I bumped into Howard Leedham in Marina Walk in Dubai the other day. Always nice to see Howard, the chief executive of the hedge fund outfit Dalma Capital in Dubai, but with a far more intriguing background as a special forces commander in the British army.
He was just off for his daily run, all geared up in Day-Glo outfit with the obligatory headphones, so he didn’t have time to tell me any new stories about derring-do on the north-west frontier. But he did have two bits of news. The first was disconcerting.
“They’ve got rid of my camel,” said Howard, as distraught as a trained killing machine can be.
I knew that once a week he went out to a camel farm in the desert outside Dubai and trekked around the dunes on his favourite animal.
He had developed a bond with this creature, who was his only companion on many hours in the desert, where Howard would commune with the desert and develop portfolio strategies while his camel plodded patiently onwards, occasionally encountering a camper shocked to see this Lawrence of Arabia figure looming towards him.
“I think they sold him for food,” said Howard, clearly upset with the camel farmer.
But just to show that for every loss there is an equivalent opportunity, he also had another bit of news for me: the Emirati entrepreneur and businessman Mishal Kanoo was to join the board of Dalma as a non-executive director.
That’s quite a coup for Dalma. Mr Kanoo is a leading member of the Kanoo group, one of the leading family-owned businesses in the region, and is well plugged into the Dubai power structure. He is modern-minded, forward-thinking and not afraid to give hard-hitting advice, even when the listener might not want to hear it.
Exactly the qualities suited to a hedge fund looking to differentiate its product offering from others in the region.
I’ve said before that, while the UAE has many attractive features as a place to live, work and bring up a family, for many the decisive factors can be summed up in four words: “No tax, valet parking.”
I know that it’s not entirely true. There is a whole raft of government charges and levies associated with life in the UAE that, while not strictly tax, are as close as makes no difference. But as long as the top line on the salary certificate is the same as the bottom, we can still claim to be living in a tax-free society.
The same applies to valet parking. Even though many places charge for this service now, it’s still a pleasure to just hand over the car keys and walk away, a joy entirely alien to anyone living in, say, London.
So it was a bit of a shock to come across a recent work by the accountants PwC on the subject of regional tax reform. Falling oil revenue and the need for more varied government revenue sources mean that tax – initially as some form of sales tax but with some form of income tax the unspoken threat – is back on the agenda.
Egypt, which already had income tax and many other forms of official expropriation of personal property, is to be regarded as a model, according to PwC.
The firm stops short of saying that tax is on the way in the UAE, but I think it’s a straw in the wind. I’ll be getting really worried when PwC brings out a study of the economic consequences of valet parking.