The DMCC has great prospects

It is hard not to be impressed by the diligent progress being made at the Dubai Metals and Commodities Centre. There is no parade of full-page advertisements in the Gulf News, rather the rapid evolution of a new fully functional commodities free trade zone to complement Dubai's status as a trading hub.

A neat presentation to journalists yesterday highlighted progress in the new divisions: Gold & Precious Metals and its upcoming Dubai Gold & Commodities Exchange; Diamonds & Coloured Stones and the Dubai Diamond Exchange; Dubai Tea Trading Centre; and Energy with a new exchange coming later next year.

The physical infrastructure of the DMCC is under construction opposite the Dubai Marina, and comprises a 65-storey Diamond Tower and smaller Gold and Silver towers known by their respective chemical symbols AU and AG. Substantial gold refining and jewelry workshops are also being built on the same site.

Yet away from the site the DMCC is already in business. Gold trading in Dubai is reckoned to have doubled from 10% to 20% of the world gold trade since the launch of the DMCC, and a new Dubai standard for smaller gold bars has been a big success.

Diamonds are also being traded in a temporary Dubai Diamond Exchange near the airport, and membership is booming. Meanwhile, the Dubai Gold & Commodities Exchange is close to launch and an energy trading platform will follow later next year.

580 DMCC companies

With 580 companies signed up for the DMCC free zone, the centre is certainly set to become a major employer as well as a new focus of business activity in Dubai.

The Dubai International Financial Centre, by contrast, has been slower to get off the ground, and now has about 50 firms signed up. In part this is due to the well publicized departure of the regulator in the summer of 2004, and the following organizational hiatus.

Perhaps too for a port city like Dubai in the oil-rich Middle East, the DMCC is an easier extension of present trading activities to handle than a financial centre. However, both are subject to international rules and regulations and with Dubai's ambition to be world-class in everything it does, this is an ongoing challenge.

Commodities are also somewhat less subject to boom-to-bust cycles than financial markets, and this may also make managing a commodities free zone that much easier. In particular, the DMCC is fortunate that its two key global commodities, gold and oil appear to be in a robust up-cycle.

So expect to hear more and more about the DMCC which has bold expansion plans, and a very exciting future.