UAE FINANCIAL SECTOR — A BEACON OF HOPE

THE UAE has emerged as an international business hub because of forward-thinking approach of its visionary leadership and remarkable performance of financial sector last year by securing top rankings in four global indexes of competitiveness, say experts.

Leading executives, analysts and industry specialists said financial sector will continue to play a pivotal role in accelerating the UAE’s gross domestic product (GDP) by attracting foreign investment and offering promising business opportunities to investors.

They attributed credit of remarkable performance to the UAE government who approved 15 federal laws, 62 regulatory decisions, nine key national projects and initiatives on financial affairs last year. The sector also benefited from the government’s transparent and proactive actions including 10 major decisions on tax matters, 17 approvals on regulating government services and six rulings on financial policies.

In addition, 147 agreements were signed to avoid double taxation and 112 deals were endorsed to encourage and protect investments. As a result, total asset value of financial sector hit Dh481.5 billion last year.

Haleema Humaid Al Owais, Vice-Chairperson, Sharjah Consultive Council; Board Member, Sharjah Chamber of Commerce and Industry and InvestBank, and CEO of Sultan Bin Ali Al Owais Real Estate, said the UAE has established itself as a global financial hub for over a decade.

“In 2023, with the implementation of various initiatives, laws, and agreements, along with its top ranking across four indexes, it has cemented its position as one of the leading financial centres in the world,” Al Owais told BTR.

In today's fast-paced world, she said it is essential for authorities, governments, and the private sector to be dynamic and stay ahead of the curve.

“With the successful execution of 386 agreements, laws, regulations, projects, and policies, the UAE's progress and achievements are nothing short of remarkable,” she said.

PROMISING FUTURE

Al Owais sees bright future of financial sector as the businesses seeking benefits from the advanced financial ecosystem in the UAE are keen to capitalise on promising opportunities in the country.

“The future is a result of the decisions and actions taken in the present. Upon careful examination of the initiatives taken in the past year, it becomes quite apparent that the UAE is a nation that values forward-thinking approach. This attribute is evident in the strides made in various fields, including the financial sector.

“In fact, given the UAE's consistent record of excellence, we can expect the future of the UAE financial sector to be a beacon of hope — a shining example of what can be achieved with vision, determination, and hard work,” she said.

Markus Susilo, Partner at Crowe for Payroll and Indirection Tax, echoed similar view and said the UAE has emerged as an international financial centre because of its excellent infrastructure, consistent policies and innovative approach towards business and economy.

“In my opinion, continuous development is ingrained in the UAE's DNA. The initiatives and performances witnessed last year mark the start of a greater journey towards positioning the UAE as a preferred global business hub. Hence, I foresee a promising future for the UAE to lead development in this sector if it so chooses,” he said.

Susilo said the financial services sector is pivotal in establishing a thriving global business hub, offering essential infrastructure for businesses to operate within and from.

“With a dedicated focus on advancing this sector, the UAE is poised to solidify its status as the preferred global business hub of the future. Attaining top ranks in global competitiveness indexes validates the effectiveness of national financial policies and visionary leadership driving these initiatives,” Susilio told BTR.

STRATEGIC PRIORITIES

Abi-gail Marshman, Senior Managing Director and Head of Financial Crime Consulting, Middle East and North Africa at FTI Consulting, hailed the UAE government's proactive stance in safeguarding the integrity of the financial sector.

She said one of the top strategic priorities of the government for the financial sector in 2023 was enhancing the domestic financial crime compliance regime. Regulatory and supervisory authorities aligned in their commitment to continue to intensify interactions with financial institutions in order to better mitigate the risks of illicit money within the ecosystem.

“In this vein, we saw a significant increase in fines and penalties issued for institutions deemed non-compliant. This concerted effort underscores the government's proactive stance in safeguarding the integrity of the financial sector and has yielded a fantastic result with the UAE being removed from the FATF greylist,” Marshman told BTR.

REGULATORY FOCUS

With regards to the UAE financial sector, she said 2023 was all about tangible government actions. “Increased investment, upskilling and international collaboration with foreign counterparts all toward increasing the health of the local financial sector and communicated a serious push to preserve the reputation and integrity of the market,” she said.

“Given that there has been such a fundamental achievement in the financial crime compliance space at a national level, we predict the regulatory focus for 2024 will shift into the ESG space. Following COP28 being hosted in the UAE last year, there is an expected focus in 2024 for financial institutions to better understand and more purposefully implement measures on sustainability, and implementing strategies to get to net zero in terms of operating processes.

COMPETITION CHALLENGES

Al Owais said the UAE financial sector is is well-equipped to face any challenges that may arise from international competition.

“Competition is a constructive concept that we should always embrace as long as it remains ethical. Furthermore, challenges have always driven the UAE to exceed its limits and achieve excellence,” she said.

“I firmly believe that the UAE financial sector is well-equipped to face any challenges that may arise from international competition. The initiatives planned for 2023 are a testament to their commitment to mitigating potential future risks,” she added.

Susilo, who is also Tax and Business Advisor of the Commercial Section of the Austrian Embassy in the UAE, expressed confidence in the UAE’s financial sector and said it will stay ahead of others because of its visionary leadership.

“Having witnessed recent global developments in this sector, collaboration and cooperation have emerged as crucial elements for fostering a well-functioning financial services ecosystem. In my opinion, as long as the UAE continues to fuel this sector with innovation and sustainable development, alongside maintaining close collaboration with other global players — which they have been doing excellently so far — the future of the UAE's financial sector remains bright,” he said.

Marshman sees healthy competition in the domestic market and said it will ultimately strengthen the UAE’s financial sector.

“We are seeing plenty of competition in the domestic market alone, without even going into the international scene. This is a consequence of the integration of emerging players in fintech, e-payments, blockchain, digital assets and other cutting-edge innovations into the domestic financial sector,” she said.

“These entities have helped to create on-ground competition for traditional financial institutions. While this is highly beneficial to the consumer, as institutions prioritize ease of doing business and excellent customer experience — to the end user’s delight, traditional more cumbersome financial institutions will struggle to keep pace and will be kept on their toes to become more nimble and efficient,” she added.

KEY FINANCIAL ACHIEVEMENTS AND INITIATIVES IN 2023

> The UAE ranked first globally in four international indexes of competitiveness in financial sector

> 15 federal laws, 62 regulatory decisions, nine key national projects and initiatives on financial affairs approved by the Cabinet

> 10 decisions regulating tax matters, 17 decisions regulating government services, six decisions on the federal government’s financial policies

> Eight international agreements were signed or approved with the Republic of Côte d’Ivoire, Republic of Mozambique, Barbados, Cooperative Republic of Guyana, Czech Republic, and the United Republic of Tanzania

> 147 agreements to avoid double taxation and 112 deals to encourage and protect investments were signed until 2023

> Dh481.5 billion is the total asset value scored up to third quarter of 2023

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