Non-performing loans are expected to swell almost 50 per cent to nearly Dh65 billion (US$17.69bn) this year as the global economic downturn and sagging property prices take a further toll on the country’s lenders.
The rise is likely to force lenders to set aside more reserves to protect themselves.
“Non-performing loans are already at a reasonable level,” Sultan Nasser al Suwaidi, the Central Bank Governor, said yesterday.
“If you take into account write-offs, non-performing loans would be higher.”…SOURCE
Non-performing loans were expected to rise to 6.5 per cent of bank lending this year from 4.4 per cent last year, he said. The total value of loans and advances in the UAE is Dh1 trillion, according to Central Bank statistics.
Banks’ loan books have been adversely affected by exposure to a severe correction in the country’s property sector, with estimated price declines of up to 50 per cent in Dubai and 40 per cent in Abu Dhabi.
Competition in the UAE tea market is intensifying as a number of new companies and brands enter the fray.
The newcomers are challenging the dominance of Lipton brand and are following in the footsteps of successful newcomer Alokozay.
Alokozay set out to break Lipton’s near-monopoly by launching special offers and promotions.
“The tea market in the UAE has been dominated by Lipton for several decades and the brand accounts for 80 per cent of local sales,” said an industry source.
“After Alokozay entered the market at least eight new companies and brands, including Good Morning Tea, Golden Tea, Neltea, High Tea, East Tea, Lovely Tea, Tasty Tea and Golden Leaf, have started to offer packets at highly discounted rates.
Most of these companies are selling tea at less than the rate charged by the established manufacturers such as Lipton and Tata Tea.”
Packets of Good Morning Tea, which was launched by MCG General Trading, part of the Carim Group, are available at up to Dh2.5 less than the corresponding Lipton brands and other market players are following the same strategy.
Several trading firms and business groups have diversified into tea as they believe the food industry is immune to the effects of the economic downturn.
As part of their initial offers the new brands are offering consumers gold coins, mobile phones, dhow dinner trips, mugs, T-shirts, air tickets and other gifts.
A source from one of the new companies said: “The annual demand for tea in the UAE is estimated to be above 55,000 tonnes and the market is controlled mainly by Lipton. Our target is to get a market share of at least one per cent within a year. Most of the new players are keen to get a minor market share.
“We are targeting a Dh12 million turnover within two years,” the source said…SOURCE
04/06/2009 10:41 PM | By Shakir Husain, Staff Reporter
Dubai: Defying the economic downturn, Dubai on Monday launched a new low-cost airline, flydubai, which will start flights in June with Beirut and Amman as initial destinations.
The move to launch flydubai as scheduled is expected to boost Dubai’s tourism sector and help residents travel at low cost. The airline will also bolster the emirate’s plans to become a hub for international air traffic as it begins to fly to more regional destinations…
04/02/2009 09:04 AM | By Shakir Husain, Staff Reporter
Dubai: Car sales nationwide fell more than 40 per cent in January and February amid tightening bank conditions for automobile loans and low consumer confidence, the head of a leading car dealership said on Thursday.
If banks continue to impose strict criteria for car loans, sales are unlikely to improve anytime soon, said Michel Ayat, chief executive officer of Arabian Automobiles Company (AAC), the Nissan, Infiniti and Renault dealer in Dubai and the Northern Emirates.
“Indications are that there was a drop of 40 per cent to 45 per cent in sales as a whole in the UAE in the first two months. The numbers for March are still not available,” he told Gulf News, citing data from leading global car manufacturers with a strong local presence.
Al Futtaim Automotive, which represents several global brands, including Toyota, in the UAE, said sales have fallen back to the 2007 level.
“The global crisis has brought sales down from the unusual peaks of 2008 to 2007 levels, but we are optimistic the UAE’s resilience will see auto sales bounce back significantly,” an Al Futtaim spokesperson said and noted that there was “a positive growth in both enquiries and car sales” for new and old vehicles between January and March.
More than 80 per cent of individual car purchases locally are through bank financing, and potential buyers are discovering that conditions of loan eligibility have become stricter in the economic downturn…
The city will not become a better place to live until all sections of society address its unhealthy market atmosphere, the emirate’s police chief told a discussion group yesterday.
Lt Gen Dahi Khalfan Tamim said at the meeting, which included representatives of property, hotel and hospitality companies, that the community needed to work together to improve the quality of life for all.
“We are in the midst of an economic crisis and everyone knows its impacts,” he told the group at police headquarters, called together to discuss problems and solutions for the city.
“We have started to sense it with, for example, increasing rent prices which have created a serious source of worry for many people.
“For this, we felt the need to launch a campaign, an initiative, which will aim to have the benefit of the individual and the country at its core. When people spend all their salary to eat, drink, pay rent and educate their kids without having any savings, that is not right.
“The aim is to make Dubai a good place to live in, visit and work in and to give security to as many jobs as possible that have been affected.
“There should also be less pressure put on businesses so that they are not forced to let people go.”
Gen Tamim suggested that some business owners, driven by greed, had contributed to the economic downturn.
“What is a reasonable percentage of profit which should be gained by a trader? There has been a big case of exploitation from people and the phenomenon has become totally unnatural.
“The leap in rent prices involves not just new developments, but also old ones. This situation existed before the crisis but I have noticed that it continued even after the crisis.
“Why is it that a one-bedroom flat bought for Dh450,000 (US$122,514) needs to be sold for Dh1 million? This is a big thing. Why is Dh1m not a good enough profit for some?”
Gen Tamim said that, to create a healthier market atmosphere in the city, prices should be affordable to the masses, which would also lead to improved tourism.
“To secure a lasting trade industry, prices should be affordable and reasonable,” he said. “Dubai has many advantages that many other GCC or Arab countries do not have.
“However, under these circumstances we should work in a different manner and lowering hotel prices is key, as the entire market is linked to tourism.
“The tourist who arrives and who needs accommodation is also the one who would be renting a car and buying from shops. It’s a cycle and they are all linked.”
Sheikh Khalid bin Zayed bin Saqr Al Nahyan, chairman of the executive committee of the Dubai Economic Council, said there should be a balance between prices and services so that most members of society could benefit, not just the rich…SOURCE
03/02/2009 09:04 AM | By Wafa Issa, Staff Reporter
Dubai: The Ministry of Labour is reviewing the six-month work ban, enforced when a person cancels work permit, to facilitate labour movements within the country, an official said.
Abdul Razzaq Qambar, training officer at the ministry’s inspection department, said during a seminar on wages, aimed at raising awareness on workers’ rights, that a review of the six-month ban was on the table.
“The ministry is studying different means to facilitate labour movement within the country and the reviewing of the ban is part of this,” said Qambar.
However, no time frame was given.
Jasem Al Banna, head of the legal affairs department at the ministry, said during the seminar that people had the right to progress in their career and they should not be prevented from doing so.
Currently, the ministry enforces a six-month ban on working in the country if the worker who cancels his permit does not have a no-objection certificate from his employer.
The ban does not apply if the person has been working in the company for more than three years. The seminar outlined the six major violations committed by companies hit by the global economic downturn.
During the past four months, the ministry has seen an increase in cases where employees have not been paid in more than a month, cases where salaries have been reduced without workers’ consent…
Stories like this one in Gulf News merely fuel an already suffering business climate. I am for equality in all laws regarding redundancy and firing. In fact, if you don’t give businesses that protection they will be extremely reluctant to hire UAE nationals. This will hit a population that is already stigmatized by much of the international business community. If there is a possibility of litigation every time HR raises a finger in your firm, you simply won’t bother.
I support our Emirati students and friends seeking employment. However, punishing businesses should not be the way forward. Equality of labor laws and ‘real’ affirmative action are…
02/17/2009 10:41 PM | By Wafa Issa, Staff Reporter
Dubai: A group of Emiratis made redundant last week by “global economic downturn” is considering the filing of a lawsuit against their former employer for “arbitrary termination” if the Ministry of Labour fails to resolve their issue.
Last week, about 20 Emiratis filed a complaint with the Ministry against the Al Futtaim Group for “arbitrary termination” and demanded reinstatement.
Ahmad Al Naqbi, one of the Emiratis, who lost his job, told Gulf News, that they are in talks with a law firm to prepare a lawsuit against the Group.
“We will file a case to demand compensation for the arbitrary termination in addition to compensation for moral and psychological damages, but we will wait until the Ministry gives us a formal response to our case before we go ahead with the case,” said Al Naqbi…SOURCE
Hmmmm. Seems like Dubai authorities are getting a little defensive on the PR front concerning the economic downturn. The facts remain that ’several’ sources have reported the car story over the last 6 months, not just the Times article. Additionally, the facts are scary enough about the downturn in the UAE. Do you really need rumor at this point? I think we are going to see more of this type of reaction as Dubai struggles to cope with the hard reality of the economics of now.
02/07/2009 08:24 AM | By Siham Al Najami, Staff Reporter
Dubai: Lieutenant-General Dhahi Khalfan Tamim, Chief of Dubai Police, has strongly denied a rumour that many people are abandoning their cars at Dubai International Airport amid the global economic crisis.
The report was published in the Arabic electronic newspaper Elaph.com.
During an urgent press conference in Dubai, Lieutant-General Dhahi denied the report published on Thursday, which based its information on The Times of London which claimed there were 3,000 abandoned cars at Dubai International Airport.
“I swear by the Lord that Benyamin [writer of the article] lied even as he based his report on The Times article,” Lieutant-General Dhahi said at the beginning of the press conference.
The reporter contributed to spreading a rumour that many people are greedy, envious and resentful about the economic growth of Dubai, he said.
“A reporter should always verify the facts of a report. Did the reporter come back to us or request a comment and we said ‘No’ to him?! Credibility, objectivity and accountability are essential in journalism and this report lacked credibility.
“Be assured that if we had at least 50 or 25 or 15 cars abandoned at the airport, I would have told you about it. There have only been 11 cars left at the airport since January 1, 2008, which is before the global economic crisis,” he said.
“False statements on the market collapsing, as stated in the article, are nothing but incorrect rumours. If there is any disruption we will inform the media about it,” said Lieutant-General Dhahi.
“It is not even worth a story to write about the abandoning of 11 cars in a 6,000 car parking lot,” he stated.
“We are not denying the presence of the global financial crisis, but what’s been attributed to Dubai is completely false whether it is locally or internationally published. There is a fierce campaign against the reputation of the blooming city of Dubai.
I have clear and direct instructions from His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, to be completely honest with the media.”
“The country is still witnessing a smooth flow in its economy. The title of the article creates an atmosphere of fear, mistrust, and contributes to spreading a rumour of a rumour. We have to put a limit to this, we are aware of the reports published on this but now it has gotten out of proportion,” he said.
The aftershocks of the global financial meltdown could shrink the GCC labour market by up to 30 per cent, according to an expert.
Dr Baqer Al Najjar, Professor of Sociology at the University of Bahrain, who was attending the 14th annual three-day conference on “Human Resources and Development in the Arabian Gulf”, told Khaleej Times on the sidelines of the conference that the labour market in the GCC as a whole could see up to 30 per cent of its workers laid off, with the construction sector hardest hit.
“The job market in the Gulf countries is badly affected in real estate, construction, service, retail and wholesale sectors. The construction sector could reduce workers by up to 40 per cent due to the downturn,” Al Najjar said.
His opinion was echoed by other scholars at the conference who were unanimous in the view that the situation would take at least three years to stabilise…SOURCE
Supermarkets and traders in Dubai say food prices have dropped significantly because of the global economic downturn and falling oil prices.
Perishable items such as fruit and vegetables were up to 30 per cent cheaper, and some traders say shoppers will benefit further during the next few months as prices continue to ease.
“The prices of food items have declined sharply since the past two months,” said Nandkumar, communications manager of Emke Group that runs the Lulu supermarket chain.
“The global economic crunch along with falling oil prices are the causes of this trend,” he said.
Khaleej Times first reported in December that officials expected prices of basic food items to drop by 25 per cent in January.
Dr. Hashim Al Nuwaimi, Director of the Consumer Protection Department in the Ministry of Economy, had said the department had reached an agreement with retailers to reduce prices in line with lower oil prices.
Faisal Al Arshi, deputy director of the Abu Dhabi Cooperative Society, told Khaleej Times then that they were expecting a price drop of at least 30 per cent.
Mohammed Haji, the owner of Family Supermarket chain in Dubai, said on Tuesday prices had started fallingsince December and the trend was expected to continue.
“The prices of all perishable food stuffs, including rice, vegetables and fruits have been falling due to the plummeting oil prices,” he said.
“The current scenario has forced all to spend only for the essential items. The stocks are getting stuck due to this,” he said.
Shakeer C., divisional manager of fruit and vegetable wholesaler Jaleel Trading, said the prices of fruits and vegetables had dropped by almost 30 per cent.“A kilo of U.S. apples, the cost of which was Dh3.65 in December, now rests at Dh2.25. Grape prices have fallen from Dh8.30 to Dh6.65. Similarly all the vegetable prices have also declined,” he said. “The fall in oil prices reduced the transportation costs and the credit crunch made people spend less, causing the price decline,” he said.
Dubai residents, used to climbing prices, welcomed the trend. “It’s really a relief. The prices of food items were high in Dubai and everybody was worried about the high inflation,” said Maria Liyasova, a Dubai resident. “The fall in prices in food items will help to organise the family budget…SOURCE
DUBAI – More than 80 vehicles found abandoned at the Dubai International Airport recently may have been left by people fleeing the country, apparently because they couldn’t repay loans after losing their jobs, according to police officials.
The Director of the General Department of Airport Security, Mohammed bin Thani, said 60 cars were seized recently.
Another 22 were seized by Dubai Police when they were found abandoned in a prohibited area in the airport, according to Colonel Saif Mohair Al Mazroui, Deputy Director of Traffic Department.
Col Saif said police noted the increase in the number of abandoned cars in the airport after the recent lay-offs by companies due to the economic downturn. “Police found that owners of some of the cars had dumped them in the airport parking lots after they failed to pay the loan instalments, and travelled to their countries,” he said.
However, Bin Thani said the evidence that the cars had been abandoned by loan defaulters was still not conclusive. He said the airport authorities had contacted banks and financial institutions to check whether the seized cars were purchased on loans…SOURCE
With just a fortnight to go, the mother of all shopping festivals — the Dubai Shopping Festival 2009 (DSF) — is coming back to town.
Scheduled to begin on January 15, the 14th edition of the DSF is set to open at a time of global financial turmoil, but the organisers say DSF 2009 will deliver.
Dubai looks her best during the DSF when every nook and corner of the city is lit up with over a million lights and colourful decorations.
Over 3.2 million people visited DSF 2008 with the expenditure touching Dh10 billion.
The participating retail outlets of the DSF and the various shopping malls are expecting a windfall. With the December sale already in session at the various retail outlets across the city, products are being sold at discounts of over 70 per cent.
Though they have not yet announced the promotional offers for the season, retail outlets have pledged their entire support to the DSFO (Dubai Shopping Festival Office) by lining up attractive discounts and raffle draws to lure the crowds into the shopping malls and retail outlets.
Shaikh Ahmed bin Saeed Al Maktoum, Chairman of Dubai Airports and Chairman of Dubai Shopping Festival Office (DSFO) Supreme Committee said the UAE economy is robust enough to ride out the current difficulties and continue to achieve good economic growth rates.
“There is a tireless endeavour to tackle the economic turmoil and hold events that can contribute to reviving several economic sectors, primarily retail trade and tourism,” he said.
“This year’s edition of DSF comes at a time when the entire world is experiencing an acute period of economic crisis with a number of leading world economies having drifted into economic recession.”
He stressed on the importance of strong partnership between the private and public sectors…SOURCE
12/26/2008 11:39 PM | By Cleofe Maceda, Staff Writer
As the economic downturn crimps demand for new apartments, goods and services in the UAE and other GCC countries, the workers who either create or sell them are losing their jobs by the hundreds.
Layoffs have come to the oil-rich Gulf. In recent weeks, companies in the UAE alone, such as Nakheel, Damac, Omniyat and Al Shafar General Contracting, announced more than 1,000 job losses.
While those who are still on the payroll are lucky, prospects of a rise in pay next year now look bleak.
Many companies in the GCC are now rationalising workers’ salaries as a cost-cutting solution. Recruitment plans have been revised, while salaries for newly hired and redundant staff are reportedly being slashed in lieu of layoffs.
Those mostly affected are workers in the investment, banking and real estate sectors.
Advantage Consulting, a management consulting firm, recently surveyed 500 organisations in the UAE, Bahrain, Kuwait, Oman, Qatar and Saudi Arabia, to assess the prevailing economic scenario in the GCC countries.
In its “Global Financial Crisis and GCC Salary Trends Report,” Advantage Consulting revealed that workers in the region will continue to get salary increases, but companies would probably no longer be as generous as they had been in the past few years.
Tuition fee increases for the next academic year are expected to be reviewed due to the global financial meltdown that has had repercussions in the UAE.
However, education officials may not be keen on a fee hike due to the economic downturn. The officials said any fee hike would be nominal.
A number of private schools also anticipate large student withdrawals when schools close for the summer with many expatriates planning to be back in their home countries.
“We are committed to the new by-laws we established recently. We are, however, open to reviewing them. Fees would be determined by supply and demand,” said Rashid Al Nuaimi, Director General at the Ministry of Education, which set fee increases to be between 10 and 30 per cent.
“We are looking at new regulations, which will be announced in January or may be earlier,” said Mohammed Darwish, Chief of Licensing and Partner Relations, from Knowledge and Human Development Authority (KHDA) that capped the maximum allowable rise at 16 per cent for the academic years 2007 and 2008. Though the emirate’s education authorities declined to disclose further information, education sources indicated the recession would be a major factor that would determine increases, if any at all.
Officials are working on a fee structure and in fact it will be announced earlier than usual. Given the new global circumstances, the recession will be kept in mind,” said a source close to the authority. Another source even suggested the authority may not announce any increases for the new academic year.
They also said with the emirate announcing regulations as early as January instead of the customary March was a further indication of their acknowledgement of the crisis.
Schools, on the other hand, have already received requests for withdrawals while others anticipate them in early 2009. “There have been a few cases of families who have withdrawn their children from a few of our schools, as they plan to move on from Dubai due to job transfers and redundancies; however the number of cases has been lower than expected,” said Clive Pierrepont, Director of Marketing and Communications at Taaleem schools…SOURCE
Employees sacked by government or private employers and who fail to repay bank loans, can approach a competent court to declare their bankruptcy.
Al Awadi Mohammed Al Awadi, legal consultant of the Abu Dhabi Police, told Khaleej Times: “In such cases, the judge will examine each case individually and defer payment of financial obligations until the defaulter surpasses the financial crisis or joins another employer.”
However, he said, the court will not issue a verdict writing off these debts.
The defaulter can depart the country if the lending bank does not demand the court for a ‘Travel Ban’, he said adding, “Should the person flee the country, court procedures will go on until a final verdict is reached.
“In such circumstances, the UAE can enforce the verdict if it has an extradition or ‘judicial mutual cooperation’ agreement with the country of the defaulter.”
With the expats making up nearly 90 per cent of the private sector workforce, the banks are concerned about a rise in defaults.
The total value of personal loans, issued by UAE banks, stood at Dh54 billion in the first half of this year.
Banks had provided clients for automobiles, housing, education and against credit cards.
Travel Ban
Banks have a potent weapon, which allows them to get a ‘Travel Ban’ imposed on individuals who want to slip out of the country without clearing their financial obligations.
“We are not worried about the situation emerging from the negative fallout of the economic downturn, with hundreds of employees being laid off by companies in distress in Dubai,” said a senior banker, while speaking on the condition of anonymity.
Loans were generally issued without collateral or guarantees.
The banks, however, obtained the necessary securities like letters from the employers and advance cheques. Car loans were granted to people who had credit worthiness and a clean record.
If fired from the job, the person cannot get the visa cancelled until he/she gets a clearance from the bank, which would put a ‘Travel Ban’ in case of a default.
Amro Abel Hadi, an expat, who was terminated from his job a few days back was working with an international contracting company in Dubai.
“I have worked here for three years. I never expected the situation would be like this,” he said.
“Last year, I took about Dh150,000 to buy a small flat in my home country and everything was ok. However, now after the termination I don’t know what I have to do because I have just a month to leave the country and most of the contracting companies have decided to reduce the number of employees including engineers,” he added.
Haythem Ahmed, who is now jobless, had resigned from a local bank in the capital to join a leading property company. However, he was shocked to know that he was terminated on the first day of his new job along with a number of others…SOURCE
Scheduled to begin on January 15, the 14th edition of the DSF is set to open at a time of global financial turmoil, but the organisers say DSF 2009 will deliver. 
