Tuesday, Jun 18, 2013


 
   By Francesca Freeman

The number of companies operating in Dubai's Jumeirah Lakes Towers free zone should continue to grow rapidly as trading companies flock to Dubai to take advantage of its low business costs and advantageous positioning between Africa, Asia and Europe, the chief executive of the Dubai Multi Commodities Center said Tuesday.

Around 6,700 companies currently operate in the free zone, up from roughly 5,500 at the end of last year, Malcolm Wall Morris told Dow Jones Newswires in an interview. By the end of the year, the DMCC expects to have more than 7,200 companies registered, a target set by DMCC Chairman Ahmed Bin Sulayem in 2011. By the end of 2014, the DMCC aims to grow its registration base to 10,000 companies, Mr. Wall Morris said.

DMCC is the licensing authority for the Jumeirah Lakes Towers free zone that helps promote the local commodities trade.

Companies operating in the tax-free zone include commodities trader Trafigura, MKS Precious Metals, Emirates Gold, Harley-Davidson Inc. (HOG) and Dunkin' Brands Group Inc. (DNKN).

Demand for business space in Jumeirah Lakes Towers is so high that the DMCC is planning a major expansion of the free zone, which currently spans 200 hectares.

"We're effectively running out of space," Mr. Wall Morris said.

The high demand for space to set up operations in the free zone reflects a growing interest in Dubai as a trading hub for commodities, including gold and diamonds, due to its low costs and positioning between producer countries in Africa and consumer countries in Asia and Europe, Mr. Wall Morris said. The free zone is also increasingly popular with energy companies, which use Dubai as a base for work in Iraq, he said.

Around 20% of global annual gold trade passes through Dubai, and it is increasingly seen as a key hub between producer countries in Africa and consumer countries in Asia and Europe. In 2012, the value of gold traded through Dubai totaled roughly $70 billion, compared with $6 billion in 2002.

The recent drop in the price of gold has only increased trade of the metal though Dubai, said Mr. Wall Morris.

While western investment demand for gold has fallen significantly in the wake of gold's tumble, demand for physical gold--which is often traded through Dubai--has been "off the scale", he said.

Gold was trading around $1,363 a troy ounce on the European spot market Tuesday, down 18% from the start of the year.

(Diana Kinch and Laura Clarke in London contributed to this report)

Write to Francesca Freeman at francesca.freeman@dowjones.com

(END) Dow Jones Newswires

18-06-13 1545GMT