UK contractors in Dubai must be paid - UK trade minister

DIPLOMATIC TALK: Lord Davies, was on an official diplomatic visit to Abu Dhabi. (Getty Images)

The British trade minister, Lord Davies, has insisted that British contractors and suppliers in Dubai that are owed money “need to be paid”, according to a report.

Lord Davies, was on an official diplomatic visit to Abu Dhabi, The National newspaper's website reported on Saturday.

Some $636m is owed to British consultants and engineers alone in unpaid fees from work undertaken in the UAE, according to the UK's Association for Consultancy and Engineering (ACE). It was reported that the ACE had asked Lord Mandelson, the British Business Secretary, for diplomatic intervention.

The National quoted Lord Davies as saying: “I think when you have a fast-expanding economy as Dubai was and then the world slows down, inevitably it takes a little bit of time to work out some of those issues, so yes, those companies, some of them need to be paid.

“I think it’s an important issue, so I don’t want to de-emphasise it. Neither do I want to make it the big be-all and end-all.”

Though the minister acknowledged the severity of the problem, he described it as a cyclical symptom of the global financial crisis that ultimately would heal itself, the daily added. He was also positive about the future economic prospects of Dubai and the UAE.

Long-term economic prospects for Dubai and the rest of the Emirates were bright, he told the Abu-Dhabi based daily.

“It’s an international phenomenon, it’s not just a Dubai phenomenon. People are owed money and they have to be paid. But on the other hand, let’s not move from that to saying Dubai is somehow finished. That’s just not the case."

“I think in the UK these images flash that all the expats are leaving and business is dying. I just don’t think it’s true. Is there a correction going on? Absolutely. Is it a painful one? Yes. But has Dubai got great medium- to long-term prospects? Yes, absolutely,” The National quoted Lord Davies as saying.

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READERS' COMMENTS

Bankruptcy
Posted by Business owner, Dubai on Sunday 12 July 2009 at 14:28 UAE time


All of the comment has been rather interesting.

Obviously this is a global issue however the reactions to the issue certainly are not.

I think it rather childish and un-educated to compare immediately what would happen in another country (positive or negative) compared to what happens in the U.A.E

Being in the construction sector and being owed money here, I can tell you that the issue is that the largest contracting companies are the one who are not paying their bills or severely delaying payments. Given the slowdown, what these same people are now doing is finding new suppliers so as to continue on with existing or new projects at the expense of previous suppliers who are still owed substantial funds.

To then be offered 50 fils or 70 fils per dirham is obscene when the same company is paying new suppliers the full rate.

What needs to happen is the creation of a bankruptcy law, so that companies who are not paying their bills are simply wound up and put out of business. This would have the following effects.

1. Business owners such as myself would then simply "write off" outstanding payments due from the now bankrupt client - even though that would be painful it allows us to refocus energies

2. The bankrupted business could be wound up and whatever is left EQUALLY dispersed to creditors

3. The directors of the bankrupt company would be banned from being a company director for the next 5 years

4. It allows other more professionally run companies to grow and compete - and in turn fill the void

The next issue here is that when I am not being paid by these large contracting companies, I still manage to have the bank (sometimes owned by the same group who owe me money) threatening to throw me in jail if I dont settle my finance and overdraft repayments.

This needs to stop.

By creating a structured business environment you would then see accurate reporting, proper credit agencies established - so as to check on a clients payment history and lastly credit insurance companies, which would prevent all of this rubbish occuring.

Non Payment by Dubai Companies
Posted by Dries, Dubai, UAE on Monday 6 July 2009 at 14:18 UAE time


Easy to say Hans! Do you know what arbitration or "simply go to court in Dubai will cost you?! Do yourself a favour and find out! Especially if your company has provided services in good faith since last year and your client promises and promises and never pay up! We are owed more than AED10million by a very large contracting company for professional services rendered per a signed agreement. It should be a simle deby collection excercise but the Arbitration fees excluding lawyers fees is already AED500,000.00! And what does the company in default do? The simply start another company under a different name and take only the assets of the old company over, not the liabilities, AND YOU CAN DO THAT UNDER UAE LAW!!! as per my lawyer. ALL EXPATRIATE COMPANIES SHOULD BE WARNED AGAINST THIS!!!

Saudi aeroplanes
Posted by Doug on Sunday 5 July 2009 at 16:51 UAE time

It's a regionwide problem though, isn't it. Remember when that Saudi plane got repossessed in France because the Saudi company wouldn't pay its bills to the French company? And how there was a flurry of comments on here from outraged people saying that KSA should boycott France?

It's this level of business immaturity which is why local companies are in the mess.

simple economics
Posted by don in dubai, dubai on Sunday 5 July 2009 at 16:36 UAE time

if the west has money to buy oil, then the oil exporting nations have money to pay their bills. cant get any simpler than that.

imagine the industrialized nations said to oil exporters, i'll pay you when i feel like it.

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