The Dubai International Financial Centre (DIFC) and the Riyadh Chamber of Commerce and Industry (RCCI) called on Tuesday for deeper integration among GCC states - particularly between the UAE and Saudi Arabia (the two largest economies of the Gulf), in light of imminent GCC common currency. A consolidated approach between the nations of the Gulf will allow them to maximize emerging opportunities around the world and in the region, Nasser Al Shaali, chief executive officer of DIFC Authority, said. Speaking at a jointly-organized conference held in Riyadh entitled “Rising Giants: Opportunities in KSA” at the RCCI, he said the two GCC member countries “have the ability and the authority to strengthen ties at an institutional level between the Kingdom of Saudi Arabia and the UAE, promote greater links between our banking and financial services industry, and facilitate greater investment ties and capital flows.” “In Abu Dhabi and in Riyadh, 28 years ago, our leaders dreamed of formulating common regulations in various fields such as economy, finance, trade, customs, tourism, legislation and administration. They envisioned joint ventures, increasing cooperation among the public and private sector, strengthening of ties between their peoples; and establishing a common currency,” Al Shaali said. The DIFC delegation was welcomed by Eng. Sa'ad Bin Ibrahim Bin Abdul Aziz Al-Moajil, vice-chairman of the board of the RCCI. Al-Moajil pointed out that the GCC has enormous resources. “GCC economies are emerging as an economic and financial hub for the wider region and have achieved average real GDP growth of 6.9 percent over 2004-2008. “Saudi Arabia is the wealthiest economy in the GCC and plays a pivotal role in the wider region. It has the mass and volume to move things and take the rest of the GCC forward,” he said. Al-Moajil agreed that to move the GCC forward, there is need to revisit plans in light of the changed global scenario. “The financial geography of the region and the world has changed and steps are needed to support regional economic and financial integration”, he added. Dr. Nasser Saidi, DIFC chief economist, pointed out that the imminent launch of the Gulf common currency reinforces the need for investments in financial infrastructure - both legal and regulatory. “We need to rapidly move toward an integration of the financial markets and payment systems in KSA and the GCC, which are the core economies of the GCC. Financial markets in GCC can become an “engine of growth”, by financing and supporting the massive investment required in networks (power, transport, telecommunications, oil& gas), by developing the capacity to invest, manage & control region's financial wealth of more than $2 trillion invested abroad, and by enabling & supporting economic and financial reforms. The Kingdom of Saudi Arabia and the UAE are natural allies and partners in moving to greater financial market integration to support regional economic integration, the GCC common market and Gulf monetary union.” Al Shaali pointed out that the results have not been as satisfactory as had been envisioned. “Our brotherly nations have not integrated their administration, their services, their systems, and their financial and legal frameworks. Money, goods and services and human capital does not flow smoothly across the GCC wherever there is need and opportunity for it. As members of the same family we have not combined our comparative advantages to tap into opportunities that seem impossible to individual states, but easy when approached as a bloc.” He referred to the estimated more than $1 trillion in Arab funds parked overseas and the fact that the GCC accounts for marginal inflows of global FDI as prime examples of delay in creating opportunities. The DIFC Authority CEO said the current global crisis is an opportunity that the GCC can utilize to create integrated systems and frameworks and common, unified and standard platforms - a true economic and financial bloc that can navigate with strength in the global economy and financial flows. Al Shaali offered to share the expertise that the DIFC has acquired - such as world-class legal frameworks, best-of-breed regulatory models for both Islamic and conventional banking, and best practices in environmental, social and corporate governance norms - to assist and facilitate the realization of the GCC objectives. Howard Handy, chief economist of Saudi American Bank (Samba), said: “Saudi Arabia's economy has not escaped the ongoing global financial crisis and severe recession, given its openness to world trade and financial flows and its pivotal importance as the world's leading oil exporter. Oil production has been cut back sharply in an effort to stabilize global prices, and access to global capital markets for project financing has been abruptly curtailed as a result of the de-leveraging by financial institutions in major capital markets. However, Saudi Arabia is exceptionally well positioned to withstand these shocks. This follows first, from its impressive progress on structural reform, which has propelled the Kingdom to being designated by the World Bank as one of the world's best countries in which to do business; and second, from its solid financial balances - large stock of foreign assets and strong fiscal position, which are enabling the government to play a powerful anti-cyclical role during the current downturn.” __
