Why Dubai Must Be Saved

One look at the newspaper and the worst is confirmed

. The Dubai Government has officially stated that it will not bail out Dubai World from a US$60 billion debt repayment schedule. This means that the ports and shipping related authority is left on its own to figure out how to restructure the debt repayments to the satisfaction of creditors and other concerned parties.

So whats the worst that can happen? Dubai World could try to sell off its assets to raise money to pay off some of the debt, and even ask the creditors for a further moratorium on the balance to be repaid. At the worst if it is not successful, the company could go bankrupt. While this is not entirely unheard of in a recession, as has happened to the banking and mortgage companies in the USA, the problem here is that it would reflect badly on the Dubai Government. Eyebrows will undoubtedly be raised if it is allowed to happen. The truth is that the Dubai Government has stretched itself to the limit on the path of development and is hard pressed to come up with a workable solution.

So it is left to Dubai World alone to find a way out of its present predicament. Notwithstanding that it has been backed by the Government in the past, this time the Dubai Government refused to come to its aid. Whatever the outcome, the management of Dubai World will learn some very tough lessons as they pass through this ordeal. And so they should. Financial discipline, realistic estimates and a less luxurious lifestyle are some of the lessons to which its executives need to condition themselves.

To my mind, the market has over-reacted to this recent event. Dubai World has not in effect defaulted on the loan. Maybe its own staff or a group of experts such as Deloitte can work out something that will help Dubai World tide over the present time. Staff at this ports authority will need to work hard and make some sacrifices. Some heads might roll without a doubt. But in the end the company and Dubai would be saved.

The mainstays of the Dubai economy, the Dubai Property market, the splendid Dubai Marina property and even furnished apartments Dubai all stand to gain from a resurgence of Dubais economy. Similar is the case with the more exclusive Dubai Properties, the Dubai Hotel Apartments and even the Dubai apartments for rent.

The diehards are convinced that if the present crisis is successfully averted, Dubai will bounce back. Employment will increase and the economy will flourish once again.

by: Mccain

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