Dubai a world diamond power? You kidding me, right?
Al Nisr, a Dubai publication reports that Dubai is an emerging world diamond center and power that has for example, Antwerp very worried. For more than 400 years the Belgian city of Antwerp has been the global center of the world diamond market with its highly-skilled craftsmen transforming rough stones into finely-worked gems.
But according to a founding member of the world’s leading diamond manufacturer, it is in danger of losing its crown to Dubai.
Belgium’s tough federal legislation regarding money laundering and checks on the use of diamond money to finance ugly conflicts are leading manufacturers to turn their eyes to the tax-free haven of Dubai’s freezones.
The emirate boasts an excellent geographical location, central to the booming diamond markets of China, Russia, and the Middle East, while its wealthy population, huge influx of tourists and relatively crime-free streets make for high domestic sales. The GCC is now the third largest market in the world for diamond jewelry.
Harshad Mehta is one of the founder members of Antwerp-based diamond manufacturer Rosy Blue, which has presence in more than 15 countries. The company’s global sales of loose diamonds reached $1.7 billion (Dh6.25 billion) in 2005, with $200 million (Dh736 million) sold in the GCC region and UAE sales worth $40 million (Dh147.2 million.)
Mehta, also vice-chairman of Dubai Diamond Exchange, said the diamond giant is considering a future shift of its main administrative headquarters to Dubai. He claimed others will follow.
“The diamond industry moved to Antwerp in the first place because less questions were asked there and it was easier for the diamond workers to do business,” he said. “Now more and more questions are being asked in Antwerp about sales and margins and where money is coming from, so people are getting fed up and saying let’s move to Dubai.”
But he added, “Dubai is still small compared to centers like Antwerp and it will take time for any major or significant change.”
Others were slightly more bullish.
Jonathan Chippindale, marketing director of Gulf Markets for the Diamond Trading Company, the sales and marketing arm of the De Beers Group, said, “All the major companies are looking at Dubai.”
“Saying that Antwerp is finished would be extremely premature, but the challenge is coming from Dubai. It is a major regional player now and it can be the major global player in the future,” Chippindale said.
Chippindale added that any view of Dubai as being unregulated is “way off,” but he claimed it has “a tremendous fiscal advantage” in terms of its tax-free status.
Federal legislation faced by the Antwerp diamond industry is considered to go beyond action taken by other countries. The HRD, an organization representing Antwerp’s diamond sector, recently met with Belgium Prime Minister Guy Verhofstadt to discuss a report outlining issues weakening the competitive position of the country’s diamond traders.
But according to Chantal Abboud, the HRD’s representative in the Middle East, their fears were exaggerated and Antwerp’s position is likely to remain intact.
“I’m not convinced that there will be any shift away from Antwerp,” she said. “I have not seen even the smallest trader consider completely closing down their Antwerp offices and move to Dubai.”
Abboud admitted Dubai’s diamond sector is growing, but said the two sectors will work in cooperation rather than against each other. She also recognised Dubai’s advantages, including its tax free status, but claimed if the industry was simply concerned with tax, the shift would already have happened.
Dubai is also considered to have an edge over Antwerp in terms of safety of moving goods. The Belgian city has been rocked by a series of huge diamond heists in past years. “The logistics are here and the infrastructure is in place to handle the all requirements of the diamond industry,” said Pearl Chandrawansa, general manager of branded jewelry at Rosy Blue FZE.