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Tue 12 Feb 2008 12:29 AM

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Gulf states face labour exodus

Contractors will struggle to retain Asian workers as pressure on dollar continues, warns expert.

Gulf construction markets will struggle to retain labour from Asian countries as the pressure on the US dollar continues, Gurjit Singh, executive director of property development at Sorouh Real Estate said on Monday.

Asian nations including India and China are now offering workers competitive advantages in a bid to preserve a labour force for their own infrastructure development, Singh told ArabianBusiness.com at the Arabian World Construction Summit.

The soaring value of the Indian Rupee also meant it was less attractive for workers to migrate to the Gulf where the Dirham was falling, he said.

A decreasing labour pool would have an enormous impact on the local construction market, forcing contractors to focus on managing their labour force more efficiently.

“Labourers will become a limited resource, where you could have 10 labourers in the past, maybe you will only have five. Contractors will need to ensure their long-term sustainability by offering them a career path, good wages and living conditions.”

Singh said developers would begin to gravitate toward the contractors that could manage their labour force efficiently, and deliver their projects on time.

He also called for the UAE government to legislate to securitise the payment of contractors, something the emirate is currently lacking.

“The contracting industry is very cash-flow centric, and if there were laws to ensure the contractor would be paid and could then pay the sub-contractors, issues such as strikes over non-payment of wages could be avoided.”

Sorouh, Abu Dhabi’s second largest property developer by market value, is currently developing the $6.8-billion Shams Abu Dhabi project.

Singh also said the firm intended to borrow $1 billion in 2008 to expand its operations, which include the launch a $500 million mixed use project in Abu Dhabi later in 2008.

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