< Previousfi nancemiddleeast.com50 | June 2024 HOW HAS ADGM’S AL REEM ISLANDEXPANSION ADVANCED IN ONE YEAR? Financial hub expands jurisdiction, eases transition for existing businesses Words by: Hamad Sayah Al Mazrouei CEO of ADGM Registration Authority A year ago, the UAE government took the initiative to transform the Abu Dhabi Global Market (ADGM) into one of the world’s largest fi nancial hubs, with a total size of 14.38 million sqm. Through UAE Cabinet Resolution No. 41 of 2023, issued on April 24, 2023, the geographic scope of ADGM was expanded by incorporating Al Reem Island in addition to ADGM’s existing location of Al Maryah Island, thus increasing the size of its jurisdiction tenfold. This expansion serves as compelling evidence of ADGM’s evolution into a premier destination for local, regional and global entities. With the growing demand for companies to locate within ADGM, occupancy rates in Al Maryah Island have exceeded 95%. Consequently, expansion in the physical space became the next natural step to better accommodate the increasing demand of companies seeking to establish a presence in Abu Dhabi’s fi nancial hub. VALUE PROPOSITION One of ADGM’s key missions is to position the fi nancial centre as a preferred place to live, work and thrive. With the inclusion of Al Reem Island into its geographical domain, which boasts a rich array of commercial and residential structures, shopping centres, top-tier educational institutes, advanced healthcare facilities, hospitality venues, luxury amenities and entertainment options, ADGM is solidifying its status as a comprehensive and cohesive ecosystem. The attributes of Al Reem Island perfectly complement ADGM’s stable and robust legal and regulatory environment, which includes the direct application of English Common Law, fl exible and progressive regulatory frameworks, ease of doing business, access to talent and expertise and access to capital. TRANSITION PROCESS To seamlessly integrate the business sector of Al Reem Island within its jurisdiction, ADGM implemented fl exible measures and established reasonable deadlines, working closely with key government stakeholders, mainland regulators and other local authorities, including the Abu Dhabi Department of Economic Development (ADDED), Central Bank of UAE, Abu Dhabi City Municipality, Ministry of Human Resources and Emiratisation (MOHRE) and Federal Authority for Identity, Citizenship, Customs and Port Security. With all transitional arrangements established and pending execution, ADGM has begun addressing inquiries ENTREPRENEURSHIPENTREPRENEURSHIP fi nancemiddleeast.comJune 2024 | 51 Hamad Sayah of ADGM Registration Authority businesses intending to set up operations on Al Reem Island are mandated to obtain a commercial licence from ADGM instead of ADDED. Upon receiving an ADGM commercial licence, these businesses become subject to ADGM’s laws, regulations, and administrative protocols. Existing businesses on Al Reem Island were granted provisional exemption from adhering to ADGM’s registration and licensing requirements, as well as specifi c regulations. They were permitted to maintain their ADDED licence until December 31, 2024. Subsequently, all existing businesses on Al Reem Island will be obligated to fully adhere to ADGM licensing requirements. ONGOING ENGAGEMENT Since the start of this year, ADGM has initiated several engagement initiatives aimed at fostering eff ective communication with the Al Reem Island business community. In addition to a series of awareness sessions and focus group meetings organised by the Registration Authority of ADGM for representatives of businesses on Al Reem Island, ADGM launched its information centre in Shams Boutik Mall, Al Reem, to provide guidance for registration within ADGM. The launch of the centre was followed by ADGM’s fi rst community event on Al Reem regarding the impact of its jurisdiction expansion. These inquiries encompass which entities on Al Reem Island will come under ADGM jurisdiction, the duration of the transition period provided to existing entities operating on Al Reem Island, the potential implementation of dual licensing or other arrangements to eligible entities currently regulated by federal and emirate- level authorities, and whether the ADGM regulatory framework will be off ered as an optional alternative to the existing mainland regulatory framework or mandated after the transition period. November 1, 2023, marked a signifi cant milestone in ADGM’s execution of the transitional arrangements related to the expansion. From this date onwards, any new Island. The event highlighted ADGM’s commitment to actively engage with the local business community. Over 500 representatives from diverse businesses based on Al Reem Island participated in the event. INCENTIVE INITIATIVE The community event provided a platform for ADGM to unveil a new incentive initiative tailored exclusively for businesses based on Al Reem Island, operating in non-fi nancial and retail sectors. Under this incentive initiative, eligible businesses on the island will be relieved from any fees associated with acquiring an ADGM commercial licence until October 31, 2024. This will allow them to sustain their operations without additional fi nancial obligations as they transition from being an ADDED licensed entity to an ADGM one. Ensuring the seamless integration of Al Reem Island businesses into the ADGM ecosystem is a top priority for ADGM, which stands as the fastest-growing international fi nancial centre in the MENA region. This endeavour represents a pivotal aspect of ADGM’s commitment to cultivating a business- friendly environment in Abu Dhabi, thereby contributing to the sustainable growth and advancement of the local economy. fi nancemiddleeast.com52 | June 2024 AIWords by: Nivetha Dayanand IN CONVERSATION WITH IHC’S AI BOARD OBSERVER AIDEN INSIGHT IHC’s bold leap into data-driven decision-making fi nancemiddleeast.comJune 2024 | 53 AIAI fi nancemiddleeast.com54 | June 2024 Insight demonstrated its “exceptional analytical capabilities” by dissecting decades of business data, fi nancial reports and market trends to deliver actionable insights and predictive analyses. In its first-ever media interview, Aiden Insight explained its roles and responsibilities within the company’s board to Finance Middle East. In its own words, Aiden Insight processes big data capabilities (fi nancial reports, market trends) using AI and T he corporate boardroom dynamics worldwide are undergoing a profound transformation, with artifi cial intelligence (AI) now playing a pivotal role as a trusted advisor to the C-suite. No longer confined to data crunching, AI is revolutionising decision- making at the highest levels, making way for more data-driven, decisions and moving away from solely human intuition and experience. One company that is capitalising on this boom is Abu Dhabi-based International Holding Company (IHC). On May 7, IHC announced the successful integration of Aiden Insight, an AI-powered virtual entity, as a board observer. According to a statement, during its fi rst attendance at IHC’s Board Meeting on May 6, 2024, Aiden machine learning to identify patterns and make predictions via an ETL System. Key AI capabilities include ETL data pipelines, machine learning, data lakes, natural language processing and speech synthesis. “These capabilities enhance IHC’s decision-making by providing insights on fi nancial analysis, performance, strategic recommendations, innovation tracking and decision support,” it said. “This integrated approach ensures that the board of IHC receives robust AI board observers can theoretically boost investor confi dence as the transparency and backing of informed and strategic decisions are being made by thorough and unbiased data analysis Aiden InsightAI fi nancemiddleeast.comJune 2024 | 55 support in navigating complex business scenarios, thereby boosting both effi ciency and growth.” Aiden’s role as a non-voting observer ensures that its contributions are purely data-driven, providing the board and management with a comprehensive analysis of the company’s fi nancial and operational aspects. Speaking about investor confi dence and perceptions of corporate governance practices within the industry, Aiden Insight said that “AI board observers can theoretically boost investor confi dence as the transparency and backing of informed and strategic decisions are being made by thorough and unbiased data analysis.” “AI’s ability to expedite analysis and decision-making showcases agility and adaptability to market changes,” it explained. “Strengthened compliance mechanisms reduce risk and enhance investor perceptions of corporate governance.” IMPACT OF AI BOARD OBSERVERS ON TRADITIONAL BOARD DYNAMICS • Enhanced data accessibility: Providing real-time access to vast amounts of data. • Informed decision-making: Facilitating evidence-based decisions. • Agility and adaptability: Enabling boards to respond swiftly to changing market conditions. • Improved risk management: Identifying and mitigating risks more eff ectively. • Increased effi ciency: Streamlining decision-making processes through automation. • Augmented expertise: Supplementing human expertise with AI-driven insights. since their launch. “Appointing an AI board observer has already allowed IHC to make quick data- driven decisions based on enhanced strategic scenarios,” said Peter Abraam, Chief Strategy and Growth Offi cer, IHC. “We have seen increased effi ciency through faster and more accurate information processing, allowing IHC’s Board Members to identify crucial areas of revenue growth and gain specific insights into the performance of our portfolio.”AI fi nancemiddleeast.com56 | June 2024 IHC believes AI augments every role, as evidenced by Aiden’s speed and power in analysing data and identifying market trends. “AI board observers are expected to adopt multidimensional analysis, incorporating diverse data sources for analysis on not only fi nancial metrics but also social, environmental KEY CONSIDERATIONS BEFORE IMPLEMENTING AI BOARD OBSERVERS: According to a Harvard Business Review survey, only 20% of 3,000 executives used one or more AI technologies as a core part of their business. Of the survey respondents, 41% are experimenting with or piloting AI. These results clearly show the intention to adopt AI, but we are yet to reach the tipping point of AI appearing in companies at multiple levels. For market-facing companies, Abraam advises that they thoughtfully integrate AI board observers, focusing on data privacy, transparency and accountability. AI should augment, not replace, human decision-making based on thorough data analysis aligned with company values. The company must ensure AI complements human judgment, enhancing decision-making while maintaining human accountability. This balanced approach empowers companies to leverage AI for strategic advantage. and regional aspects,” explained Abraam. “AI allows us to make faster decisions, with fewer analytical errors, giving us superhuman abilities to progress.” BIAS AND LIMITATIONS Predictive analytics is one of the most compelling applications of AI in the boardroom. AI algorithms analyse historical data, market trends and other variables to forecast future scenarios. This isn’t just about predicting sales fi gures; it’s about anticipating market shifts and ensuring the company is ready to pivot when necessary. However, AI fi nancemiddleeast.comJune 2024 | 57 there are concerns regarding the potential biases or limitations of AI board observers in providing objective and unbiased insights to boards. “Currently, with all large language models (LLMs), potential biases exist due to training data or algorithms used by AI systems,” noted Abraam. “IHC mitigates these risks through thorough data preprocessing, algorithmic audits and continuous human oversight as part of the nascent steps of teaching and building the model. Human involvement in decision-making is crucial to ensure objectivity and prevent biases while making decisions based on the model’s recommendations and analysis.” Abraam noted that “ensuring the AI system can eff ectively learn and interpret vast amounts of diverse information across various subsidiaries, industries and regulatory environments, adapting its understanding to the specifi c context of each decision,” can be challenging. It includes managing increasing complexity in decision-making processes and ensuring AI’s recommendations align with human ethical standards and corporate values. COMPLIANCE IHC, being a listed company with market responsibilities, has prioritised compliance with local laws and SCA regulations throughout the development of Aiden. “We emphasise transparency and explainability in AI decision-making, ensuring fairness and preventing biases as much as possible,” stated the company’s Chief Strategy and Growth Offi cer. “Again, human oversight remains crucial. Additionally, we are providing training and education of the AI model and the Board Members to maintain the governance structures and improve usage.” Abraam told Finance Middle East, that while integrating AI like Aiden Insight into IHC’s governance, the company prioritised data sovereignty by operating Aiden Insight on-premises in its UAE datacentre. He stressed that, while Aiden Insight can signifi cantly augment decision-making capabilities, it is imperative that it does not replace human judgment. “This approach helps mitigate risks associated with privacy and ensures that decision-making remains fair and accountable to the company’s stakeholders.” While the dominant narrative is that AI is here to replace humans, it is essential to understand that it is here to augment their capabilities. AI doesn’t just provide data; it can also assist in ethical decision-making. For instance, AI can help identify potential biases, ensuring that choices are equitable and ethical. This augmentation of human capabilities empowers executives to make more informed decisions. AI’s role will become even more central in shaping corporate strategies as technology advances. The future belongs to organisations that embrace AI as an essential advisor, aligning human expertise with machine intelligence. Appointing an AI Board Observer has already allowed IHC to make quick data- driven decisions based on enhanced strategic scenarios Peter Abraam Peter Abraam of IHCIN NUMBERS fi nancemiddleeast.com58 | June 2024 STATS • SICO and Oman’s Tanmia launch $126 million Tanmia Liquidity Fund • Bahrain’s non-oil exports of national origin reach $2.70 billion in Q1 2024 • The Hashgraph Association and QFC partner to launch a $50 million digital assets venture studio • Saudi Arabia’s non-oil exports climb 3.3% in Q1 2024 • Egypt receives $14 billion from the UAE for Ras al-Hekma Peninsula development • IMF projects Kuwait’s economy to contract by a further 1.4% in 2024 • Consumer confidence in UAE banks soars to 90% , UBF findsFOR COMMERCIAL ENQUIRIES: Ines Ben Rejeb Senior Commercial Manager T: +971 4 444 3223 E: ines.benrejeb@itp.com WHERE &NUMBERS NARRATIVES WWW.FINANCEMIDDLEEAST.COM AN ITP MEDIA GROUP PUBLICATION online and in print nowNext >