$10bn aid funds to target Dubai SWF firms
Dubai, March 24, 2009
Funds from an emergency $10 billion rescue plan will target Dubai World, Dubai Holding and domestic firms in the emirate's sovereign wealth fund's portfolio, Dubai's finance department head said on Tuesday.
A five-man fiscal committee, headed by Emirates airline chairman and local power broker Sheikh Ahmed bin Saaed Al-Maktoum, was re-established a month ago to assess the companies' requirements and decide how the funds would be used, Nasser Al-Shaikh told Reuters in an interview on Tuesday.
"We will not wait to support the companies, there are urgent requirements that need to be dealt with quickly," he said.
"There is no free lunch; we will be helping companies on commercial terms," he quipped.
Shaikh said the funds would begin flowing in the next few weeks and said non-bank financial advisors would help allocate the financing to avoid "conflict of interests."
Dubai launched the $10 billion bailout plan in February, paid for by bond purchases from the United Arab Emirates central bank in a move lauded by investors for restoring confidence in the former boom town, hit hard by the financial crisis.
Dubai World includes real estate unit Nakheel, developer of palm-shaped manmade islands, and port operator DP World, while Dubai Holding, an investor in Sony and EADS, is owned by the ruler of the emirate.
Dubai property prices have been under pressure since late last year, when the global financial crisis and a slump in oil prices ended an economic boom in the Gulf region.
Hundreds of billions of dollars of expansion projects have since been cancelled in the UAE, Dubai companies have laid off thousands of employees and UAE banks have been loath to extend new mortgage loans.
Local banks, including Islamic institutions, have also submitted proposals to the government to provide assistance to small and medium enterprises, Shaikh said.
"For us it's like driving a car with poor visibility: We can only see 10 to 15 meters ahead," he said. "We will have to revisit our plans and stay focused on the short-term challenges."
Emaar Properties, the largest listed UAE property developer, has not held discussions with the government as it "believes it can handle it (the situation)."
The government is also set to appoint an international PR firm as part of its crisis management efforts and plans to collate all Dubai's economic data on the web.
"We are working on improving the economic data," Shaikh said. "There are different reasons for rumours in Dubai but once the information is out there it will kill them."-Reuters
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