The Bloomberg report below indicates the severe situation which needs new blood injection in terms of key players in the business. It is a right move in the right direction to regain the confidence as well as to make a quantum leap out of the current doldrums.
I am fortunate to get to know some of these personalities during my previous attachments and they have of course contributed to Dubai's success to a certain level as heads of business empires.
Time to move on and to return to normalcy, even it may take some time while strengthening every level of support and delivery system.
And of course, about time to learn from the past, especially on the downturn part of the success story.
Nov. 22 (Bloomberg) -- Dubai ruler Sheikh Mohammed Bin Rashid Al Maktoum has consolidated his hold on the debt-laden emirate, downgrading powerful figures behind the city-state’s boom that turned to a bust.
Sheikh Mohammed on Nov. 20 sacked the governor of the Dubai International Financial Centre, Omar Bin Sulaiman, who had led efforts to transform Dubai into a Middle East finance hub. A day earlier, he dropped Mohammad al-Gergawi, Sultan Ahmed Bin Sulayem and Mohammed Ali Alabbar from the board of Dubai’s main holding company, the Investment Corporation of Dubai. The three were at the forefront of a construction drive that began in 2002 and collapsed last year after the global financial turmoil engulfed Dubai.
The moves herald greater consolidation of so-called Dubai Inc., the web of competing, state-owned companies that Sheikh Mohammed used to accelerate diversification of the second- largest member of the United Arab Emirates away from oil. Dubai is struggling under $80 billion of debt amassed in the process.
The replacement of the DIFC governor is part of efforts to improve the efficiency of government institutions and companies, and “consolidate the emirate’s growing importance as an international center for finance, business, trade, tourism and all services,” Mohammed Ibrahim Al Shaibani, director-general of the ruler’s court, said in an e-mailed statement on Nov. 20.
This needs to be accompanied by much greater transparency and better coordination between the various state-run companies, said Tristan Cooper, a Dubai-based Middle East sovereign analyst at Moody’s Investors Service.
“It’s difficult to read too much into the personnel changes at this stage, but it would be encouraging if it helped to improve coordination and information flow within Dubai’s large and disparate public sector,” Cooper said by e-mail.
Bin Sulayem is chairman of Dubai World, a state-run holding company that has about $59 billion of debt and other liabilities. It controls property developer Nakheel PJSC, which has had to cancel plans for a new waterfront development the size of Hong Kong Island. Nakheel has to repay a $3.52 billion bond maturing in December.
Al-Gergawi is chairman of Dubai Holding, which owns developers including Dubai Properties LLC, Sama Dubai LLC and Tatweer LLC. Tatweer has put on hold a project to build “Dubailand,” a Disneyland-style leisure park that would be three times the size of Manhattan. Alabbar is chairman of Emaar Properties PJSC, the largest developer in the U.A.E., which is building the world’s tallest tower.
The emirate will study the viability of projects more closely in the future, Sheikh Mohammed said Sept. 9. “We’ll be more careful now,” he said.
Dubai’s real-estate market was the worst affected by the global financial crisis. Home prices have tumbled about 50 percent from their peak, and may drop another 20 percent this year, Deutsche Bank AG said in June.
The actions of Dubai’s ruler may also be aimed at helping him shore up his position with regard to the wealthier neighboring emirate, Abu Dhabi, said Jean-Francois Seznec, a professor at Georgetown University’s Center for Contemporary Arab Studies in Washington.
Abu Dhabi, which has 90 percent of oil in the U.A.E., holder of the world’s sixth-largest crude reserves, bailed out it’s fellow emirate in February with a $10 billion Dubai bond issue subscribed entirely by the U.A.E. central bank. Dubai is seeking to raise another $10 billion, a significant portion from the federal government in Abu Dhabi.
Sheikh Mohammed is trying to salvage his business empire by merging assets, said Christopher Davidson, a professor at Durham University in the U.K. and author of the 2008 book “Dubai: The Vulnerability of Success.” “The ruler’s main government-backed companies are on the verge of bankruptcy and rapid centralization of these bits and pieces is needed to hold them above water,” he said by phone.
In June, Emaar said it was in talks to combine with Dubai Properties, Sama Dubai and Tatweer as it aims to control the supply of new buildings amid a glut of homes.
Alabbar shrugged off his removal from the board of the investment body. “As business goes on, all organizations restructure,” he said Nov. 20. Al-Gergawi didn’t pick up his mobile phone and Bin Sulaiman and Bin Sulayem didn’t respond to interview requests via their spokespeople.
Al-Tayer, Al Shaibani
Ahmed Humaid al-Tayer, the new governor of the DIFC, which is home to regional offices of banks including Goldman Sachs Group Inc. and Deutsche Bank AG, said yesterday he would pursue the same strategy as his predecessor. Al-Tayer is also chairman of Emirates NBD PJSC, the U.A.E.’s biggest bank by assets, and remains a member of the ICD board along with Al Shaibani, the head of the ruler’s court. The other four board members are Sheikh Mohammed, two of his sons and his uncle.
“They were given authority and access to capital and told to go out there and expand Dubai, they were given a license and latitude, and to that extent, they were obeying orders,” he said.