Jafza trade worth $60bn

Companies in the Jebel Ali Free Zone generated trade worth more than US$60 billion (Dh220bn) last year, more than a quarter of Dubai's total trade value, new data show.

The Jebel Ali Free Zone Authority (Jafza) did not provide data from the year before. But last year's total fell short of the 2008 trade figure - $88.65bn.

The number of new companies setting up was largely flat. A total of 480 businesses were set up in the Dubai economic free zone last year, compared with 484 the year before.

"We are very proud of our positive contribution to the economic growth of Dubai and the UAE," said Salma Hareb, the chief executive of Economic Zones World, Jafza's parent company. "The performance is in line with the vision set for Jafza as a growth engine of the local economy."

Officials are trying to attract more companies from fast-growing emerging markets in South America and the Far East.

But Jafza has faced tough competition from the Ras Al Khaimah Free Trade Zone (RAK FTZ) and other regional emerging business parks offering low rents. More than 1,700 new companies were registered in RAK FTZ last year.

Moody's Investors Service last week downgraded by one notch Jebel Ali Free Zone's long-term foreign and local currency issuer ratings, citing uncertainties about the company's near to medium-term capital structure.

Businesses setting up in Jafza last year included the Chinese energy company Petrochina International, Japan's Isuzu Motors, Wallenius Wilhelmsen Logistics of Belgium, and the French energy management company Schneider Electric.

Most of the companies moving in were involved in petrochemicals and oil, followed by automotive and electronics enterprises.

Investors from the UAE accounted for 97 new businesses, India 47, the UK 37, and the US 29.

"Jafza is a vital intermediary hub for the Asia-Europe trade, while it is also well positioned for delivery to the growing North African and Middle Eastern economies," said Ibrahim al Janahi, Jafza's deputy chief executive and chief commercial officer. "Companies in emerging economies in Asia who are looking to expand their horizons are continually attracted by Jafza's value proposition."

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Dubai works towards better air quality by 2021

Dubai is on a mission to record good air quality for 90 per cent of the year – up from 86 per cent annually today – by 2021.

The municipality plans to have seven mobile air-monitoring stations by 2020 to capture more accurate data in hourly and daily trends of pollution.

These will be on the Palm Jumeirah, Al Qusais, Muhaisnah, Rashidiyah, Al Wasl, Al Quoz and Dubai Investment Park.

“It will allow real-time responding for emergency cases,” said Khaldoon Al Daraji, first environment safety officer at the municipality.

“We’re in a good position except for the cases that are out of our hands, such as sandstorms.

“Sandstorms are our main concern because the UAE is just a receiver.

“The hotspots are Iran, Saudi Arabia and southern Iraq, but we’re working hard with the region to reduce the cycle of sandstorm generation.”

Mr Al Daraji said monitoring as it stood covered 47 per cent of Dubai.

There are 12 fixed stations in the emirate, but Dubai also receives information from monitors belonging to other entities.

“There are 25 stations in total,” Mr Al Daraji said.

“We added new technology and equipment used for the first time for the detection of heavy metals.

“A hundred parameters can be detected but we want to expand it to make sure that the data captured can allow a baseline study in some areas to ensure they are well positioned.”

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