Japanese builders owed billions for Dubai work - official

Sunday, 8 November 2009 7:08 AM

Japanese construction companies are facing "serious debt problems" amid issues with being paid for work done in Dubai, a top ranking official has said.

Seiichi Otsuka, the Japanese consul general in Dubai, claimed firms are still owed billions of dollars on projects that include the Dubai Metro and Palm Island, UAE daily The National reported on Sunday.

Japanese builders have played a major role in Dubai’s construction boom, spearheading work on the metro and other key projects in the emirate.

“Some Japanese construction companies are facing very serious debt problems,” Otsuka told the paper. “Some companies engaged with the construction of the Metro are facing some payment issues.”

Mitsubishi Heavy Industries (MHI), the lead company for the metro contract, are among those firms affected by non-payment on contracts, the paper added.

“MHI executed the construction of the Dubai Metro and some other contracts and we are still awaiting payment,” said Koji Okamoto, the general manager of the Middle East office of MHI in Dubai. The company has contracts in the Middle East valued at $150bn.

The Japanese government has not discussed the payment issues with the Dubai Government, nor has it intervened with financial assistance to those companies affected, Otsuka said.

“We are in a position to push both sides to make an amicable solution,” he said.

Otsuka told the paper it was difficult to put a figure on the outstanding debt as some payment was due shortly.

Last month, it was reported that some UK contractors were turning down invitations to chase work in Dubai because of continuing doubts over whether they will be paid on time.

According to Nelson Ogunshakin, the chief executive of the UK Association for Consultancy and Engineering (ACE), a large number of UK firms significant number of UK firms are still owed money by struggling developers in the emirate.

In July, the UK government reiterated its call for contractors to be paid by Dubai developers – and said it was "continuing to monitor the situation".

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Posted by: Paolo C Monday, 9 November 2009 5:17 PM[UAE] - Italy

we were told!?? Facts are that this is only one of the stories which gets to the media in order to put pressure and shame on those who owe money and don't follow their obbligations. The reality is that out there are many contractors which don't see any money at all, and receive instead only reassurances. The debt is by far much higher than anyone can imagine and could have serious geopolitical consequences, as well as the end of an era.

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Posted by: Creditor Monday, 9 November 2009 2:12 PM[UAE] - United Arab Emirates

Agreed TQ but the majority are actually DGE's some of whom are being merged with other equally in debt DGE's and no doubt the slate will again be wiped clean. Then the usual excuses will come out about new management, new Co, the works shouldn't have been authorised and of course bad workmanship...!! Yawn

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Posted by: TQ Monday, 9 November 2009 1:33 PM[UAE] - UAE

Wouldn't say its a million $ question Ahmed....You name me a big company with govt ties and I can assure you they are on there! I think we all know who they are, the govt just needs to be a little more grown up in sharing with us what is already common knowledge between suppliers and the media.... The list is long and distinguished, I don't think there is a company on there that we haven't heard of :)

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Posted by: ahmed Monday, 9 November 2009 1:13 PM[UAE]

@TQ...agreed...but name and shame who???...isnt that a million $ question??

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Posted by: TQ Monday, 9 November 2009 12:03 PM[UAE] - UAE

Ali, the published article is another reality check for all those dreamers that still are living in the bubble. The debt figures are collosal and are still on the rise. Dubai has definately not rebounded from the crisis and wont do for some time yet, until the government put in place some realistic measures to help payback suppliers that have to date only recieved credit notes and empty promises. The issue is that there is not enough transparency, instead the general public are being fluffed off with "the futures bright" stories rather than naming and shaming those that are letting the side down. The second the govt start to take responsibility for repaying International suppliers that have helped shape Dubai only then can Dubai start to regain some trust back and again start to head in the right direction. Locally these Habtoor stories will wash but internationally the media is not as fickle and are printing the real facts.

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