Rough Trading In Dubai
May 23, 02
In a very short time span some 40-45 diamond companies have established operations in Dubai. Even De Beers is sending Sight boxes directly to some clients at this location. No need to stress the fiscal attractiveness of the tax-exempt free trade zones. But it isn’t tax avoidance that makes Dubai sought after.
The problem faced by many Antwerp diamond firms, and others, is the absence of meaningful equity on company balance sheets. The desire for transparency and good corporate governance requires more realistic levels of company capitalization in relation to parameters such as turnover and banking indebtedness.
Dubai will help profitable companies to very quickly build their equity. At a later stage this equity will be reflected in the respective diamond groups corporate accounts.
Though this is only one aspect of Dubai’s rise as a rough diamond-trading center, it is worthwhile to reflect that things are seldom what they appear to be.
Provided that Dubai becomes an active participant in the Kimberley Process, the center may produce important added value to the international diamond business.