Ten years ago, few would have imagined that Dubai, famed more for its seven star hotels, artificial palm islands and desert, would soon be one of the world’s emerging commodities hubs. Nevertheless, trade in commodities has boomed in recent years.
Central to this boom has been the Dubai Multi Commodities Centre (DMCC). The DMCC was established in 2002 as part of a strategic initiative by the Dubai Government to provide the physical, market and financial infrastructure to set up a commodities marketplace. It is now home to over 10,000 companies, with 170 new companies registered per month. Physically centred on the Jumeirah Lakes Towers area, the DMCC is able to leverage on its close proximity to Jebel Ali port (the largest container port outside the Far East) as well as Dubai’s new Al Maktoum International Airport at Dubai World Central.
Tea has showcased Dubai’s growth as a commodity centre. The UAE is now the world’s largest re-exporter of tea. They have a 60% share of the market and 750,000 kg annually passes through the UAE. This is valued at USD 48 million per annum.
Dubai is well positioned between some of the world’s leading tea producers in India, Sri Lanka and East Africa, and tea consumers in the Middle East, Europe and North Africa. Restrictive laws on the import of tea into many tea producing states, which hinder the blending and packaging of teas, left a gap in the market which Dubai was only too willing to fill.
The DMCC tea centre provides a temperature controlled environment over a 24,00 sq m area in which tea is not just stored but also blended and packaged (both bagged and loose packed), with in-house tasting and blending expertise provided to customers. The DMCC also provides office leasing facilities near the tea centre and a specialised DMCC Tradeflow document of title for inventories of tea stored at the tea centre to aid trade finance. The DMCC proudly boasts that a container can arrive at the tea centre from the nearby Jebel Ali docks, be unpacked and blended before being packaged and sent out again within a 24 hour period.
Tea is not the end of the story for Dubai’s growth as a commodity hub. The DMCC has ambitious plans to grow trade in other soft commodities as well as precious metals and hard commodities, alongside the services that support such trading including brokering, shipping, insurance and finance. With Dubai’s track record of rapid growth in other areas that it has set its mind to, its zero tax status and strategic positioning between European and Far Eastern markets, few would bet against Dubai rapidly becoming a commodity hub to rival London, Geneva, and Singapore.
From near anonymity, Dubai now trades more than USD 30 billion worth of diamonds.