1 difc 2011economic activity survey difc 2011 economic activity survey report value added accounting...
TRANSCRIPT
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DIFC 2011Economic Activity Survey
DIFC 2011 Economic Activity Survey Report
Value Added Accounting of DIFC
Presentation to Media Roundtable
25 July 2012
Dr. Nasser Saidi, Chief Economist, DIFC
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Agenda
Objectives of the DIFC Economic Activity Survey
Distribution of DIFC Companies by Economic Activity
GDP By Type of Economic Activity in DIFC
Breakdown of GDP By Type of Economic Activity in DIFC for 2011
Employment and Education in the DIFC
Assets and Liabilities, Paid up Capital and Ownership
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Objectives of the DIFC Economic Activity Survey
1. Measure the size and level of economic performance of the DIFC sub-economy and its contribution to Dubai’s and the UAE’s GDP.
2. Estimate & make projections of the trend and rate of DIFC economic growth in relation to other countries’ financial sectors and/or regional financial centers.
3. Help businesses in assessing future demand for their services & products.
4. Understand the sectorial activities structure of the DIFC sub-economy and its variations.
5. Assist the DIFC authorities formulate strategy and design development plans and policies.
6. Develop strategic targets for different business sectors in the DIFC.
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Survey Conducting Process: General Overview
• Data for the 2011 DIFC Economic Activity Survey were collected through DIFCSTAT, the online portal that provides companies with a secure, interactive and web-based platform for
reporting and storage of company data.
• The survey questionnaire consisted of 8 sections designed to collect wide range of data, including value added, assets/liabilities, ownership structure, and workforce characteristics.
Methodology of value added compilation was in line with the UN-OECD National Income Accounting Standards.
• Response ratio for the current survey increased to reach 65.2% (63.5% for the 2010 Survey). The number of reporting entities was up by 8.6% compared to the previous survey,
while total number of companies at the center increased by 5.7%.
• Following online submission, Economics Department staff review the responses to ensure data quality and integrity. In some cases, survey questionnaires were returned to
respondents with a request to review provided data and re-submit survey forms. This is believed to ensure sufficient quality of survey responses.
• While every effort was made to verify submitted data, we cannot guarantee their accuracy, as we are not in a position to conduct on-site verification or audit of data. Therefore, we rely
on the data provided by companies.
• We estimate total value added or the equivalent of GDP and use the terms interchangeably.
Distribution of DIFC Companies by Economic Activity
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Distribution of DIFC Companies by Economic Activity• The number of entities registered at the DIFC, excluding those
obtaining licenses and pending dissolution or liquidation, was estimated at 817* in 2011. This number represents the companies that contributed to the centre’s value added in 2011.
• Growth rate was 5.7% when compared to the end of 2010.
Source: DIFC Economics
Economic Activities 2007 2008 2009 2010 2011
Financial Intermediation 257 366 354 383 382
Business services 243 346 348 386 431
Public administration 5 3 4 4 4
Total 505 715 706 773 817
Growth Rate 41.6% -1.3% 9.5% 5.7%
*Total number of registered entities was 848 as of end of 2011
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Distribution of DIFC Companies by Economic Activity• The number of registered entities that were
active at the DIFC (excluding those under formation and pending dissolution or liquidation) was estimated at 817 in 2011. Growth rate was 5.7% when compared to the end of 2010.
• At end December 2011, there were 330 active DFSA-regulated and 487 active non-DFSA regulated companies at the Centre in addition to public administration, government & the DIFC Courts.
• They represented 40.4% and 59.6% respectively of companies operating at the DIFC.
• The regulated firms included 279 Authorized Firms, 49 Ancillary Service Providers and 2 Authorized Market Institutions (Nasdaq-Dubai and DME).
Source: DIFC Economics
GDP By Type of Economic Activity in DIFC
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GDP By Type of Economic Activity in DIFC• This fifth survey of Economic Activity at the DIFC places the total value added of the
DIFC sub-economy at USD 3,127.4 million or approximately 1.4% of UAE’s non-hydrocarbon GDP as estimated by the IMF.
• Breakdown by type of economic activity shows that financial sector accounted for 70.3% of the total value added within the DIFC (in 2010 – 72.0%), while the business services – for 28.0% (26.5%). Public administration (DIFCA, DFSA, DIFC Courts) reported only a small contribution of 1.6%.
Source: DIFC Economics
ISIC Code
Economic Activities No. No. (%) ValueValue (%)
KFinancial Intermediation 382 46.8% 2,199.7 70.3%
G - S Business services 431 52.8% 876.3 28.0%
O Public administration 4 0.5% 51.4 1.6%
Total 817 100.0% 3,127.4 100.0%
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Comparison with Previous Years
According to the estimates, nominal GDP of the DIFC entities increased from USD 2,923.8 million in 2010 to 3,127.4 in 2011, or by 7%, a notably high rate when compared to financial sectors of advanced economies. However, DIFC’s nominal GDP growth rate was similar to that of the peer financial centers in Asia.
Source: DIFC Economics
ISIC Code Economic Activities 2007 2008 2009 2010 2011K Financial Intermediation 1,514.7 2,224.6 2,029.6 2,105.6 2,199.7G,H,I,J,L,M,N,P,R,S Business services 295.2 550.7 687.5 774.8 876.3O Public administration 28.8 64.2 54.5 43.5 51.4
Total 1,838.7 2,839.6 2,771.7 2,923.8 3,127.4Growth Rate 54.4% -2.4% 5.5% 7.0%
Economy 2009 2010 2011Hong Kong -7.8% 7.9% 7.8%Luxembourg -6.3% 16.8% -0.7%UK -4.9% 0.8% 2.1%USA 6.4% 5.4% -0.8%Bahrain -6.8% 5.8% 0.1%Singapore 1.7% 9.9% 9.1%DIFC -2.4% 5.5% 7.0%
Detailed Breakdown of GDP By Type of Economic Activity in DIFC for 2011
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DIFC Value Added By Type of Economic Activity in DIFC for 2011
• The major part of the 2011 nominal value added, 70.3%, was generated by financial sector entities.
• Growth rates across companies were quite diverse: Business services grew at a fast pace (+13.1%) compared to that of Financial sector (+4.5%).
• However, a substantial portion of nominal GDP growth was supported by non-financial companies: 49.9% of incremental GDP was produced by business sector entities, compared to 46.2% of financial companies.
Source: DIFC Economics
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Financial Sector Value Added in DIFC, 2011
• Within the financial service activities class (K64), Monetary Intermediation accounted for some 16.4% of sector value added; the largest contribution was from Holding companies, 18.2%; Trusts and funds contributed 17.6%.
• The financial auxiliary class (K66) that comprises Managing Assets, Advising on Financial Products or Credit, Providing and Arranging Custody, Operating an Exchange etc. contributed an overall 42.7%.
• The insurance sub-sector (mainly re-insurance) contribution was small at 5.2%.
Source: DIFC Economics
ISIC Economic Activities Count % Value %
K64Financial service activities, except insurance and auxiliary activities 186 48.7% 1,147.3 52.2%
K641 Monetary intermediation 15 3.9% 360.2 16.4%K642 Holding companies 113 29.6% 400.6 18.2%
K643 Trusts, funds and similar financial entities 58 15.2% 386.5 17.6%
K65Insurance, reinsurance and pension funding 12 3.1% 113.8 5.2%
K66Activities auxiliary to financial services and insurance 184 48.2% 938.6 42.7%Total 382 100.0% 2,199.7 100.0%
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Business services Sector value Added in DIFC, 2011
• Business activities were dominated by Professional, Scientific and Technical Activities sub-sector, which generated 66.9% of the sectoral GDP. Within this class, Legal & Accounting sectors, and Management Consultancy contributed 35% and 34% respectively.
• Legal and Accounting firms together with companies providing Management consultancy were among the most active entities, adding 29% and 22% respectively to the value added generated by the DIFC’s Business Activities sector
Source: DIFC Economics
ISIC Classification of Business Activities Count % Value %H Transportation and storage 2 0.5% 97.6 11.1%J Information and communication 27 6.3% 54.6 6.2%L Real Estate Activity 6 1.4% 33.4 3.8%M Professional, scientific and technical 249 57.8% 577.9 65.9%M69 Legal and accounting 48 11.1% 252.2 28.8%M701 Activities of head offi ces 117 27.1% 132.0 15.1%M702 Management consultancy 84 19.5% 193.7 22.1%N Administrative and support service 40 9.3% 68.2 7.8%P Education 11 2.6% 12.4 1.4%G,I,R,S Retail trade & Accommodations 96 22.3% 32.3 3.7%
Total 431 100.0% 876.3 100.0%
Assets and Liabilities, Paid up capital & Ownership
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DIFC Companies’ Assets and Liabilities* (USD mln)
• Total assets of the DIFC economy as of 2011 were estimated at around USD 115 bln, of which USD 109 bln were financial assets.
• Paid up capital of DIFC registered entities reached USD 29.5 bln as of end of 2011.
Source: DIFC Economics
Type of Asset End of 2011 % of total1.1. Lands 115.6 0.1%1.2. Buildings 94.6 0.1%1.3. Machinery and equipment 407.0 0.4%1.4. Transport equipment 5.7 0.0%1.5. Furniture and offi ce machinery 69.7 0.1%1.6. Inventories 69.9 0.1%1.7. Intangible assets 1225.8 1.1%1.8. Projects under execution 332.4 0.3%1.9. Other non-financial assets 3185.6 2.8%1. Total Non-Financial Assets 5506.2 4.8%2.1. Government and non government securities 744.0 0.6%2.2. Shares and equities 14305.2 12.5%2.3. Other financial securities 5371.2 4.7%2.4. Loans and Advances 73579.4 64.2%2.5. Cash and deposits in banks 8817.4 7.7%2.6. Debtors 4239.6 3.7%2.7. Others financial assets 2052.9 1.8%2. Total Financial Assets 109109.6 95.2%Total Assets 114615.8 100.0%
*Estimated preliminary data
Type of Liability End of 2011 % of totalPaid up Capital 29479.4 25.7%Reserves 3692.5 3.2%Provisions 323.7 0.3%Deposits 10061.4 8.8%Creditors 5023.0 4.4%Loans Received 22960.4 20.0%Financial Securities 1490.7 1.3%Insurance Technical 338.3 0.3%Other Liabilities 3518.7 3.1%Profits or losses carried 13270.3 11.6%Statistical discrepancy 24457.3 21.3%Total Liabilities 114615.8 100.0%
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Ownership of Paid-Up Capital• According to the responses, around
1/3 of DIFC’s aggregate paid up capital is owned by UAE residents.
• Holding companies account for 37.5% of consolidated paid up capital, and head offices for another 34.4%.
• Paid up capital of monetary intermediates represents only 1.1% of total paid up capital, due to the fact that most of the entities from this group are branches.
Source: DIFC Economics
UAE Residents Non-UAE ResidentsValue, US$
mlnShare
Value, US$ mln
ShareValue, US$
mlnShare
K Financial Sector 9,116.8 48.6% 9,651.1 51.4% 18,767.9 63.7%K641 Monetary intermediation 50.0 15.5% 273.6 84.5% 323.6 1.1%K642 Activities of holding companies 4,245.8 38.4% 6,814.8 61.6% 11,060.7 37.5%
K643, K649Trusts, funds and similar financial entities, Other financial service activities 4,636.7 83.9% 887.6 16.1% 5,524.3 18.7%
K650Insurance, reinsurance and pension funding 42.5 13.1% 282.5 86.9% 325.0 1.1%
K660Activities auxiliary to financial service and insurance activities 141.8 9.2% 1,392.5 90.8% 1,534.3 5.2%
G - S Business services activities 794.8 7.4% 9,916.7 92.6% 10,711.5 36.3%J Information and communication 1.6 31.1% 3.6 68.9% 5.3 0.0%H Transportation and storage 28.9 8.0% 331.9 92.0% 360.8 1.2%L Real estate activities 66.1 100.0% 0.0 0.0% 66.1 0.2%M69 Legal activities 1.6 3.5% 43.6 96.5% 45.2 0.2%M701 Activities of head offi ces 653.3 6.4% 9,495.9 93.6% 10,149.2 34.4%
M702, M71, M73Management consultancy activities, Architecture, R&D, Advertising 35.4 55.7% 28.2 44.3% 63.6 0.2%
NAdministrative and support service activities 0.0 0.3% 6.4 99.7% 6.5 0.0%
P Education 0.9 89.8% 0.1 10.2% 1.0 0.0%
G,I,R,SWholesale and retail trade, Accomodation and food services, Arts, and Other 7.1 50.5% 6.9 49.5% 14.0 0.0%Total 9,911.7 33.6% 19,567.8 66.4% 29,479.4 100.0%
ISIC Code Economic ActivitiesTotal
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Geographical diversity of UCPs• According to estimates, the
largest share of Ultimate Controlling Parents (UCPs) is represented by the UAE with 17%, followed by the US and UK with 15% each.
• From the GCC region, Saudi Arabia represents 3% of all UCPs and Kuwait (2%).
Source: DIFC Economics
Out of 533 responding entities, around 400 disclosed their UCP’s country of incorporation. The concept of ultimate controlling parent is not applicable to the rest 135 responding companies, as most of them are owned by individuals
Employment in the DIFC
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Employment at the DIFC: Overview• Total number of people working at the DIFC as of end of 2011 was estimated at 12,945,
which is 16% higher compared to the end of 2010 (est. at 11,162 persons). Note that this does not imply that all were working during 2011.
• According to the survey, 55.6% of total workforce was employed in the financial sector companies, and 41.7% by other business entities, while around 2.7% were in public administration sector.
• UAE nationals represented 2.2% of the total workforce.
• Interestingly, number of expatriate males is around 2 times the number of expatriate women while among UAE nationals the female to male ratio is closer to 1.
Source: DIFC Economics
Distribution of workforce by sex Distribution of workforce by Sector
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Breakdown of DIFC Workforce, by Sectors• The largest number of people were employed in entities involved in activities auxiliary
to financial services (30.6% of total DIFC workforce), followed by legal firms (13.9%), and monetary intermediation entities (13.7%)
Source: DIFC Economics
Breakdown of DIFC Workforce by Sector (No. of people; percentage)
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Educational Attainment of the DIFC Workforce• By education, the DIFC workforce constitutes 67% university graduates, while about
21% hold post-graduate degrees. • Similar to 2010, around 85% of both men and women are university graduates and
above, underscoring the availability of a highly skilled workforce at the Center.
Source: DIFC Economics
Type of Education Male Female Total1. Primary (including preparatory) 157 44 2012. Secondary 738 663 1,4013. University graduate 5,766 2,883 8,6494. Post graduate 1,987 707 2,694 Total 8,648 4,297 12,945
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Value Added per Person Employed, Financial Sector
Nominal value added per person employed in Trusts and Funds, and Holding Companies, considering the nature of their businesses, was the highest among the financial sector companies at the DIFC in 2011.
Source: DIFC Economics
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Value Added per Person Employed in Business Sector
Management Consultancy, and Information and Communication companies were among the leaders of Business sector entities in 2011 in terms of value added generated per person employed.
Source: DIFC Economics
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Occupational Distribution of Workforce in DIFC• Managers represent a significant share of the total workforce in financial
sector, while in business services sector service workers play an important role.
• On average, 50-60% of workforce, across all type of entities at the center, is represented by specialists and technicians, 15-20% by managers, and another 20-30% by service workers.
Source: DIFC Economics
Economic Activity Survey 2011 Project Team
DIFC Economics:
- Dr. Nasser Saidi
E-mail: [email protected]
Tel: +971 4 362 2550
- Beknazar Amanov
E-mail: [email protected]
Tel: +971 4 362 2386
- Aathira Prasad
E-mail: [email protected]
Tel: +971 4 362 2478
- Cristina Attanasi
E-mail: [email protected]
Tel: +971 4 362 2421
DIFCSTAT:
- Nadine Chaar
E-mail: [email protected]
Tel: +971 4 362 2560
