Source: ArabianBusiness.com 8 Nov 09
================================
Japanese companies are owed billions for work done in Dubai, including the metro system, the Japanese consul general in Dubai has said. 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".
Showing posts with label debt. Show all posts
Showing posts with label debt. Show all posts
Tuesday, 10 November 2009
Sunday, 5 July 2009
Contractors in Dubai must be paid: UK Trade Minister
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.
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.
Friday, 26 June 2009
Bankruptcy law call after Dubai boss flees
From ArabianBusiness 25 June 09
The Gulf News has a fuller explanation of the current bankruptcy laws in the UAE.
And to confirm what's in the following article, in Dubai you can be jailed for bouncing a cheque and unbelievably there is no system in place here for the person who's written the cheque to put a stop on it.
================
Lawyers on Thursday called for a review of UAE bankruptcy laws, after the owner of a Dubai gifts company fled the country with massive debts.
It emerged on Wednesday that Simon Ford, the owner of an events and alternative gifts company BlueBanana.com, had left the UAE after his firm became insolvent.
In an emotional letter to suppliers and customers Ford said that the UAE’s "lack of structured bankruptcy laws and a banking system which has zero flexibility on loan repayments" had forced him to flee the country.
But legal experts have now called for an overhaul of bankruptcy laws in the UAE-and urged a review into whether a bounced cheque should be a criminal offence.
“There have been discussions amongst lawyers and accountants as to the need for modernisation of the UAE insolvency regime," Raza Mithani, a senior advocate at law firm Al Tamimi told Arabian Business.
"The areas which are probably in most urgent need of review are the enactment of detailed provisions dealing with individual (non-trader) and cross-border insolvency, together with improved legislation to better facilitate the rescue of businesses in financial distress."
“A corollary to this would be a review of the law relating to bounced cheques and whether it is appropriate for it to continue to attract criminal sanction,” he added.
Currently there are no bankruptcy laws for ‘non traders’, which would include consumer bankruptcy cases such as employees of companies.
Mithani added: “There is also a need to encourage awareness of the legislation that already exists. This would enable businesses in difficulty to consider their options at the earliest possible opportunity. Such options may, depending on the circumstances, include entering into a formal or informal composition with creditors."
The Gulf News has a fuller explanation of the current bankruptcy laws in the UAE.
And to confirm what's in the following article, in Dubai you can be jailed for bouncing a cheque and unbelievably there is no system in place here for the person who's written the cheque to put a stop on it.
================
Lawyers on Thursday called for a review of UAE bankruptcy laws, after the owner of a Dubai gifts company fled the country with massive debts.
It emerged on Wednesday that Simon Ford, the owner of an events and alternative gifts company BlueBanana.com, had left the UAE after his firm became insolvent.
In an emotional letter to suppliers and customers Ford said that the UAE’s "lack of structured bankruptcy laws and a banking system which has zero flexibility on loan repayments" had forced him to flee the country.
But legal experts have now called for an overhaul of bankruptcy laws in the UAE-and urged a review into whether a bounced cheque should be a criminal offence.
“There have been discussions amongst lawyers and accountants as to the need for modernisation of the UAE insolvency regime," Raza Mithani, a senior advocate at law firm Al Tamimi told Arabian Business.
"The areas which are probably in most urgent need of review are the enactment of detailed provisions dealing with individual (non-trader) and cross-border insolvency, together with improved legislation to better facilitate the rescue of businesses in financial distress."
“A corollary to this would be a review of the law relating to bounced cheques and whether it is appropriate for it to continue to attract criminal sanction,” he added.
Currently there are no bankruptcy laws for ‘non traders’, which would include consumer bankruptcy cases such as employees of companies.
Mithani added: “There is also a need to encourage awareness of the legislation that already exists. This would enable businesses in difficulty to consider their options at the earliest possible opportunity. Such options may, depending on the circumstances, include entering into a formal or informal composition with creditors."
Wednesday, 27 May 2009
Legal firm sees sharp rise in UAE contract disputes
From ArabianBusiness.com, 25 May 09
This is a story to watch as there are rumours circulating in Dubai (Rumour Central of the Entire World) of huge, almost mind-boggling, amounts of money owed to contractors and construction companies by quasi-government development companies. Aside from industry publications, discussion of the level of debt owed to the companies has received little attention here, probably because its bad news so its just passed off by the media here as "a misunderstanding". The flow-on effects of the cancelled, sorry "postponed", projects and the resultant job losses, actual and looming, are the focus of many expats' attention.
How long can these companies continue to carry the debts? There is also an effect on the Dubai economy as a whole: If the big guys aren't being paid, they aren't paying their sub-contractors who then can't pay their workers who then aren't spending in the shops etc etc. Its a big circle.
If the written contracts prove to be so full of holes you could shoot pumpkins through them and attempts at reasonable negotiation fail, what options are left to the companies to recover the debt or part of it, except to litigate? Does the threat of "you'll never work in this town again" really mean anything any more or has it become, for some, wishful thinking?
------------------------------------------------
There has been a sharp rise in litigation cases in the UAE resulting from contractors not being paid, law firm Al Tamimi said on Monday.
Speaking on the sidelines of an Al Tamimi seminar about financial and legal recovery strategies for creditors and stakeholders in Dubai, Raza Mithani, a senior advocate at Al Tamimi told Arabian Business: "We are seeing a huge upturn in the amount of litigation that is coming through which suggests amongst other things that a number of contractors are not being paid."
"In addition we are experiencing a significant rise in arbitration work across a variety of sectors. Presently we are dealing with a range of claims worth from hundreds of millions of dirhams to hundreds of millions of US dollars," he said.
"We are dealing with a number of truly massive claims which we believe to probably be some of the largest ever arbitrated in the UAE."
Arbitration is a legal process for resolving disputes outside the courts.
Severe liquidity conditions and a property downturn triggered by the global crisis has left many contractors and consultants in mainly the construction and real estate sectors owed millions of dirhams.
Almost $636m is owed to British consultants and engineers in unpaid fees from work undertaken in the UAE, according to the UK’s Association for Consultancy and Engineering (ACE).
WS Atkins, the engineering consultancy that designed the Burj Al Arab, said it was owed $39.7m that should have been paid in the first quarter by developers in the Middle East.
Evidence is also mounting that UAE companies who are not paying their customers are in “serious trouble”, said Gary Watts, head of the corporate commercial department at Dubai- based Al Tamimi – the largest law firm in the Middle East.
“It has become obvious that some people are tight with releasing cash, and other people are in serious trouble – they do not have the cash to release and they do not have the resources to meet their commitments,” he said.
Watts said that ‘an abrupt interruption of cash flowing around the system’ had put companies in the position of not being able to pay their contractors and consultants.
This is a story to watch as there are rumours circulating in Dubai (Rumour Central of the Entire World) of huge, almost mind-boggling, amounts of money owed to contractors and construction companies by quasi-government development companies. Aside from industry publications, discussion of the level of debt owed to the companies has received little attention here, probably because its bad news so its just passed off by the media here as "a misunderstanding". The flow-on effects of the cancelled, sorry "postponed", projects and the resultant job losses, actual and looming, are the focus of many expats' attention.
How long can these companies continue to carry the debts? There is also an effect on the Dubai economy as a whole: If the big guys aren't being paid, they aren't paying their sub-contractors who then can't pay their workers who then aren't spending in the shops etc etc. Its a big circle.
If the written contracts prove to be so full of holes you could shoot pumpkins through them and attempts at reasonable negotiation fail, what options are left to the companies to recover the debt or part of it, except to litigate? Does the threat of "you'll never work in this town again" really mean anything any more or has it become, for some, wishful thinking?
------------------------------------------------
There has been a sharp rise in litigation cases in the UAE resulting from contractors not being paid, law firm Al Tamimi said on Monday.
Speaking on the sidelines of an Al Tamimi seminar about financial and legal recovery strategies for creditors and stakeholders in Dubai, Raza Mithani, a senior advocate at Al Tamimi told Arabian Business: "We are seeing a huge upturn in the amount of litigation that is coming through which suggests amongst other things that a number of contractors are not being paid."
"In addition we are experiencing a significant rise in arbitration work across a variety of sectors. Presently we are dealing with a range of claims worth from hundreds of millions of dirhams to hundreds of millions of US dollars," he said.
"We are dealing with a number of truly massive claims which we believe to probably be some of the largest ever arbitrated in the UAE."
Arbitration is a legal process for resolving disputes outside the courts.
Severe liquidity conditions and a property downturn triggered by the global crisis has left many contractors and consultants in mainly the construction and real estate sectors owed millions of dirhams.
Almost $636m is owed to British consultants and engineers in unpaid fees from work undertaken in the UAE, according to the UK’s Association for Consultancy and Engineering (ACE).
WS Atkins, the engineering consultancy that designed the Burj Al Arab, said it was owed $39.7m that should have been paid in the first quarter by developers in the Middle East.
Evidence is also mounting that UAE companies who are not paying their customers are in “serious trouble”, said Gary Watts, head of the corporate commercial department at Dubai- based Al Tamimi – the largest law firm in the Middle East.
“It has become obvious that some people are tight with releasing cash, and other people are in serious trouble – they do not have the cash to release and they do not have the resources to meet their commitments,” he said.
Watts said that ‘an abrupt interruption of cash flowing around the system’ had put companies in the position of not being able to pay their contractors and consultants.
Monday, 25 May 2009
Rising number of credit card defaulters run from the UAE
From Thomson Reuters
--------------------------
Some UAE banks are seeing up to 2,500 customers leave the country every month without paying off their credit card bills, a number that could rise in June, a senior RAK Bank official said on Sunday.
RAK Bank business advisor David Martin said most of those leaving without settling their credit card bills were linked to the construction sector in Dubai, the hardest hit of the seven emirates that make up the United Arab Emirates federation.
"On our credit card portfolio, in common with other banks, we are seeing increasing numbers of 'skips' - that's people leaving the country without paying their bills," Martin said.
Martin said the bank's research indicated banks in the UAE have 1,500-2,500 customers leave every month over the past six months without paying what they owe on credit cards.
RAK Bank, which has around 20 percent market share in the country's credit card sector with around 300,000 customers, has seen around half that rate in the same period, Martin said.
"The instances of skips in our bank, according to our own intelligence, is 50 percent below our competitors," he said.
"Most of the skips are connected to the construction industry in Dubai. We don't see a lot of skips in Abu Dhabi or Sharjah."
Thousands of expatriates have lost their jobs in the Gulf trade and tourism hub of Dubai since the financial crisis triggered a real estate crash late last year that ended a six-year economic boom.
Although growth in the number of "skips" has begun to level off in the past two months, Martin said, banks in the UAE could face a new wave of customers leaving with their debts unpaid as expats who have lost their jobs may wait to the end of the school year to leave.
"We could see a resurgence of this at the end of June," he said.
RAK Bank recovers around a quarter of the debt that goes unpaid as a result of one of the customers leaving the country, Martin said. (Reuters)
--------------------------
Some UAE banks are seeing up to 2,500 customers leave the country every month without paying off their credit card bills, a number that could rise in June, a senior RAK Bank official said on Sunday.
RAK Bank business advisor David Martin said most of those leaving without settling their credit card bills were linked to the construction sector in Dubai, the hardest hit of the seven emirates that make up the United Arab Emirates federation.
"On our credit card portfolio, in common with other banks, we are seeing increasing numbers of 'skips' - that's people leaving the country without paying their bills," Martin said.
Martin said the bank's research indicated banks in the UAE have 1,500-2,500 customers leave every month over the past six months without paying what they owe on credit cards.
RAK Bank, which has around 20 percent market share in the country's credit card sector with around 300,000 customers, has seen around half that rate in the same period, Martin said.
"The instances of skips in our bank, according to our own intelligence, is 50 percent below our competitors," he said.
"Most of the skips are connected to the construction industry in Dubai. We don't see a lot of skips in Abu Dhabi or Sharjah."
Thousands of expatriates have lost their jobs in the Gulf trade and tourism hub of Dubai since the financial crisis triggered a real estate crash late last year that ended a six-year economic boom.
Although growth in the number of "skips" has begun to level off in the past two months, Martin said, banks in the UAE could face a new wave of customers leaving with their debts unpaid as expats who have lost their jobs may wait to the end of the school year to leave.
"We could see a resurgence of this at the end of June," he said.
RAK Bank recovers around a quarter of the debt that goes unpaid as a result of one of the customers leaving the country, Martin said. (Reuters)
Wednesday, 11 March 2009
Kuwait travel ban for expats with unpaid loans
From Arabian Business, 10 March '09
Kuwaiti ministers are drawing up plans to stop expatriates leaving without paying off their loans.
Expatriates living in Kuwait could be banned from travelling out of the country unless they can prove they have paid all their debts, it was reported on Tuesday.The new rule is part of plans being drawn up between the Ministry of Communications (MoC) and the Ministry of Interior, according to a senior official at the MoC in an interview with Kuwait daily Kuwait Times. The move comes in the wake of an Audit Bureau report that accused the MoC of negligence in collecting debts owed by a number of corporate companies and domestic customers.
Zakariya Mohammed Al Ansari, the head of the MoC’s accounting and commercial services department confirmed to the newspaper that the two ministries were working closely on plans that wold ensure expatriates did not leave the country without repaying their loans. But he rejected the bureau’s report findings that estimated debts exceeded KD120m ($408m), saying the sum was nearer to KD9m.The department had collected KD117m in unpaid debts in 2008 alone, as well as 98 percent of the amount owed to the ministry by local embassies, Al Ansari added.
[No doubt the UAE is looking at something similar thereby formalising what is already happening here ie companies informing the banks when a person is made redundant. The banks in turn are informing the immigration department who are then refusing exit visas. I've heard of a 22 year old who, when he arrived in Dubai a year or so ago, bought a car but has now been made redundant. He's done the right thing, tried to get another job, tried to sell the car both non-starters in the current economy. When he attempted to fly out of Dubai he was told at the airport that he couldn't leave the country until he "sorted it out". How he'll "sort it out" with no job and no income I have no idea.]
Kuwaiti ministers are drawing up plans to stop expatriates leaving without paying off their loans.
Expatriates living in Kuwait could be banned from travelling out of the country unless they can prove they have paid all their debts, it was reported on Tuesday.The new rule is part of plans being drawn up between the Ministry of Communications (MoC) and the Ministry of Interior, according to a senior official at the MoC in an interview with Kuwait daily Kuwait Times. The move comes in the wake of an Audit Bureau report that accused the MoC of negligence in collecting debts owed by a number of corporate companies and domestic customers.
Zakariya Mohammed Al Ansari, the head of the MoC’s accounting and commercial services department confirmed to the newspaper that the two ministries were working closely on plans that wold ensure expatriates did not leave the country without repaying their loans. But he rejected the bureau’s report findings that estimated debts exceeded KD120m ($408m), saying the sum was nearer to KD9m.The department had collected KD117m in unpaid debts in 2008 alone, as well as 98 percent of the amount owed to the ministry by local embassies, Al Ansari added.
[No doubt the UAE is looking at something similar thereby formalising what is already happening here ie companies informing the banks when a person is made redundant. The banks in turn are informing the immigration department who are then refusing exit visas. I've heard of a 22 year old who, when he arrived in Dubai a year or so ago, bought a car but has now been made redundant. He's done the right thing, tried to get another job, tried to sell the car both non-starters in the current economy. When he attempted to fly out of Dubai he was told at the airport that he couldn't leave the country until he "sorted it out". How he'll "sort it out" with no job and no income I have no idea.]
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