Interview: Ahmed Jasim Al Zaabi
In what ways is ADDED supporting wider government efforts to diversify the economy?
AHMED JASIM AL ZAABI: Fostering Abu Dhabi’s economic diversification and resilience will continue to be the key focus, as will developing our human capital and attracting talent. ADDED plays a vital role in driving Abu Dhabi’s economic development, as well as leading the transition to a smart, inclusive, sustainable and knowledge-based economy. Abu Dhabi’s economy is strongly driven by non-oil sectors. In 2022 non-oil sectors contributed more than 50% to GDP, despite the remarkable rise in oil prices over the course of the year. This growth proves Abu Dhabi has diversified its economic base and sources of income in line with its strategic plans.
By allowing 100% foreign ownership, Abu Dhabi is further opening its economy to the world and enhancing its appeal as a destination for foreign investors, businesses, start-ups and entrepreneurs. Furthermore, under new regulations, investors have a real competitive benefit in terms of the ease of establishing businesses, with all nationalities able to wholly own enterprises in Abu Dhabi if they fall under the list of permitted sectors. These decisions are a few of the many initiatives taken to boost the private sector and enhance the status of the emirate on the global investment map.
How is the Abu Dhabi Industrial Strategy accelerating manufacturing’s shift towards smart technologies and the Fourth Industrial Revolution?
AL ZAABI: Since its launch in June 2022, the Abu Dhabi Industrial Strategy has made a significant impact on the sector, resulting in an increase in new industrial licences and investment. The number of new industrial licences granted in Abu Dhabi has risen by 16.6%. Moreover, investment in factories entering the production phase has experienced a surge of over 85%, reaching Dh15.4bn ($4.2bn). The number of active manufacturers in the emirate has grown by nearly 5% to a total of 966 factories. The total investment of operating manufacturers exceeds Dh384bn ($104.5bn), and we support them to enhance productivity, global competitiveness and promote sustainable economic growth.
The manufacturing sector grew by 7% during the second quarter of 2023, and recorded its highest quarterly value-added since 2014, reaching Dh25bn ($6.8bn). The sector accounted for 8.7% of the total GDP in the second quarter of 2023. During the same period, this activity contributed 16.2% to non-oil GDP.
Where do you see opportunities for mainland and offshore financial jurisdictions to leverage synergies to attract local and foreign investors?
AL ZAABI: Achieving a strong, stable, smart and sustainable knowledge economy remains our main development goal. By focusing on continuous evolution, economic diversification and integration, we can develop a prosperous “falcon economy” that can overcome challenges and reach new heights.
Abu Dhabi offers a range of incentives and value propositions for local and international investors, such as its ease of doing business, access to capital and markets, and double taxation treaties with over 130 countries. The government is actively investing in research and development, as well as innovation and technology, to further support the private sector.
International financial centre ADGM has established a progressive regulatory environment that is helping to attract regional and international financial businesses. Year-to-date numbers for 2023 show that ADGM has grown to support close to 1600 operating entities, over 6000 business licences and a workforce of over 12,000 people in ADGM Square. In the first half of 2023 alone, it saw a 35% increase in assets under management and a 119% surge in in-principle approvals granted for companies that are soon to be fully operational within the international financial centre. These factors illustrate ADGM’s multifaceted growth and its ascent as an international financial centre in just eight years.
Which mechanisms have been adopted to further facilitate the growth of asset management companies and financial institutions in Abu Dhabi?
AL ZAABI: Abu Dhabi is committed to becoming a financial powerhouse. Therefore, asset management has become one of the key focus areas considering Abu Dhabi’s position as a “capital of capital”. As part of this reputation, the emirate is home to some of the world’s largest sovereign wealth funds – with an estimated value of around Dh5.5trn ($1.5trn) – and a real GDP of approximately Dh1.1trn ($299.4bn) as of 2022, a figure that is the third highest in the world in terms of GDP per capita. Abu Dhabi home to over 200 nationalities, has attracted talented asset managers and global financial institutions for relocation or expansion thanks to the presence of sophisticated local institutional investors.
The Abu Dhabi Securities Exchange (ADX) has been making efforts to become the region’s leading listing venue, accounting for 14% of initial public offerings (IPOs) around the world in the first quarter of 2023. To further support this growth, the Abu Dhabi IPO Fund was launched in 2022 to act as a catalyst for strengthening the ADX’s position as a leading stock market. With a focus on increasing liquidity and providing investors with attractive investment opportunities, the fund will enable the government to promote economic growth and support the development of a vibrant capital market in Abu Dhabi. Global companies can access capital through public offerings on the ADX, and support local companies in their journey to become IPO ready and transition from private to public joint stock companies.
ADGM’s enabling framework balances a business-friendly environment while retaining appropriate levels of investor protection. It recognises that a thriving fund industry is pivotal to attracting newcomers to the market, and as such, allows start-up and boutique fund managers to establish operations within ADGM to manage non-retail funds. Fund managers can also establish and manage funds outside of ADGM’s jurisdiction while being located within or outside the zone using a range of corporate, limited partnership and trust vehicles, including sharia-compliant funds and structures. The sophisticated regime provides flexibility for fund managers to structure a variety of funds, including venture capital funds.
What makes Abu Dhabi an attractive location for green asset issuers, financial intermediaries and financial technology (fintech) firms?
AL ZAABI: As a regulator and international financial centre, ADGM has played a pivotal role in creating a sustainable financial hub in the emirate. In 2023 the Financial Services Regulatory Authority of ADGM implemented a comprehensive sustainable regulatory finance framework covering regulations on sustainability-oriented investment funds, managed portfolios and bonds, as well as a framework for environmental disclosures by companies based in ADGM.
Another regulatory amendment in 2022 introduced the environmental instrument as a class of financial instrument, allowing carbon offsets to come under its regulatory framework. The introduction of these regulatory frameworks and enhancements opens doors for green asset issuers, financial intermediaries and fintech innovators to explore not just green funds, but also the carbon credits market and climate transition funds through AirCarbon exchange, a carbon-credits trading platform launched within ADGM.
Collaboration on sustainability is actively being encouraged. One example is the Abu Dhabi Sustainable Finance Declaration, which is led by ADGM’s Financial Services Regulatory Authority and has amassed more than 100 signatories, leading to the formation of the Sustainable Finance Working Group.
Furthermore, Abu Dhabi is working to cultivate a green falcon economy – a combination of rapid expansion and green initiatives to meet growing demand for sustainability and attract capital for climate financing.