Once sustained by cargo vessels, the emirate's commerce is now supported by the Dubai Multi Commodities Centre, says Michael Jansen , in Dubai
For millennia a regional commercial hub, Dubai is now making a strategic bid to become a global high-tech centre for the trade in virtually all commodities.
Instead of old-fashioned, graceful wooden dhows with lanteen sails that still transport cargo across the Gulf and Arabian Sea, the vehicle for the emirate's 21st century commerce is the Dubai Multi Commodities Centre (DMCC), launched in 2002 by crown prince and now ruler, Sheikh Mohammed bin Rashid al-Maktoum.
Determined to make oil-poor Dubai a prosperous global financial and commercial centre, the visionary Sheikh Mohammed has been the driving force behind the emirate's building boom as well the expansion and regulation of banking and trade. To Dubai's trade in traditional commodities of gold, silver, pearls, precious stones and tea, DMCC has recently added oil and steel futures. Gasoline futures are soon to be added to the list.
DMCC is also involved in the development of the world's first liquid natural gas storage area with a capacity of 40-65 billion cubic feet. This is to be located at the Jebel Ali Free Zone.
The commodities centre took off in 2005 when a major international bank and the Dubai Islamic Bank put together a $200 million (€156 million) package to make it self-financing over five years. In accordance with Islamic banking practice, investors do not receive interest, but returns from rents at the three tower-blocks under construction to house the divisions of the commodities centre at the Jumaira Lakes campus hosting 79 buildings.
Resident companies are granted free zone status, a 50-year tax holiday, 100 per cent business ownership, freehold commercial premises, repatriation of profits and a secure and regulated environment.
The Dubai Multi Commodities Centre has 861 members. Traders can become resident members or join a commodity platform. Gaiti Rabbani, the centre's chief sales and marketing officer, observed: "We are creating a community of the market place [ as well as] business opportunities for clients . . . Dubai diversifies clients' contacts so they are not simply tied to western trading platforms" that have dominated world trade for centuries.
The commodities centre has three divisions:
• gold and precious metals;
• diamonds and coloured stones;
• general commodities.
Operations are carried out by specialised trading platforms.
The Dubai Gold and Commodities Exchange (DGCX), with 187 members, is the first automated international online commodities exchange linking Europe and the Far East. It provides traders with access to a host of clients across the world and offers six-month forward steel, fuel oil and precious metals options.
The Dubai Diamond Exchange, the first diamond bourse in the Arab world and member of the World Federation of Diamond Bourses, has 240 members from 30 nationalities.
The Dubai Gems Club, with 29 members, provides exclusive facilities for private deals. The Dubai Gem Certification Centre is the world's first such centre that deals with diamonds, gemstones, pearls and jewellery.
Ms Rabbani remarked: "Contrary to popular belief, the diamond trade is not managed by Israelis but by Indians" with whom the Dubai Diamond Exchange has close connections.
Dubai also has a high-tech manufacturing complex for cutting stones and making jewellery for local and export sales. Since Gulf Co-operation Council members represent the world's third-largest consumer market, Dubai is an ideal centre for regional as well as global trade.
The Dubai Tea Trading Centre, with 42 members and 60 applicants, offers storage, blending and packaging facilities for traders operating in the region, which consumes 25 per cent of the world's tea production.
Colin Griffith, executive director of gold, said DMCC, which has an A rating from Standard and Poor's, is "the first entity in Dubai to receive a rating from this organisation".
"Dubai is the golden gateway to India, the largest gold consumer in the world. Dubai is the largest per capita consumer of gold and overall the sixth or seventh largest consumer," he said.
He explained that the emirate, which has a population of 1.5 million, receives 26 million visitors a year. Dubai sells large volumes of gold at rates close to the international price.
Gold is cheaper in Dubai than in Europe and the US, where small volumes are sold at higher prices. India, Saudi Arabia and the Gulf export scrap gold to Dubai for melting down and making jewellery and small gold bars. The exchange operates two gold refineries and two more are under construction and certifies refineries around the world.
Mr Griffith said the 2001 terror strikes on New York and Washington were a watershed for trade in Dubai. The Dubai International Financial Centre and the commodities centre, set up after the attacks, had dual purposes: to extend the commercial reach of Dubai and regulate trade and banking to prevent money laundering and the transfer of funds to hostile groups.
He said the DMCC is itself a regulator, a member of international regulatory bodies and adheres to international standards. "A lot of progress has been made to make this market more transparent, more regulated.
"We had a visit at this time last year from the World Bank and IMF and they went home feeling comfortable."
