By Andy Sambidge and Neeraj Gangal
Dubai World intervention to ensure 'long term commercial success' - senior figure.
Dubai will remain an attractive regional business hub, despite the government having to asked for a standstill agreement regarding the debts of its flagship companies Dubai World and Nakheel,a senior figure has said in a statement.
The government's intervention in the debt restructuring at Dubai World, was aimed to ensure the holding company’s "long term commercial success", said Sheikh Ahmed Bin Saeed Al Maktoum, chairman of Dubai Government's Supreme Fiscal Committee in comments published by news agency WAM.
“We want to ensure resources are deployed in the full knowledge that they are used to enhance the businesses of the Dubai World Group, build on the restructuring that has already been taking place and ensure long term commercial success," said Sheikh Ahmed, who is also chairman of Dubai Civil Aviation Corporation, chairman and chief executive of Emirates Airline and Group.
"Our intervention in Dubai World was carefully planned and reflects its specific financial position. The government is spearheading the restructuring of this commercial operation in the full knowledge of how the markets would react. We understand the concerns of the market and the creditors in particular. However we have had to intervene because of the need to take decisive action to address its particular debt burden," he added.
"Like most global cities, Dubai has experienced its share of economic and social challenges in this global downturn. No market is immune from economic issues. This is a sensible business decision."
He said further information would be made available early next week.
Sheikh Ahmed said that the unprecedented growth, in Dubai and across the UAE, over the past decade "has helped lay the foundation for what is now a broad-based sustainable economy beyond just natural resources".
"The economic fundamentals, such as our highly developed infrastructure, strong transport and communications hub and regional financial centre will ensure Dubai remains an attractive regional market," he added.
Dubai World is one of the UAE's leading holding companies that includes port operator DP World and property developer Nakheel.
Dubai said on Wednesday that it would ask creditors of Dubai World and Nakheel to agree to delayed debt repayments as a step towards restructuring. It added that DP World was not part of the restructuring process. Dubai World has $59bn of liabilities, representing a large part of Dubai's total debt of $80bn.
Eid mubarak folks. Well, Omar and the other guys who had been screaming here all the time about Dubai having turned the corner and the worst was over and real estate prices have been growing and Dubai is rocking - the moment of truth has finally arrived. Oh yes,Omar...... after three months I would love to see your comments ..... and btw, I too am from Santa Monica in california. Lets see how your financial consulting experience holds you up now.
Dubai will evolve and will be back stronger than ever before. For those of you with good memories, Russia defaulted on their GKOs in 1998, and many advised investors to kiss Russia goodbye. By 2004 investments in Russia were back in vogue, and it still is. You can compare Dubai World to global companies. US Fortune 500 global companies defaulted in the past and still do. European and Asian global companies are no different. Ambition and greed lead to over leverage and lure some decision makers to make headline acquisitions in non-core business or pay exorbitant prices for core assets. When bubbles burst, those decision makers learn their lessons usually after losing their jobs, but countries and institutions march on armed with valuable learning experiences. It's human nature....and Dubai companies are no different. Dubai climbed half way a 5,000 meter high mountain. The last 500 meters they took the easy route and climbed muddy trails rather than rocks. Then came the torrential rain, and they slid back 500 meters. Let' s not forget they are still 2,000 meters above ground level. Dubai and its people have nothing to be ashamed of or to apologize for, and have a lot to be proud of. They will take their time to plan how to continue their ascension, and ascension they will do. God bless Dubai and the UAE. They set a role model for many countries/cities to follow...
Chris, it is sad to see how much pleasure you are getting from the misfortunes of dubai and so many people here ! if you hate dubai so much, i don't understand why are you still here? sad, very sad...
Dubai will be a verry different place a year from now. Its ability to finance on going and future projects will be far harder and more expensive. As for Dubai's aspirations to be a major financial centre, it is difficult to concieve how this will be achieved.
Many of us believe in the great achievements of Dubai. But bleating passionate rhetoric in favor of the greatness of our City will not set the economy right. More importantly, many of the vocal supporters do dis-service to the city by advocating that 'everything is fine' and hope we keep doing what we have been doing so far. Fact is, we need to take a diagonal turn and take a fresh look at the business model (or the execution of it). The emphasis was always on doing it better and bigger at a huge cost to the bottom-line. Practically, every project & every marketing campaign around here bears testimony to the extravagant style. I guess we need to get away from the glitzy and flamboyant business model and pursue realistic options.
It is a normal phenomen, if they have asked for 6 months halt the world is not falling down. When there is economic recession all over the globe its impact has to come but that necessarily does not mean the downfall. Please do not come to these kinds of conclusion specially some media has different intentions & they are raising this issue too much. Keep in mind Dubai undoubtedly one of the most safest city in the world if you compare with any other metro city all over the world,the intentions of the governance are honest and they have created very good infrastructure development ,transport system with a very decent life style & so on. Just wait another few years where foundation is very strong these small issues will not affect Dubai. Do not expect miracles overnight.With time Dubai will emerge a more stronger economy,regional business centre & healthy place of living.
We all have to praise the kind of growth we have seen last 6 to 7 years. When whole world is effected by bloody recession how do you expect Dubai to be immune. We need to give time to great leaders of Dubai to turn the tables again and see the growth like never before.
I am a banker and I have been here for more than two years. It is understandable that during this global economic downturn, dubai could not be immune, however this should be treated as a wake up call. The dynamics of world economy are fast changing, in this period of shattered consumer confidence hardly anything worse could be expected to rattle the investor's confidence.
Sorry Anil Dutt, it is NOT normal. Not when you are told to the last day that everything is fine and there are not problems to pay the debts, and then this. What do you think happened to the investors who believed the information? What do you think happens to the confidence of banks giving the loans or consumers? We in the Middle East have to change our ways of doing business. We have to be more transparent.
Good post Andy Ramz Dubai needs to stop all these press releases that seem to be contradicted the next day/week and focus on real change for the better. ie: one minute everything is fine and Dubai is a model city that people should aspire to be like and the next day they have financial trouble. No one can deny that Dubai has come a long way in a short time but now there is a very important fork in the road...Decision time - One road says "all bling millionaires this way" and the other says "get focused and be more realistic and practical"....its kinda obvious which way they need to go to succeed in building a city to be proud of !