Can dubai's debt be eating away its successes?
Debt-laden government related enterprises (GREs) in Dubai can affect business confidence in the region, according to Michael Belindo, vice president of World Confederation of Business (World COB).
“It (debt) will not restrain business in the region as debts are a part of a business, but it will definitely affect the confidence of the firms,” said Belindo.
In a recent report, the International Monetary Fund estimated that Dubai’s total debt stands at $142 billion, or around 102 per cent of its GDP, with $35 billion of that amount in government and government-guaranteed debt.
But despite Dubai’s debt burden, Belindo said that the emirate and other local markets are unique due to the high level of growth seen in the region.
“Most markets in the Gulf coast are bringing more international opportunities for the rest of the world,” he said.
“But the UAE and Dubai have a high level of diversity in their marketplace as compared to the rest of the Gulf markets.”
A Department of Economic Development (DED) business confidence survey, conducted earlier this year, found that 83 per cent of businesses in Dubai expect an increase or no change in sales volumes in the third quarter of 2013.
Meanwhile another quarterly survey by Dubai Chamber of Commerce and Industry found that 48 per cent of business leaders expected economic conditions to improve in the upcoming quarter. The optimism among business leaders was attributed to increased employment and improved access to credit and financing facilities.
Belindo added that the country’s tax-free policies are definitely an economic advantage for businesses looking to set up in the UAE.
He said that World COB, an international organisation that facilitates the growth of businesses around the world by providing them training in various facets, has also seen a rise in membership from the Middle East.
“We started four years ago with 100 members in the region but now we have expanded to 100 more,” said Belindo.
“The challenges that businesses face have already been encountered by the region in last four years. The near future will be filled with opportunities.”
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