It seems that every media product needs to have its “Man of the Year”. My choice would undoubtedly be Tawfique Abdullah, the brilliant Dubai entrepreneur who very early recognized “the strategic fit” between the business plans of his Metals & Commodities Centre (DMCC) and both the geographic growth directions of the (polished and rough) trade, the fiscal challenges of the traditional diamond centers (especially Antwerp) and the needs created by the DTC’s Supplier of Choice.

By the end of 2002 Dubai’s rough trade was believed to be in the range of $1 billion, while polished imports were in the area of $600 million, and considerable re-exports confirm the domestic equity creation. From an almost zero basis, there are now some 50 rough diamond trading companies (mostly, but not only, Indians) who are channeling more and more rough diamonds through the DMCC.

But the most fascinating part of Abdullah’s strategy – and that may well be pure “luck” – is that the DTC’s Supplier of Choice strategy requires diamond companies to have strong balance sheets, with ample equity. In Antwerp and Ramat Gan, the accumulated profits of companies is largely invisible in their inventories – the balance sheets of companies show little accumulated profits, little equity and high liabilities, which are mostly a result of the agreed tax assessment systems between the industries and their respective governments.

The traditional industry players were under-capitalized, over-indebted and their gearing was mostly covered by friendly overseas collateral. This didn’t sit well with the Supplier of Choice business model.

Supplier of Choice is a “program-in-a-hurry”; either you meet the criteria or you don’t. You get a second chance only in theory – not likely in practice. And when you don’t meet the criteria, then you are out.

Diamond companies needed a quick solution to creating equity in balance sheets. Dubai provided the fastest, safest and, indeed, most respectable solution. Sightholders or potential sightholders, and anyone else for that matter, enjoy in Dubai 100% foreign ownership, a 50-years (!!) exemption from corporate and income taxes, exemptions from customs duties, freedom to repatriate both capital and profits, absence of currency restrictions and a host of other advantages.

Dubai is not the only offshore trading center – there are many more. Indeed, there is considerable competition among free trade zones. None of these competing territories have so broadly, quickly and totally embraced the rough diamond trade as Abdullah’s DMCC. And, conveniently – though not surprisingly - Abdullah is also the local Kimberley Process authority, assuring the controlled development of the rough trading mechanisms. In a way, he may also prove to be one of the strictest and uncompromising Kimberley participants – as any flaws in the administration would endanger the integrity of the entire DMCC concept.

This week Tawfique Abdullah announced that under the patronage of the Crown Prince of Dubai, His Highness Sheikh Mohammed bin Rashid Al Maktoum, the DMCC is hosting the 3rd Annual World Diamond Council Meeting in Dubai. And, not unexpectedly but still quite remarkably, De Beers chairman Nicky Oppenheimer will be speaking at the meeting and will be guest of honor at the Gala dinner.

Dubai has become a household word in the diamond business. It may not be realized that it is only less than two years ago that the DMCC was created in order to implement the strategic objective of Dubai’s government to establish a domestic commodity market place. (To be exact: the DMCC was launched on April 24 2002 by a decree from the Government of Dubai.)

The Oppenheimer presence is the ultimate prize, crowning Tawfique Abdullah’s positioning of Dubai as an important senior player in the world’s rough market. Mission accomplished!

Officially – and that should be stressed – Oppenheimer is coming to attend the World Diamond Council (WDC) meeting. That has become a part of tradition, after also attending the Milan and London events. Though the WDC (of which I am privileged to be a member) was initially created as a special purpose ad hoc vehicle to assure the role of the industry in the Kimberley Process, it has de facto become the industry’s most pronounced and visible international representative body.

The De Beers membership in WDC has provided it an “entry card” into many public bodies combating conflict diamonds, including the Kimberley meetings itself – and, of course, the United States. No need to stress that the achievements of the WDC are real and worthy of the (financial and moral) support given to it by De Beers and other producers.

Though the WDC’s mandate ostensibly was limited by time and purpose, the organization and its chairman Eli Izhakoff have assumed some of the more attractive diamond characteristics – they will probably last forever. But, undoubtedly, Nicky Oppenheimer isn’t only coming to participate at the WDC meeting; his presence is also a tribute to the role played by the DMCC and the country in the restructuring of the international rough diamond trade.

Indirectly, De Beers certainly benefited from the role played by Dubai. The DMCC enabled the raising of the transparency and accountability levels of the diamond industry.

Let’s get back to our choice of Man of the Year. For an “outsider” to get into the diamond business, Tawfique Abdullah could not have played a brighter and smarter game. The DMCC solves many problems of the rough traders in the traditional centers, it is attractively positioned from an Indian perspective (and also meeting the fiscal needs of that community), and, through its strict compliance to Kimberley, it has become the most respected “offshore” location for diamond businesses.

Indeed, there are many offshore centers competing to service international trading communities – and the DMCC certainly doesn’t hold a monopoly position on the offshore diamond map. But it is the fastest growing and most active player. It fully understands what it takes to be so attractive to so many different industry participants all at the same time.

Abdullah, in his company’s website, gives all the credit to his forward-looking government, which, by implementing sound economic diversification programs, encourages foreign direct investment. But governments don’t understand anything; people do. Tawfique Abdullah is the architect behind the government policies that attracted the diamond business to Dubai.

Abdullah “learned” the diamond business. (He is the only person who ever bought my “From Mine to Mistress” reference book in an elevator in a hotel, to start reading when he got to his floor). The DMCC hasn’t accomplished all its programs yet. Abdullah understood that having a diamond industry financing institution is an absolute prerequisite to facilitate rough diamond trading.

One of his first achievements was to convince the ABN-Amro bank to establish a dedicated diamond and jewelry business unit to serve several of the bank’s global diamond clients who have set up operations in Dubai, and to cater to the UAE & Middle East jewelry markets. 

Abdullah is not finished yet. The DMCC’s Diamond Exchange is not yet complete – and other programs are still in the making. But if many established diamond centers deserve to host the WDC, Abdullah has actually earned that privilege. He earned that in less than two years. That’s why I salute him and make him my choice for Man of the Year.