From ArabianBusiness.com 5 July 09
Rumours of colossal debts owed to large foreign contracting companies by both Dubai developers and the government's development companies have been circulating ever since the tide of redundancies began. If the stories are even half true, then there are some major companies which, if they remain unpaid, could be placed in serious financial jeopardy. Lord Davies is being diplomatic, as one would expect, but the question being asked is: if a company suffers financial loss in Dubai as a result of unpaid debts, why would that company consider doing business here again assuming things ever improve? I hear that some companies have discovered to their surprise that the contracts they signed aren't worth the paper they were written on.
The same question applies to the expats who've been made redundant and have now returned to their home countries or have moved elsewhere - why would they ever return to work in Dubai?
As an aside, Limitless has closed its Dubai office, all staff who'd been working on the Arabian Canal project have been made redundant.
The British trade minister, Lord Davies, has insisted that British contractors and suppliers in Dubai that are owed money “need to be paid”, according to a report.
Lord Davies, was on an official diplomatic visit to Abu Dhabi, The National newspaper's website reported on Saturday.
Some $636m is owed to British consultants and engineers alone in unpaid fees from work undertaken in the UAE, according to the UK's Association for Consultancy and Engineering (ACE). It was reported that the ACE had asked Lord Mandelson, the British Business Secretary, for diplomatic intervention.
The National quoted Lord Davies as saying: “I think when you have a fast-expanding economy as Dubai was and then the world slows down, inevitably it takes a little bit of time to work out some of those issues, so yes, those companies, some of them need to be paid.
“I think it’s an important issue, so I don’t want to de-emphasise it. Neither do I want to make it the big be-all and end-all.”Though the minister acknowledged the severity of the problem, he described it as a cyclical symptom of the global financial crisis that ultimately would heal itself, the daily added. He was also positive about the future economic prospects of Dubai and the UAE.Long-term economic prospects for Dubai and the rest of the Emirates were bright, he told the Abu-Dhabi based daily.
“It’s an international phenomenon, it’s not just a Dubai phenomenon. People are owed money and they have to be paid. But on the other hand, let’s not move from that to saying Dubai is somehow finished. That’s just not the case."
“I think in the UK these images flash that all the expats are leaving and business is dying. I just don’t think it’s true. Is there a correction going on? Absolutely. Is it a painful one? Yes. But has Dubai got great medium- to long-term prospects? Yes, absolutely,” The National quoted Lord Davies as saying.