TBY talks to Malcolm Wall Morris, CEO of Dubai Multi Commodities Centre, on stimulating the flow of commodity trade, establishing a trade hub, and the advantages of the JLT Free Zone.
TBY Why was Dubai Multi Commodities Centre (DMCC) established?
MALCOLM WALL MORRIS The DMCC was created in 2002 by the government to stimulate the flow of commodity trade through the Emirate. To achieve this, we were granted 200 hectares of empty land to develop in any way we pleased. After thorough market reviews, the Executive Chairman, Ahmed Bin Sulayem, decided to create a mixed-use free trade zone as a way of stimulating the physical presence of commodities. Ten years ago, when DMCC was conceptualized, this entire area was arid desert. Today, it is known as Jumeirah Lakes Towers (JLT) Free Zone and is a vibrant city within a city, where 50,000 people live and work in 61 towers. However, JLT is not just a property development or a community, it’s actually the fastest growing free zone in the UAE. DMCC has developed significantly from its original remit and is both the master developer and licensing authority for the JLT Free Zone, as well as the region’s leading commodities authority.
How successfully has the trading hub been established?
In terms of fulfilling our mandate, we are the region’s only dedicated commodities marketplace. DMCC has become the diamond trading center for the region, and despite being such a young country, we are now among the top three diamond centers in the world. Just one example of how we have impacted the diamond industry is in the trade statistics. Before DMCC was created, the value of the diamond trade was just $5 million annually. In 2011, the value of the diamond trade was $41 billion. The previous year it was $35 billion. And for gold, another important commodity that we facilitate the trade of, has seen its traded value grow to $56 billion in 2011. We’ve achieved this by providing commodity companies with relevant physical infrastructure, products, services and facilities that enable them to operate at a world class level. A gold or diamond company, for example, is able to set up a business with us, buy or lease office space in the free zone, store its goods in our state-of-the-art vaults, use our boiling, polishing, refining or certification services and trade goods on our platforms. They are also able to meet with industry peers and share best practices with other industry players through our conferences, forums, and networking clubs. In terms of numbers, we have brought over 4,600 companies to the free zone over the past decade. In 2010, we registered 725 new companies, and in 2011 almost 1,400. In 2012, between January and June we had 1,000 new businesses join us. We attract around 180 companies every month, and of the companies that join us, around 85% of them are new to Dubai and many chose the JLT Free Zone as their regional base.
Does JLT differ from other free zones in any way?
Companies choose the JLT Free Zone because there is an availability of freehold and leasehold real estate, it is well located between two metro stations, close to the airport, as well as within reasonable commuting distance of the capital, and we are also in the middle of a large residential area with over 30,000 residents. Like all free zones in the UAE, there is no corporate tax for 50 years and 100% ownership of the business. However, as JLT is a mixed-use free zone, almost all business activities can be licensed here, which leads us to have a variety of companies ranging from retail outlets, hospitality, and IT, to marketing, consultancies, medical facilities, and of course, commodities companies. This gives us a clear advantage over free zones that only license a specific business activity. Being the region’s leading commodities authority, we are clearly the natural choice for any commodities company. This is underlined by a clustering effect that various industry segments have followed. For example, we have over 600 diamond companies here. But we see the clustering effect also in areas such as petrochemicals, gold, and tea. The specifically created physical infrastructure we offer is an important contributing factor in this area.
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