8b6476f94d868210VgnVCM100000e56411acRCRDapproved/thenational/Articles/Migration/2009-Q3Bad debt is bad news for us all7b6476f94d868210VgnVCM100000e56411ac____Bad debt is bad news for us allWhen a traveller is detained by immigration officials at the airport for failing to pay a Dh13 phone bill, as happened to a Syrian businessman in Abu Dhabi a few years ago, then something is clearly awry with the system of checks and balances that should regulate the personal finance business.<p>When a traveller is detained by immigration officials at the airport for failing to pay a Dh13 phone bill, as happened to a Syrian businessman in Abu Dhabi a few years ago, then something is clearly awry with the system of checks and balances that should regulate the personal finance business.
As we report today, the Dubai government hopes to eliminate such incidents with a new system that will allow individuals leaving the country to pay court-ordered bills and fines at the airport. This would streamline the current process, which dictates that an individual must report to the authority issuing the bill before leaving the country. Failure to do so means that the courts can freeze an individual's assets. The new system, which is still undergoing feasibility studies, will be implemented by the Dubai Public Prosecution and will be applied to all entry and exit points in the country. It will allow airports to work in tandem with utility companies and police departments to reduce the number of individuals detained over petty sums, and create an incentive for people to pay bills in good time.</p>
<p>This is a welcome step in the right direction, but it would be fair to say that it addresses only a small part of a much greater problem: that of borrowers who run up unsustainable amounts of debt, and then try to leave the country without paying. The issue has become particularly acute during the current recession, and it is exacerbated by the absence of any central body to assess the credit history of potential borrowers. When financial institutions are unable to assess who they are lending to, and to what degree such borrowers are likely to default on payment, they are effectively flying blind.</p>
<p>Lenders need access to this information at a national, regional and international level. With a draft law currently awaiting approval in the Supreme Council for a mandatory credit information company, there is no better time to create a national credit bureau: perhaps by giving an official federal mandate to Emcredit, the private credit bureau of Dubai that operates throughout the Emirates. Large debts from bad credit are damaging - not Dh13 bills from unused phone lines.</p>