DUBAI: For the man tasked with shoring up Dubai’s finances, it feels like driving a car in a sand storm: It’s slow going, and all you want to do is avoid a crash.
“We can only see 10 to 15 meters ahead,” said the emirate’s finance chief Nasser Al-Shaikh. “We have a clear focus on surviving in the current environment with the least damage.”
Urgent action is needed to shore up companies such as Dubai World’s Nakheel, developer of Dubai’s signature palm-shaped islands, and port operator DP World, Al-Shaikh said.
In addition, the emirate is targeting Dubai Holding, an investor in Sony and EADS, and local firms in its sovereign wealth fund, as the first to tap into the fund.
“There are urgent requirements that need to be dealt with quickly,” said Al-Shaikh, resplendent in traditional Arab robe, in the low-rise government compound of the Ruler’s Court that overlooks Dubai Creek, the heart of the emirate’s old center.
The first detailed rescue plans should come out in two weeks, said Al-Shaikh, who was appointed in September. Emaar Properties, the largest developer in the United Arab Emirates (UAE), is not angling for bailout money because it believes it can handle the crisis, he added.
“There is no free lunch; we will be helping companies on commercial terms,” said Al-Shaikh, who attended the University of California in San Bernardino. “We would like to avoid sitting down with them in six months and talking about the same issue.”
To do this fairly, Dubai has put together a five-member fiscal committee headed by Emirates airline Chairman Sheikh Ahmed bin Saeed Al-Maktoum. “I don’t make the call; it’s the committee that decides,” Al-Shaikh said, brushing aside ideas that his being a chairman of troubled Islamic mortgage lender Amlak Finance and developer Deyaar would prejudice the process. “These times, everybody questions what we do. In good times nobody did.” Dubai will shortly appoint non-bank financial advisers to ensure assets are valued properly and avoid conflicts of interest, Al-Shaikh said, declining to say if these could include a specialist like fund manager Blackrock, which held its board meeting in the emirate last year.
Sign of crisis emerged this summer with “hot money” coming in to bet on the local currency’s rise and banks restricting lending, Al-Shaikh said. Then Lehman went bust and things went into overdrive. “We reached a stage whereby we were fearing the weekends, when all the deals were happening.” Indeed, the 39-year-old father of five hasn’t seen much of his family lately: “Work and go home to sleep,” he said.
The crisis really hit home when Dubai’s property prices started sliding. Hundreds of billions of dollars of expansion projects got canned, Dubai companies laid off thousands and UAE banks cut off credit for mortgages and projects. Stories started popping up of droves of brand-new Maseratis being left at Dubai’s airport by expatriates dashing out.
That’s an urban myth Al-Shaikh said he could do without, acknowledging at the same time Dubai needs to do a better job on publishing timely economic data. He said he plans to collate all Dubai’s economic data on the web and appoint PR firms.
