What can Mauritius learn from the Dubai International Financial Centre?
The Mauritius International Financial Centre will formally be launched on 1 March by the Government of Mauritius, along with the Financial Services Promotion Agency (FSPA) and the Financial Services Institute (FSI). As Mauritius prepares to unveil its Mauritius IFC identity and to project its financial services offering on the international stage, what can be learned from the highly successful Dubai International Financial Centre (DIFC)? Is the DIFC a potential partner, or a major competitor, for Mauritius? AfricaMoney asks Joseph Margéot Jolicoeur, a Mauritian business professional working in the financial services sector in Dubai, to explain the secrets of its success and the key lessons to be drawn.
Edited excerpts from an exclusive interview:
Joseph, we have seen that 2015 was a record-breaking year for the Dubai International Financial Centre (DIFC). As someone on the ground in Dubai, what would you say are the key drivers, or multipliers, of this growing success in the DIFC?
Since its creation in 2005, the DIFC has witnessed rapid development and has positioned itself as a world class financial centre. The exceptional amount of business that was generated and created by the DIFC last year does not come as a surprise as the DIFC has been able to position itself as a global financial hub by providing international companies with world class services and facilities. The success of the DIFC can be attributed to a number of factors, basically the focus on providing a world class physical, legal and regulatory environment which is tailor made for the financial services and business community, its financial sustainability and the client-centric approach of doing business by ensuring the best business processes, procedures and services.
I do think that the establishment of proper independent regulatory bodies such as the Dubai Authority, Dubai Financial Services Authority (DFSA) and the Dispute Resolution Authority has contributed to the growth and development of the DIFC as a global financial centre. It is this type of business-friendly and legal environment that has allowed the DIFC to attract incumbent players such as Lloyd’s, BankMed from Lebanon, Philippines’ BDO Unibank, the law firm Bae, Kim and Lee, Shinhan Bank from South Korea and Access Bank UK which started its operation in DIFC in 2015.
Do ‘magic circle’ law firms, or others, play an important role in attracting new market entrants to DIFC?
The presence of a large number of international law firms, hedge funds, wealth management firms and international banks has indeed played a major role in promoting the DIFC. Major international law firms already have a branch or an office in Dubai and the presence of these large firms provides some kind of comfort to international investors willing to set up an operation in the DIFC. The presence of these large firms adds more substance and further consolidates the position of DIFC as an international financial centre.
Do you consider that the DIFC’s status as a government authority constitutes a particular advantage and, if so, how?
I do think that part of the success of the DIFC is due to its status as a government authority. The setting up of the DIFC is in line with the vision of the Ruler of Dubai to build up a world class financial centre. They have clear goals and objectives and have been developing the right strategy that has been contributing to the success of the DIFC.
There has been tremendous investment in infrastructures and also in the development of an appropriate legal framework that has been a catalyst in the development of the DIFC.
To what extent do you consider that air connectivity gives the DIFC an edge over other international financial centres?
Personally I do not think that air connectivity per se provides any competitive edge in determining the success of an international financial centre, as normally it is not mandatory for clients or investors to be physically present in the specific jurisdiction where they are to set up a company.
In September 2015, an Investment Promotion and Protection Agreement (IPPA) was concluded between the UAE and Mauritius, and then in October 2015 a Memorandum of Understanding was signed between the Dubai Financial Services Authority (DFSA) and the Financial Services Commission (FSC) of Mauritius. Do you consider that the DIFC is a potential partner for Mauritius, or a major competitor, particularly when it comes to Africa?
The Memorandum of Understanding that was signed with the DFSA last year is likely to contribute tremendously in enhancing mutual cooperation towards promoting and developing cross-border investments between Mauritius and Dubai and the UAE as a whole. It is certain that the signing of the MoU will create a strategic partnership and consolidate the business ties between Mauritius and DIFC, and surely both parties will greatly benefit from this.
I would like to highlight that Mauritius has already had a Double Taxation Avoidance Agreement with the United Arab Emirates since 2007, plus at least 15 more DTAAs with African countries like South Africa, Kenya, Namibia and Madagascar, just to name a few. This nexus of DTAAs with the African countries further strengthens and enhances the position of Mauritius as the partner of choice when entering the African market. What is more likely to come from this agreement is support and cooperation between Mauritius and DIFC when it comes to cross-border investment, particularly when going through Africa.
Are there any specific areas where you consider that Mauritius has a particular advantage over the DIFC in terms of its offer?
The ease of doing business and setting up companies in Mauritius cannot be disregarded either. When it comes to the cost of doing business, Mauritius offers premium services at a reasonable cost which is one of the variables in deciding where to set up a business operation. The pool of multicultural, professional and qualified workforce available in Mauritius is an attribute that Mauritius has and can offer and it definitely plays to the advantage of Mauritius when servicing global clients. Since a lot of African countries are English and French speaking, Mauritius is better positioned to carve a niche in these markets as Mauritius can appeal to all clients from almost every country. Language barriers are not likely to be a problem when it comes to doing business in and with Mauritius.
From your personal experience of working in both Dubai and Mauritius, what would you say are the key lessons that Mauritius can learn from the DIFC?
Partnering with the DIFC, or using the DIFC business model to develop the right business and marketing strategy, can actually give Mauritius a cutting edge when it comes to developing further its financial services business. With the networks of double taxation agreements that Mauritius already has, and its ease of doing business at a relatively low cost, adopting the right marketing strategy will surely position the island as a top-tier jurisdiction for international business in the changing global tax environment.
- By Samantha Seewoosurrun