Dubai orders state firms to hand over surplus
Dubai, December 17, 2009
Dubai's ruler on Thursday issued a law ordering government-linked companies to transfer their surplus revenues to the emirate's treasury, and to improve transparency and control of public spending.
Dubai received a surprise $10 billion bailout from neighbouring Abu Dhabi this week to help its flagship company, Dubai World meet its debt obligations and stave off a bond default by Dubai World unit Nakheel.
'The law requires government departments that enjoy fiscal independence as well as government-related companies to transfer surplus revenues to the public treasury as public revenues,' the decree from Sheikh Mohammed bin Rashid al-Maktoum said.
The new law allows the companies re-invest profits and revenue surplus before transferring them to the public treasury, with the approval of the Supreme Fiscal Committee, in consultation with Investment Corporation of Dubai, which oversees the emirate's investment portfolio.
Government departments must also transfer all revenues to the treasury, the decree ordered.
Dubai, famous for its man-made islands in the shape of palms and other lavish spending projects, rocked global markets on Nov. 25 with a request for a standstill agreement on $26 billion in debt linked to Dubai World and its two main property units, Nakheel and Limitless World.
The emirate, which suffered a public relations black eye when it announced the standstill just before an extended Islamic holiday break, has announced a slew of initiatives aimed at boosting transparency.
It said earlier this week it would implement immediately an insolvency law modelled on US and British practices in the event Dubai World needs to seek protection from its creditors. Dubai's ruler also created a tribunal, headed by three international judges, to oversee any disputes between Dubai World and its creditors.
The new law announced on Thursday also aims to regulate government departments' public spending 'and control government revenues (and) provide an accurate database for revenues and expenditures.'
Meanwhile, top Dubai officials - the heads of the Supreme Fiscal Committee and ICD - were due in New York on Thursday in an effort to rebuild confidence in the Gulf emirate's finances after a stop in London the day before.-Reuters