Dubai, riding the Middle East’s oil-fired boom, has declared itself the center of Islamic finance and says it aims, in the words of Dubai’s government, to « develop the same stature as New York. »
With U.S. investment houses tumbling into bankruptcy, consolidating operations or transforming themselves into more closely regulated commercial banks, Wall Street’s reputation as the prime address to raise capital, seek investment advice or trade securities is no longer rock solid.
The flow of capital had already begun moving away from the United States this summer. A survey released last week about the competitiveness of world financial centers found that New York and London, which are often neck-and-neck in such rankings, were still at the top.
But the survey also found that the two cities’ lead over their rivals shrank after February because of the credit crisis and the collapse of U.S. securities firms. Frankfurt and Paris also lost ground. Cities in Asia and the Middle East, meanwhile, were deemed most likely to gain in importance.
« Dubai, Singapore, Shanghai and Mumbai — they are the probable leaders, » said Michael Mainelli, executive chairman of Z/Yen Group Ltd., which carried out the survey. Researchers looked at factors including infrastructure, foreign direct investment, cost of living and the presence of a fair and just business environment.
Firms in some financial centers are using the Wall Street breakdown to snap up assets — and people, tens of thousands of whom have been laid off in the last few months.
Dubai‘s International Financial Center boasts that its tenants are eligible for benefits such as no tax on profits, 100% foreign ownership and no restrictions on foreign exchange or repatriation of capital. In addition, said Mohammed Abu Ali, an assistant professor of economics at Dubai‘s American University, « Dubai has an ideal location. It is located between the East and the West. It is in a good time zone. And it has a very dynamic economy. »
Hussain al-Qemzi, chief executive of the Noor Islamic Bank, which is majority-owned by the Dubai government, aims to turn the city into a hub for Islamic banks, prohibiting usury, that would rival Wall Street’s traditional banks.
From Ariana Eunjung Cha, The Washington Post October 2, 2008