous growth opportunities that are emerging in areas such as commodity trade.”
On being asked for his views on the impact that Dubai’s winning bid for the Expo 2020 could have on the emirate’s growth rate, he said, “I would prefer to stay away from predictions, but I guess one can reasonably expect the emirate to grow at around 15% leading up to 2020.”
Acceleration of economic diversification was also identified as a factor crucial to the long-term growth of GCC nations. Noting that the UAE leads the way in the region when it comes to diversification away from oil, Kimberly Tara, Group CEO of global investment group FourWinds, stated that manufacturing is now the third largest industry in the UAE in terms of number of people employed.
“From a manufacturing perspective, there are numerous factors driving the UAE’s growth – such as the many free zone facilities, the superb logistics infrastructure, low operational costs, easy access to investment as well as the ease of importing raw materials. Moreover, the manufacturing industry stabilizes and supports the growth of several other sectors. I would go as far as to label manufacturing the most valuable asset to the UAE after oil,” she said during the course of her presentation titled “Diversifying the UAE Industry – Developing Manufacturing”.
Suresh Nair, Head of the Litigation & Dispute Resolution Department at Singapore-based Straits Law, gave an insightful overview of the legal risks and complexities that often underlie global trade transactions. Drawing into his years of experience in the legal profession, Nair cited examples of complex trade disputes, their legal trajectory and eventual outcome to provide the audience a sharper understanding of the potential legal pitfalls that businesses could face while carrying out international trade transactions.
With foreign exchange exposure becoming a growing concern for companies in today’s era of heightened globalization, particularly during times of instability, the conference also sought to address the issue of how to effectively manage FX and interest rate risk. Giving a presentation on the topic, Julien Huston, Director – Global Institutions (MENA) – Global Markets, National Bank of Abu Dhabi, stated that changes in exchange rates can have a considerable impact on organizations’ operations and profitability.
“The challenge facing companies today is to find a way to lock in the profit without putting their business at risk. As a result there has been a growing appetite for innovative instruments such as credit-currency swap – which offers the best of both worlds by eliminating the volatility risk of both FX and interest rate,” Huston said.
Speaking on the role of supply chain in today’s complex industrial environment was Hariharan Laxminarayanan, Head Buyer at Emal. “Many manufacturing companies get caught up in the process of cost reduction, to the extent that their attention is shifted away from what ought to be their main goal – value generation. They must reset their priorities to focus more on maximizing efficiency and productivity and explore new ways in which finance and supply chain can come together to drive growth,” he said.
Laxminarayanan also had a word of advice for SMEs on how to compete more effectively in the market. “Since the fortunes of SMEs are directly linked to the growth of the industrial sector, it is important that they align their goals with that of the manufacturing industry at large, rather than set goals independent of their core industrial constituency.”
The largest private commercial bank in the State of Qatar, Doha Bank is one of the leading financial services companies in the Gulf region. The bank provides individuals and commercial, corporate and institutional clients across Qatar and the region, new and better ways to manage their financial lives.