ABU DHABI // People who follow the deliberations at the FNC often ask who the most vocal members are – those who were appointed or elected?
My answer is always the same: “Both.” Many are surprised. Initially, so was I. Many people assume that if members are appointed by the ruler of their emirate, they are less likely to pin down the Government or tackle certain issues.
Opening that can of worms and detailing the Government’s faults publicly and grilling ministers can be hard to imagine. But I have covered the 40-member body since it was convened in 2011, and have come to learn that these assumptions are inaccurate.
After interviewing nearly all the appointed members for a recent series on the FNC, I found that many felt they were under pressure to deliver.
Of course there are some who say they are unsure why they were hand-picked to join the council, and their presence goes unnoticed in most sessions, but a significant number can only be described as diplomatic rebels.
They all want to return to the ruler who appointed them once their term ends and show what impact they have had on policy changes, and that they were closely monitoring the Federal Government.
Elected members have a different kind of responsibility. It is their chance to show their constituencies that their elections campaigns in 2011 were not filled with empty promises.
The difference is that when they challenge the law, they want everyone to know.
Some have sought me out to show the public what roles they have played in the council and their plans for the next debate.
Of course when an FNC member (Mosabeh Al Kitbi, Sharjah, elected) tells me that he will call for 10 more days of public holidays each year, it is not something that would go unnoticed.
Although some elected members bring vast knowledge of their fields of expertise to the FNC, the appointed members have also shown their wealth of knowledge, albeit lacking the frequency of their elected peers in doing so.
The FNC’s examination of the stock-market regulator this month was a fine example. It was a chance for the appointed business giants in the council to come out of their proverbial shells, and they did.
But it does not mean that those who were less knowledgeable about the stock market, including many elected members, did not play an equally important role.
Publicising the impact the stock market has had on Emiratis was crucial, particularly since many lost millions of dirhams in the recent market crash.
I particularly liked Hamad Al Rahoomi’s involvement in the discussion. The elected member from Dubai, who has experience in aviation and shipping, did not hesitate to take part in the discussion, but he nonetheless acknowledged publicly that he was not an expert.
In any case, he made a notable contribution.
In terms of legislative work, elected and appointed members often have a heavy-handed approach to making amendments. The elected members usually keep in mind the social aspects of the law, while the appointed members tend to pass more specific, technical changes. This works both ways, depending on the debate.
Although the council is often criticised for having only half of its members elected, the members have shown that the system works.
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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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