The Dubai International Financial Centre is seeking reduced telecommunications tariffs to entice global financial services companies to move trading operations to the tax-free business park.
The DIFC has started talks with the United Arab Emirates’ two telecommunications service providers after “enough” companies called for a drop of 20 percent to 30 percent in tariffs, the center’s Chief Executive Officer, Jeffrey Singer, said in an interview yesterday. Lenders including Deutsche Bank AG (DBK), Germany’s biggest bank, have indicated they would relocate some trading operations if rates were lower, he said.
The DIFC opened in 2004 to attract international banks, asset managers and insurers with promises of a zero-tax environment for 50 years. The regional offices of Goldman Sachs Group Inc (GS), Citigroup Inc (C) and Standard Chartered Plc (STAN) are located in the center, which was home to 817 companies at the end of last year, including 279 in financial services.
Higher costs for data and phone lines erode a company’s savings from paying lower salaries to traders than in Europe, Singer said.
More Than Singapore
“Telecom rates in the city are more than Singapore and London on an adjusted basis so you can’t move large trading operations here unless” tariffs are cut, Ashok Aram, Deutsche Bank’s Middle East North Africa chief executive officer, said at a news conference in Dubai yesterday. “Dubai will never become a huge trading center until telecom rates come down.”
Dubai is one of seven emirates that make up the U.A.E., which is home to state-run Emirates Telecommunications Corp. (ETISALAT), based in the capital Abu Dhabi, and Emirates Integrated Telecommunications Co., known as Du (DU) and headquartered in Dubai.
The DIFC is also working to attract financial institutions from China as Asia’s biggest economy boosts investments and trade with Africa, while using Dubai as a hub, Singer said. Chinese companies are investing in minerals, agriculture and infrastructure in Africa and several Chinese institutions are seeking to base their regional offices in Dubai, he said.
The center also expects to benefit from rising personal taxes in Europe, which may push businessmen to move to Dubai, Singer said.
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