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UK contractors in Dubai must be paid - UK trade minister
by This email address is being protected from spam bots, you need Javascript enabled to view it on Saturday, 4 July 2009Posted on Sunday, 12 July 2009
Bankruptcy
Posted by Business owner 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.
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Posted on Monday, 6 July 2009
Non Payment by Dubai Companies
Posted by Dries 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!!!
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Posted on Sunday, 5 July 2009
Saudi aeroplanes
Posted by Doug 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.
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simple economics
Posted by don in dubai 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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Insolvency
Posted by The Consultant at 14:56 UAE time
Mounir, I don't hate you but on the other hand I would suggest you don't comment on things you don't fully understand, like the insolvency process, for example.
In the case of bankrupcty, it is not simply the case that secured creditors will be paid and others won't. It depends on how much money can be generated by the liquidators. In a bad case, even the secured creditors might get nothing. In a good case, the unsecured creditors might get all or most of their money in the end. It is perfectly possible that, through a restructuring process and the sale of assets and/or non-core business units, a company can survive and return to solvency.
Let's face it, those companies who are squeezing their suppliers to take a haircut on their debts are not doing so because they think the suppliers will be better off this way - they are doing it because they are in trouble and are trying to save money any way they can, ethical or not. Some of them are probably insolvent but don't want to admit it, so the people to suffer as a result are the suppliers, instead of the shareholders and the senior management.
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Dont be silly
Posted by Hans at 14:53 UAE time
Hello all,
I dont think that anyone here is arguing that companies (UK-based or elsewhere) should get paid their money. I know for a fact that most companies, local and international, are not extending credit anymore and are demanding upfront payment for their services and because of the special time that we're in, many companies are struggling with dried up cashflows and limited liquidity.
It is very insensitive for someone to say "Tough, if you dont like it, go elsewhere... The chinese would love to take over". That's just not the right way. Pay those companies and let them leave if they wish. It is not the responsibility of governments to intervene in commercial matters of private or semi-private companies but rather it is the government's responsiblity to ensure that the Law is upheld and justice is served in accordance with that Law. The emerging markets generally promise high rewards but also are highly risky. If your contract is not being honored, then seek arbitration to settle the matter or simply go to court.
Best of luck to everyone!
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I Agree lets work together face the problem
Posted by NAT at 14:32 UAE time
Some of the stories above are so true! The sooner the UAE face the problems
head on, the better for everyone. The rest of the world is putting their
hands up and staying sorry we have messed up but we are going to fix it!
Why don't we pay up for the services we have used? I laugh when people call
me at working ask for discount on there bills! And if I don't give them one
they tell me I will wait a long time for my money! And to be honest they can
do what they want as they know there is no law here in the UAE regarding
collecting your money from clients. But you miss a payment on your loan you
have a threat that you will be put in prison... as though that solves the
problem!
I understand companies are having cash flow issues but with attitude like
that no one would ever want to do business again with a client that has that
type of attitude, so in long run they will be the ones that will suffer
more.
The UAE needs to set up systems like the rest of the world has regarding
credit checks and good credit controls; be able to blacklist people who
don't pay, or take someone to court who has not paid, and feel that you will
get a fair case. Then people will start paying.
What is the scariest thing is that if people out there have that single
minded attitude and continues doing business like that, Dubai will just
crumble.
We all need to work "together" irrespective of your race, colour or religion
otherwise all the sweat blood and tears that people have put into this place
will be for nothing and will be worthless and very empty place just like the
desert as it was before. Good on Lord Davis for just saying it how is really
is!
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haha so much hate!
Posted by Mounir at 13:49 UAE time
whats goin on here! why all the hate? I merely stated a fact: if a company goes bankrupt, only the secured debtors will get paid (and even they wont be paid 100% for every dirham they'er owed); the rest will get nothing! this is the system in all capitalist states, so why are you guys getting angry at me for? Yes, all debt should be cleared and yes, no one should be forced to accept less than what was agreed upon: but this is a situation where you can lose 100% of your investment, or a lesser amount; which would YOU take?
as for what the Prophet said; so we should ignore everything he taught about the horridness of debt and interest because its convenient to do so, yet remember what he said about paying the worker? funny way to look at things, if i didnt know better id call that hypocritical! but thats just how business is today, isnt it?
Dubai-based clients owe foreign consultants and companies money, and they should be paid fully; otherwise the process should continue as per UAE (not UK or US or EU) law, and anyone who does not like this can simply choose to stay in their countries: chinese companies will be more than happy to take over :) but here's the funny thing; SOOOO many foreign companies were paid money in the past (im talking at least a decade ago) and they simply fled and went back to their countries: should the UAE issue a statement on behalf of the UAE-based clients and say that the UK or the US or the EU have to own up to their problems and do the work that they were paid to do? Of course not; the clients here took a risk, and they were taught a lesson. I hope that the foreign companies now know to demand larger bank guarantees and down payments :)
Last but not least, if i were to go into business, id go in with enough money saved to last me sometime in the case of non-payment, and i would not over extend myself and get greedy like some companies here do / did.
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Read the article properly
Posted by The Consultant at 12:45 UAE time
Mounir and Mounir 2, try reading the article properly. Lord Davies has not "ordered" the UAE government to pay up, he is simply stating a fact - there are many suppliers out there to the construction industry who are owed money, and they need to be paid as all legitimate debts do in due course. I think he's actually been quite fair and positive in his comments, even stating that "it's not the be-all and end-all".
I'm sure if the reverse were true, and it was UAE suppliers trying to get their bills paid by UK companies and someone from the UAE Government were to say they needed to be paid, you would both be jumping up and down with excitement at the prospect of being able to post a comment on AB about how great the UAE government is for supporting UAE businesses!
I also doubt, Mounir, that you would be so blase about "taking risks when you do business" if you were the owner of a business that was owed money in this situation, particularly if the money was required to keep your business afloat.
As for the suggestions that these businesses should be happy to accept a reduced settlement - this might be a valid point if the companies in question were to go through a formal process of restructuring and treat all creditors equally. However in most cases that is not what is happening, it is simple bullying of those suppliers who are deemed to have the least leverage over the company. No doubt that once the economy is back on its feet, the next generation of suppliers will be wise to these tricks and will either price in a premium for the risk of non-payment or, if they can, hold on to critical deliverables until the work has been paid for.
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Mounir's comment
Posted by Paul at 12:39 UAE time
Have Mounir and Mounir 2 actually read the article? The irrelevant childish and protective responses suggest not. I suggest you re-read the article and you will see that the UK minister had nothing but praise for the UAE.
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You do a job you should get paid for it
Posted by AP at 12:23 UAE time
Why does it have to get religious, or political or about one group of people wanting to feel better than another group of people. Surely it comes down ot only one thing, you do a job and you should be paid for it. It doesnt matter who is asking for this promise to be kept. If you make a contract to pay someone keep to it. If you dont or cannot keep the promise and then you should not take offence that somebody is chasing on the debt. If UAE based companies worked int the UK or anywhere else in the world and were owed $636m, would it not be reasonble for the UAE government to follow up on the debt with the respective government?
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Mounir's Comments (1 &2)
Posted by Joseph at 12:11 UAE time
Both of you gentelmen are indeed correct that the UK has problems of it's own, as does every country in the world at the moment when it comes to fiscal issues; however this does not mean that UK government should ignore issues for British companies overseas.
Last week Dubai launched a study to investigate the possibility of holding the 2020 olympics. If this is to be sucessful then Dubai is going to require a huge amount of infrastructure work...the likes of which it could not imagine. Like it or not, this work would have to be done by overseas companies and how many of them are going to be prepared to work here if the Emirate has a reputation for not paying it's bills.....probably none. Also this work would need to start in the next 2 to 3 years if Dubai is to stand a chance of having everything ready in time and at the moment it would appear that it is not capable of funding these kind of projects.
The interesting point will come when one of these large companies says enough is enough and starts legal proceedings which will then spread across the globe and unfortunately for Dubai it will take a long time to recover.....and certainly not in time for the 2020 games.
I am not a Dubai basher...I and my family like living here as it has a lot to offer but I think it needs to face up to it's problems and start paying its bills as it expects every expat who lives here to do.
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'Meddling' with economies
Posted by Doug at 12:09 UAE time
How laughable. Do you really think being an independent sovereign nation means local companies are free from their obligations and don't need to answer to anyone?
May I ask you, why on earth do you think there are job losses etc. in the UK. Could it be perhaps that companies who came to the UAE from the UK aren't receiving the cashflow from their UAE work and so can't afford to pay staff back in the UK? And why is it that the UAE is doing so well? Could it be that everything you see here simply hasn't been paid for? It's very easy to carry on being rich when you decide you don't need to pay your bills.
Asking private companies to pay their bills like civilised people isn't 'meddling' with another country's economy; it's called 'good business'. But UAE non-payment of bills IS meddling with other countries' economies. Fine, don't pay your bills. When people in the West can't afford to travel because of the cashflow blockage here in the UAE, I wonder who you think will be able to afford to travel here and stay in your hotels, or pay for your oil. Keep this up and the UAE will learn a very nasty lesson in consequences.
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Mounir's Comment
Posted by Mounir 2 at 11:24 UAE time
Mounir, well said. I think the British Authorities should not intervene in this country's economics. They have far bigger and far more serious issues in their govt. They should see a mirror before poitning fingers at others. UAE is a sovereign country and yes, it has faced financial issues due to the slowdown, but so have all other countries, its GLOBAL, not domestic and al hamdillah by the grace of God, GCC, specifically UAE and KSA are the least effected, though that does not mean its not effected. I think Mr. Davies should mind British wages and salary issues which are FAR more serious and STOP intervening in other country's economics. Mr. Davies might be a "lord" in his office, not here. There are laws here and proper channels to appeal for any mishappenings. My opinion to this is that UK, once AGAIN, wants to create a negative publicity for the UAE as they have been doing since the start of this year because they need to feel good mentally that out in the world there are ppl worse off, which is not the case definitely but is being tried to be portrayed in such a manner for the British to feel "happy" and "content" while they lose millions of jobs there and so that they, UK public, would feel a little bit better when they see in their papers those lies about GCC and the UAE. It has become a political game, cant anyone see it? Leav UAE alone and let it deal with the crisis, it needs not any intervention, it is a sovereign country and has its own laws. Please!!!
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Independence
Posted by Doug at 11:09 UAE time
Fine Mounir. Don't pay the UK companies. Don't follow the advice of the Prophet (PBUH) where he says you should pay your worker before the sweat on his brow has dried. Let's see how far that gets the UAE. You can't exist in this little bubble where it's one rule for the UAE and one for everyone else because I guarantee you that no-one will come to work in Dubai ever again. There'll be no contractors to build any of the projects the UAE is dependent on. In the end, not paying your bills will hurt you a lot more in the long run and damage the good name of the UAE.
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