DMCC to launch innovative financing scheme for commodity warehousing in Dubai

Known as Dubai Commodity Receipts (or "DCR's"), the new system is a unique initiative of DMCC to facilitate both the financing and storage of bulk commodities in Dubai. The DCR system will be implemented in early 2004.

Announcing the introduction of the DCR system, DMCC's Chief Executive, Tawfique Abdullah, said: "Offering substantial financing opportunities for the commodities sector, DCR's represent an innovation which will bring new volumes of commodities trade to Dubai. DCR's will generate efficiencies in commodity trading, finance and storage. DCR's will directly benefit commodities traders, warehouse operators and banks. Hand-in-hand with the substantial growth in our port facilities this will bring Dubai ever closer to international recognition as a world-class commodities trading hub".

Mr. Abdullah added: "We are working closely with the market to ensure that DCR's meet its need. More than 50 interested parties attended a working session with us a few weeks ago, and we are in the process of appointing an advisory committee of traders, warehouse operators and banks to work with us during the implementation stage".

DCR's themselves will be issued by approved warehouses for inbound deliveries of bulk commodities. The warehouses will issue DCR's on a DMCC controlled web-based technology platform. Once the commodity has been delivered, and a DCR issued, it is then a matter of approaching a banking member of the DCR system to obtain finance.

Addressing the issue of which commodities are likely to be the subject of DCR's, DMCC's Executive Director, Commodities, David Rutledge said: " One of the advantages of the DCR structure is that it is generic and highly flexible. Our facility will work for most commodities and, as a result, we are not forced to be prescriptive about the commodities to which it might apply. We can essentially let the market determine the extent of DCR applicability. That said, we have already had indications that traders in textiles, rice, sugar, spices and certain metals will have an interest in the DCR system."

By developing the DCR, DMCC has further demonstrated its commitment to increase the value and volume of traded commodities in Dubai. As Dubai is set to drive and promote the region's economic growth, DCR's will play an important role in enhancing the competitiveness and efficiency of the commodity sector with resultant benefits for economic activity and employment in the Emirate.

The Dubai Metals and Commodities Centre (DMCC) was created as a strategic goal of the Dubai Government to establish a commodity marketplace in Dubai. As an innovator and a regulator, DMCC is committed to serve the needs of participants in the Dubai gold, diamonds and commodities market. The Centre aims to attract key players throughout the entire value chain of each of these industry sectors, together with relevant support industries such as finance, logistics and insurance.

DMCC offers resident partners numerous benefits, including a secure regulated environment, special freight rates, a 50-year tax holiday and the benefit of ownership of business premises.

Strategically located in Dubai at the crossroads of trade and commerce between the East and West, DMCC is ideally positioned for manufacturers to service and access markets that span the Middle East, North and Southern Africa, the Indian Subcontinent and CIS countries.