Dubai, one of the seven emirates of the United Arab Emirates (UAE), is a country rich in gas, and it is an important port in the Persian Gulf. The leadership of the emirate understands that its natural resources in its time will be depleted, and decided to act in advance, developing other economic sectors.
Bright shine among the sands
Earlier long before the discovery of gas in the region, Dubai was an important regional trade center. On this basis, in 2002, a free trade area was created, and Dubai organized a tea trade exchange there. To this area, the Dubai Multi Commodities Center (DMCC), in 2004, a gold exchange and a gold trading center were added, as well as a gemstone trading center and the Dubai Diamond Exchange (DDE). To this end, in 2003 the UAE also became a participant in the Kimberley Process Certification Scheme.
By offering a tax amnesty for 50 years, DDE has become an attractive option for diamond-diamond firms, especially for diamond manufacturers looking for ways to increase their small net income. Companies headquartered in India, Belgium and other countries opened offices on the Dubai Diamond Exchange and started trading.
The main part for organizing this trade was the construction of the tower of Almas. The diamond was organized according to the model of the Israeli Diamond Exchange and the Bharat Diamond Bourse, which was still under construction at that time. It provides a safe and closed complex, which includes under one roof all the necessary for traders with diamonds. It has a floor trading on DDE, a premise for diamond auctions, for services related to diamonds, a shipping service, storage facilities, banks, as well as restaurants and shops for customer service.
Great geographical advantages
The geographic location of Dubai enhances its attractiveness as a center for trade in diamonds. For the first time, a large diamond center appeared in the heart of an important diamond market, the Arab region of the Persian Gulf. In fact, it serves consumers in Saudi Arabia, Bahrain and other UAE countries, which in 2014 bought diamond jewelry worth $ 4 billion, which is 2% higher compared to the previous year.
Dubai is also conveniently located at the crossroads between Africa, the leading diamond supplier, and India, the leading diamond cutter and polisher. This position at the crossroads was another attractive feature for Indian companies that quickly became members of DDE.
The most pleasant thing to top it all off
Finally, in response to the recent decline in the availability of funding in the diamond veteran centers, local banks began to offer higher levels of funding to diamond-diamond companies in Dubai. These banks include Emirates NBD, Mashreqbank and National Bank of Fujairah (National Bank of Fujairah). This additional financing was the most pleasant, especially after the Antwerp Diamond Bank announced its closure, and ABN Amro announced a toughening of the requirements for providing financing.
The combination of safe and modern retail spaces, a very convenient geographical location and greater access to finance have made Dubai an important trading center, especially for diamonds.
Dubai - rising star
Showing the rapid development of Dubai as a diamond trading center, one should take into account the growth of the total volume of trade for a period of less than 10 years. In 2011, a year before the formation of the trade zone, Dubai's total trade volume was only $ 5 million. From the point of view of the diamond and diamond industry, this is not business.
By 2010, diamonds and diamonds traded through the Dubai Diamond Exchange reached 286.7 million carats worth $ 35.1 billion, according to the DDE. It was a record year, the volume of trade increased by 50% compared to 2009, and the value of traded diamonds doubled.
In November 2011, DDE reported a new record in the diamond trade - 206.1 million carats for the first half of 2011, which is 35% higher than the 131 million carats sold in the first half of 2010. The volume of trade for this period was $ 25.3 billion, which is 55% higher than the trade volume of $ 16.3 billion in the first half of 2010.
The role of Dubai as a diamond center seems to have grown mainly due to the diamond trade in Antwerp. The Belgian center at that time was suffering from high taxation and a regime that made tax expenses unclear until the end of the year. In addition, there was a series of raids by the Belgian police and tax authorities on many Antwerp diamond companies. This caused fear and created an unpleasant environment for doing business. Compared with the economic climate in Dubai, Antwerp seemed less favorable, which led to the transfer of trade from the traditional center to the new one.
Dubai Diamonds Today
This move seems to have slowed in recent years. In 2013 and 2014, the size of the Dubai industry remained at around $ 35 billion. Of this total trade, in 2014, Dubai exported $ 8.3 billion worth of diamonds.
Dubai's growth has attracted not only diamond trade, diamond production and banks. In 2011, De Beers Auction Sales opened an office in Dubai to serve its ordinary customers: Indian small and medium-sized businesses. For such firms it is too expensive to make regular trips for diamonds from Mumbai to Antwerp or Tel Aviv.
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