On Wednesday, the free zone – called the Abu Dhabi Global Market (ADGM) – announced it was ready to receive applications for operating licences from financial firms.
This comes more than a decade after the Dubai International Financial Centre (DIFC) opened in 2004.
Enviable
The move, which has been in the pipeline for more than two years, has been praised by advisers who said the new free zone will encourage financial services organisations around the world to establish a presence in the region.
“There is no doubt that this will be an unrivalled success for Abu Dhabi and will contribute to the already enviable global reputation it has so far built in the region,” said David Howell, chief executive of Guardian Wealth Management.
He suggested the free zone will encourage firms, like Guardian Wealth, to set up a base in the UAE capital.
Well thought-through
Although Howell argued it has taken some time to establish the appropriate legal and regulatory framework, he said global businesses will benefit from a “solid, well thought-through” regulatory environment.
“Going forward, it will be important for the ADGM to ensure that the application and licensing process remains efficient and timely to encourage sustained development of this new market,” he added.
Not perfect
Sam Instone, chief executive of AES International, agreed: “The Abu Dhabi Global Market has been in the making for a number of years, so it’s great to see it finally open its doors.”
Yet with the oil price being down and questions being raised in some quarters about the sustainability of economic growth in the country, he argued that the timing of the new free zone is “perhaps not perfect”.
Meeting point
“However, politically stable UAE continues to act as a safe haven for private wealth,” Instone said, adding that the country is a “meeting point” between the East and West and an entry point for many companies into the Middle East and Africa.
“The real question will be whether the UAE capital is able to convince the world that its financial centre has a regulator and independent legal system strong enough to compete with other jurisdictions in a way that the DIFC and DFSA have so successfully done.
“Whatever happens, competition is only ever a good thing and this is yet another step in the UAE’s progress towards competing among the world’s most important financial centres.”
Indirect success
Chartered financial planner and associate of the Personal Finance Society (PFS) Chris Woodward said overall the free zone is excellent for the economy, job creation and for the commerce of Abu Dhabi.
“This follows on from the success of DIFC in Dubai which has created thousands of new jobs both directly and indirectly,” he said.
“It will also inevitably raise the standards of tangible financial advice given to consumers and the qualifications of intermediaries.”
