Middle East regulators have been hitting the headlines across the Gulf for different reasons this summer. Their emergence says much about the progress the region is making towards appropriate standards of business practice.
Middle East regulators have been hitting the headlines across the Gulf for different reasons this summer. Their emergence says much about the progress the region is making towards appropriate standards of business practice. On 1 July, Bahrain became the first Middle East country completely to liberalise its telecoms sector. This is good news for business. Bahrain, historically, was the telecommunications hub of the Gulf. Bahrain Telecommunications Company (Batelco), which is co-owned by local investors and Cable & Wireless of the UK, has been in the vanguard of service and product development. In December, a second mobile service provider started operating and more competition, from fixed-line services to satellite communications, is now certain. The government has given up control of the sector and handed over authority to the Telecommunications Regulatory Authority, headed by the charming but deceptively steely Andreas Avgousti, the region's first genuinely independent market regulator. His skills have been honed by working in regulation in London, Hong Kong and Greece. Liberalisation coupled with Avgousti's reputation underwrite Bahrain's assertion that it will maintain its competitive edge in telecommunications in terms of both price and quality. A telecoms regulatory body has been set up in Oman and a power regulator will start operating in the sultanate soon. Other Gulf states have already made some progress. Saudi Arabia has appointed regulators in telecommunications and in power, but neither is independent in the generally accepted meaning of the word. At the end of last month, the regulatory body planned for the Dubai International Finance Centre (DIFC) was, in contrast, in the news for all the wrong reasons. Sackings and controversy at the Dubai Financial Services Authority (DFSA) sent the body reeling and raised serious questions about the viability of the whole DIFC project. The DFSA has now come back fighting. In a statement issued on 6 July, it said that its independence had now been personally guaranteed by Dubai Crown Prince Sheikh Mohammed, effective chief executive of the emirate and Minister of Defence in the government of the UAE. This was an excellent move which has been welcomed by the financial community. It gives new DFSA chief executive David King, a well regarded manager, and chairman of the regulatory council Habib al-Mulla, a chance to recover the ground lost in the past three weeks. Icing was put on the cake by the news that the federal government had approved the establishment of the DIFC, which should be going ahead by the end of the year (see Interview, page 8). The outstanding question is how the DFSA, regulator of the DIFC, will work with the Central Bank of the UAE, the internationally recognised regulator of the whole UAE banking system. The apparent sidelining of the central bank was the fundamental flaw in the DIFC scheme. The fact that it is now working with the DIFC is good news for the governor, Sultan Bin Nasser al-Suwaidi, a much respected figure erroneously underrated by people who have not had contact with him. It is also good news for friends of the UAE worried by recent centrifugal trends. All will be revealed when the Dubai DIFC law, the final piece in the legislative puzzle, is announced. But the biggest news of the month is the appointment, almost eight months after MEED tipped him for the job, of Jammaz al-Suhaimi as chairman of the Saudi Arabian Capital Markets Authority (CMA), the other members of which were also announced. The capital markets law, passed two years ago, is the most significant modernisation of the Saudi banking system since the Saudi Arabian Monetary Agency (SAMA) was created in the 1950s. As CMA chairman, Al-Suhaimi will have sweeping powers to scrutinise, and intervene in, the affairs of quoted banks and companies in the public interest. It is an immensely important
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