“Necessity is the mother of invention” is an old adage, and to keep afloat every other global crisis one must innovate to keep the ball rolling.
Look around you, and you will find setbacks – one after another right from the West to the EU to the Middle East. I wonder when it will strike the South East Asian Countries. Or has it actually?
Bad economic policies led by following bad economic practices, over whelming sky targeted vision that could never match, failure of the central bank to regulate credit limit, withering value created as a port, dwindling in the global economy….yes, I am talking of the Dubai Crisis.
In Fact this is just the beginning of a new end. Imagine with, oil reserves running dry, what would be the fate of the countries of the OPEC nations? How long they will survive with oil? There has to be a value created before the oil reserves run dry, and that is what the stalwarts of the Dubai World thought of before it plunged or nose-dived.
Although the intent was right, the execution was bad. Things were too fast and furious to be taken into proper consideration. Long debts became outstanding debts, outstanding debts became bad debts till the authorities of the Dubai World had to pull the trigger and say- “Look we cannot pay our creditors any debt…There is no more money around…”
Here is something that can be done to push cash reserves of Dubai :
- Lift the rates of crude oil per barrel. This would ensure that the stocks go out in proper prices and increase overall revenue. Again, this would mean a cartel.
- Introduce tax for permanent citizens only in the long run. This will go against the very nature of the country, but if you survive first, then only can you take your father’s name. Introducing tax for the foreigners would mean love labor lost. The investment in tourism and settlement would go sour.
- Promote tourism in Dubai and UAE in general. Make it a haven by completing theme parks and encourage tourism.
- Increase overall port tax marginally so that extra revenues are generated through shipping companies. Take care so that new shipping companies are not warded off.
- In future, hedge risk by taking a loan against a loan for a new infrastructure. In case you cannot pay the loan, insurance provides the outstanding debt.
- Ask Abu Dhabi for help. Lending 10 million USD to Dubai is not enough, support in restructuring financial debts and immature Islamic finance is required.
- This is the time when foreign conglomerates for oil should be opened for bidding in Dubai. High bidding prices for drilling and exporting crude oil for sometimes should actually help to mitigate the immediate crisis.
- Dubai Inc. should create more games and sports of extreme kind and promote it in the region for tourism and benefits.
- “The world’s shopping Paradise” – Dubai should encourage free shopping at low rates even though there is marginal loss in importing as a long term destination. Dubai Inc. should find the other unique values, and long term strategy to make it a favorite destination.
- If a part of the money of the residents living in UAE are donated for the cause of Dubai, the immediate debt can be warded off. I know that big brother Abu has the capacity to bail out Dubai World, but this calls for a nation-wide conglomeration.
Hope this helps us stop the trigger of downfall of nascent recovery.