Dubai seeks to boost foreign investment, tourism and trade

Dubai, the most populous city of the United Arab Emirates (UAE) has begun 2023 by signalling ambitious growth plans for the next 10 years. It will seek to attract capital, mostly from the US and the UK – already its biggest sources of foreign direct investment (FDI), to expand trade and almost double funding from abroad over the period.

The city aims to increase FDI to 650 billion dirhams (AED) – around US$$177 billion – by 2033, according to Sheikh Mohammed bin Rashid Al Maktoum. The plan was revealed as he launched the Dubai Economic Agenda (D33) on his 17th anniversary as ruler of the city, one of seven emirates making up the UAE federation and regarded as the Gulf region’s commercial and tourism hub.

The plan, if successful, would attract an average of AED60 billion dirhams in FDI annually over the next decade, nearly double the annual figure of AED32 billion over the past 10 years, the ruler tweeted. Foreign trade would rise to AED25.6 trillion for goods and services from AED14.2 trillion in the past decade.

Sheikh Mohammed, who is also prime minister of the UAE, said the plan includes economic targets of AED32 trillion, with the government aiming to launch 100 projects within the next 10 years to double the size of Dubai’s economy.

While the plan is short on detail, Dubai has ambitions to become one of the top three economic cities globally, and rank as one of the top four global financial centres. “We know our economic position during the next decade... the world makes way for those who know what they want,” said Sheikh Mohammed,

Dubai’s economy has recovered strongly from the Covid-19 pandemic. GDP grew by 4.6% on the year for the first nine months of 2022, while tourist numbers in the first half of 2022 were more than 180% more than in H1 2021.

The city benefited from the 2022 World Cup-related travel boom. Football fans travelled to the Gulf states for the tournament in Qatar, where limited accommodation persuaded many to stay in neighbouring countries. Dubai received more than 23.7 million visitors last year, of which 21.8 million arrived via Dubai International Airport (DXB) and Al Maktoum International Airport (DWC).

“The use of technologies such as artificial intelligence (AI)and the Internet of Things (IoT) has allowed Dubai Airports to deliver exceptional digital services and a superior travel experience … solidifying Dubai’s reputation as a top destination for tourism, business, and lifestyle,” said Mohammed Ahmed Al Marri, the Director General of General Directorate of Residency and Foreigners Affairs of Dubai.

Dubai plans to introduce a 9% corporate tax rate from June 2023, while it is also cutting a 30% tax rate levied on alcohol to further boost tourism. Licences for residents, which cost about US$72 and are required when buying alcohol for home consumption, will also be free in Dubai, removing a layer of red tape designed in part to deter Muslims from indulging. The changes, which will be made for a trial period of one year, follow a series of secularising reforms introduced over the past two years.

France’s regulator reveals 2023 action plan and supervisory themes

The French Financial Markets Authority (AMF) has disclosed its top focus areas of action and supervisory priorities for 2023, which were outlined in a statement published on its website.

The regulator’s priorities for action include promoting retail investors-focused finance, actively working with the European Securities and Markets Authority (ESMA) on “supervisory convergence," developing regulatory framework to promote sustainable finance and combat greenwashing as well as enshrine robust and efficient supervision.

The AMF will aim to ensure that its financial education is better targeted at retail investors and “will seek out new channels to raise public awareness of the risk of scams, which is continuing unabated, and will draw on the lessons learned from its mystery visits and inspection campaigns to encourage distributors to market products that are genuinely adapted to the different investor profiles,” the regulator explained.

To achieve “supervisory convergence,” the AMF will work on liquidity management by investment funds in collaboration with the Financial Stability Board (FSB) and the International Organisation of Securities Commissions (IOSC). France’s regulator also intends to support the implementation of new legislation such as the European Regulation on Markets in Crypto Assets )(MiCA).

On sustainable finance, the AMF says it will aid listed companies and asset managers in complying with key sustainable financial legislation and also intends to review the first reports submitted by listed companies on their economic activities that are considered to be environmentally sustainable.

The regulator also promised to adapt its tools and guard its enforcement policy in order to stay up to date with changes in behaviour and technology.

The regulator’s supervisory priorities for this year cover various categories of market participants. For investment management firms, the AMF will focus on cybersecurity arrangements, financial management delegations and the application of the Sustainable Financial Disclosure Regulation (SFDR). For market intermediaries and infrastructure, the regulator plans to focus on the quality of post-trade transparency data and cross-border activities, among other steps.

Other planned measures include a focus on how marketing is conducted in distribution banking networks, what marketing materials are used and how investors' claims are handled.

Japan’s premier wants close government relationship with central bank

Japan’s prime minister Fumio Kishida says that his government and the central bank must discuss their relationship in guiding economic policy once he has named a new Bank of Japan (BOJ) governor in the spring.

Asked in a television interview what kind of person he would choose as next BOJ governor, Kishida said only that it will be someone “best suited for the job” when incumbent Haruhiko Kuroda’s term ends on 8 April.

“The government and the BOJ must work closely together, but also each play its own role” in achieving price stability and higher wage growth, said Kishida, who has authority to choose the Bank’s next head. “Under the new BOJ governor, we must discuss the relationship between the government and the BOJ.”

There has been much market speculation that the BOJ could move further to phase out Kuroda’s economic stimulus by tweaking its yield control policy under a new central bank governor. Three weeks ago, the Bank surprised global markets by shifting its yield curve control policy, which pushed the Japanese yen (JPY) sharply higher.

Kuroda insisted that the BOJ’s decision to widen the allowance band around its yield target was aimed at enhancing the effect of its ultra-easy policy, rather than a first step toward withdrawing its massive stimulus programme.

“In guiding monetary policy, policymakers must have a view on the outlook for the economy. There needs to be careful communication and dialogue with markets,” Kishida said, when asked whether the BOJ needs to tweak it ultra-loose policy.

The premier also noted that careful explanation and communication with markets would be part of consideration on monetary policy, when asked about possible future changes in the BOJ’s ultra-loose policy.

WEF questions value of digital ledger technology

Distributed ledger technology (DLT) has been hailed as a solution to problems ranging from economic risks present in financial services to mitigating insurance fraud. But a new paper from the World Economic Forum (WEF) suggests that more than a decade since its creation and despite enormous effort from large organisations, DLT has yet to prove itself in real-world applications.

The Australian Securities Exchange (ASX) recently scrapped its blockchain project, which had been in development for nearly a decade, the WEF notes, while a lack of collaboration has seen major groups including IBM and Maersk end their supply chain management blockchain.

The Forum notes that while many pilot projects – such as those spearheaded by the Bank for International Settlements (BIS) have been completed with promising results, many questions remain on replacing current infrastructure with a digital tokenized format. The European Central Bank’s (ECB) Director for Market Infrastructure and Payments, Ulrich Bindseil, recently noted that “these technologies have so far created limited value for society – no matter how great the expectations for the future.”

“There is nonetheless an expectation that DLT can prove to be a net good for the financial markets,” the commentary notes. Foreign exchange markets have an estimated US$8.9 trillion at risk very day due to the final settlement of transactions between two parties taking days.

“This is why the Financial Stability Board (FSB) and the Committee on Payments and Market Infrastructures have focused their efforts on enhancing cross-border payments with a comprehensive global roadmap. Part of this roadmap includes exploring the use of DLT and Central Bank Digital Currencies (CBDCs).

“The problem may not be the technology itself, but the aim of replacing current technology systems with distributed networks. DLT networks are being designed to completely overhaul and replace legacy technology that financial markets depend on today. Many pilot projects, such as mBridge and Jura rely on a single blockchain developed by a single vendor. This introduces a single point of trust, and removes many of the benefits of disintermediation. Although the completed projects have shown great promise, the ability for one blockchain to communicate and transact with another blockchain remains a key stumbling block.”

BBVA expands in Central America via BAC Credomatic partnership

Spain’s multinational financial services group Banco Bilbao Vizcaya Argentaria (BBVA) said that it is taking its cash management services to Central America via a partnership with Costa Rica-based BAC Credomatic that will benefit clients of both banks, thanks to the wider geographical coverage of their combined cash management operations.

Companies using the recently launched BBVA Pivot app will be able to make payments and transfers with their subsidiaries, customers and suppliers in six new Central American countries – Costa Rica, Guatemala, Nicaragua, Panama, Honduras and El Salvador – from the same cash management solution, which will now integrate BAC accounts as if they were BBVA’s.

The group said that the advantages of the service are a single global connectivity, a single point of contact and a single contract for all their national and international arrangements, operating through direct channels, SWIFT, web or app, and having comprehensive and expert assistance.

In the first phase, BBVA clients who also have a BAC account will be able to initiate payments and transfers from BBVA Pivot, as well as view or receive aggregate information about their accounts and operate with any from a single point, simply and with integration.

BBVA added that one year on from its launch, Pivot already has 1,500 corporate and business group clients and expects to have reached a transaction volume of €680 billion (US$730 billion) by the end of 2022.

LSQ partners with Calculum on supply chain finance

Working capital finance and payments solutions provider LSQ has partnered with financial artificial intelligence (AI) and data-analytics services provider Calculum to improve supply chain finance.

A release said that the new partnership is set to help with bettering liquidity and building resilient, sustainable, and diverse supply chains by leveraging AI and trade finance solutions. It will combine LSQ’s working capital and supply chain finance solutions with Calculum’s data analytics services and technical expertise.

Through this strategic partnership, LSQ and Calculum are looking to streamline and combine spend and supplier analytics to identify opportunities for the optimisation of payment terms, while simultaneously providing financing and risk mitigation solutions for domestic and cross-border trade, having a focus on the improvement of the analysis and distribution of such data. 

As part of the initiative, Calculum’s web-based platform Ada will be leveraged by LSQ to provide data analytics and AI to enable clients to carry out comparisons between themselves and their peers, as well as to negotiate and optimise better payment terms.

Mastercard teams with Polygon to empower emerging artists in Web3 tech

Mastercard has partnered with the Ethereum scaling platform Polygon to introduce emerging artists into Web3 technology.

The new programme, titled Mastercard’s artist accelerator, will teach five different emerging artists, including singers, musicians, DJs, and producers, to use blockchain tools to grow their brand and fan engagement.

Mastercard artist accelerator program will use the Polygon network to teach the selected artists how to perform a series of activities that will allow them to cut the middleman, mint their own non-fungible tokens (NFT) collections to grow their online fan engagement, and be present in metaverse-based concerts, among others.

Autonomy and freedom are prioritised as the biggest goals of the programme, and the two companies shave prepared a so-called “first-of-its-kind-curriculum” for this task. Ryan Watts, CEO of Polygon Studios, says that Web3 has the potential to empower a new type of artist that can grow a fanbase, make a living, and introduce novel mediums for self-expression and connection on their own terms.

BNP Paribas joins investors in AccessFintech

BNP Paribas is the latest banking group to invest in AccessFintech, joining a previously announced Series C funding round for the capital markets specialist.

The French bank joins JPMorgan, Goldman Sachs, Citi, Bank of America and BNY Mellon in backing AccessFintech, which is working to improve the capital markets operating model through data and workflow collaboration.

BNP Paribas says the deal will enable it to provide its corporate and Institutional banking clients with the latest technology, data and workflow tools in a context of shortening settlement cycles.

Clients will also be able to take advantage of AccessFintech’s Synergy data collaboration network, which helps market participants reduce collateral needs and compress transaction costs through data collaboration, accelerated workflows and a cloud-based approach to data governance and normalisation.

Bruno Campenon, global head, banks, brokers and corporates, Securities Services, BNP Paribas, says: “This investment is part of our strategy to partner with innovative technology companies to expand and digitalise our offering and give our clients access to the latest technologies.

“AccessFintech’s solutions will provide concrete benefits to our clients - and the industry as a whole - through greater operational efficiency and optimised risk management.”