Dubai Champions Corporate Governance Standards In Gulf Region

by Lorys Charalambous, for LawAndTax-News.com, Cyprus

19 June 2006

An audience of senior business representatives in Dubai was told last week that companies operating under effective governance regimes perform better, are valued more highly in the market, have a lower cost of capital and a lower risk profile than those that do not.

“In order to achieve sustainable growth of the regional markets and financial sector the implementation of good corporate governance is an essential element," Dr Nasser Saidi, Executive Director of Hawkamah, a regional corporate governance body, told the audience of bank CEOs, senior bank managers, members of the Abu Dhabi Chambers of Commerce, business consultants and lawyers.

The event was held to promote and highlight the ongoing efforts of Hawkamah in promoting good corporate governance within the region and the Dubai International Financial Centre.

Hawkamah is the first organisation of its kind in the Middle East. It provides technical assistance, monitoring, analysis, research and consultation for regional institutions. Hawkamah also helps to promote awareness of corporate governance by working with regional taskforces, promoting policy dialogue and acting as an intermediary for corporates seeking to bring their governance in-line with international standards.

Hawkamah argues that corporate governance standards in the region’s domestic capital markets need to improve to ensure continued growth and to attract investors, and says that the financial sector will play a key role in raising these standards.

The institute believes that good corporate governance can help to mitigate against excessive volatility in capital markets, such as was witnessed in the region recently when, from the end of 2005 to April 2006, Gulf investors saw the value of their holdings fall by over $200 billion.

"We at Hawkamah aim to assist the countries and companies of the region to develop and implement globally sound and well-integrated corporate governance frameworks," Dr Nasser Saidi explained.

Hawkamah, or the Institute for Corporate Governance, was set up earlier this year by a group of international institutions, including the Dubai International Financial Centre (DIFC), Organisation for Economic Cooperation and Development (OECD), International Finance Corporation (IFC), Centre for International Private Enterprise (CIPE), Young Arab Leaders (YAL), Dubai School of Government (DSG), Institute of Management Development (IMD), UAE Ministry of Finance and Industry, and the Union of Arab Banks (UAB). It is an autonomous association covering the Middle East, North Africa and Central Asia.

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