British contractors and suppliers in Dubai that are owed money "need to be paid", the British trade minister, Lord Davies, said during a visit to Abu Dhabi. Several reports have emerged in recent months of foreign companies working in Dubai's flagging construction industry being asked to accept only partial payment for work that has been completed. In other cases, a range of consultants, suppliers and other firms lower down the property development ladder are struggling to stay in business as they wait to be paid.
Earlier this year New Civil Engineer, a UK trade journal, cited an analyst who estimated that British consultants in Dubai alone were owed Dh2.2 billion (US$599m). "I think when you have a fast-expanding economy as Dubai was and then the world slows down, inevitably it takes a little bit of time to work out some of those issues, so yes, those companies, some of them need to be paid," Lord Davies said.
"I think it's an important issue, so I don't want to de-emphasise it. Neither do I want to make it the big be-all and end-all." While acknowledging the severity of the problem, Lord Davies described it as a cyclical symptom of the global financial crisis that ultimately would heal itself. Long-term economic prospects for Dubai and the rest of the Emirates were bright, he said. "It's an international phenomenon, it's not just a Dubai phenomenon. People are owed money and they have to be paid. But on the other hand, let's not move from that to saying Dubai is somehow finished. That's just not the case.
"I think in the UK these images flash that all the expats are leaving and business is dying. I just don't think it's true. Is there a correction going on? Absolutely. Is it a painful one? Yes. But has Dubai got great medium- to long-term prospects? Yes, absolutely." Lord Davies's visit to Abu Dhabi follows months of increased diplomatic activity aimed at stoking cross-investment between the UK and UAE. The UK prime minister, Gordon Brown, visited last November, and Lord Mandelson, the business minister, visited in April.
On Thursday, Lord Davies met Sheikha Lubna Al Qasimi, the Minister of Foreign Trade, as well as officials of the Abu Dhabi Investment Authority, the sovereign wealth fund, and Mubadala Development, the Abu Dhabi Government's strategic investment arm. He also visited the carbon-neutral Masdar City project and the airport extension nearby. The visit was Lord Davies's first to the UAE since Mr Brown appointed him minister for trade promotion and investment under Lord Mandelson in January. He is a former chairman and chief executive of Standard Chartered Bank, a job that saw him visiting the region frequently.
While Lord Davies emphasised the long-standing commercial links between the UAE and Britain - exports from the UK last year were worth £3.7bn (Dh22.2bn), a 34 per cent increase on the year before, and imports were worth nearly £1.3bn - he said more could be done to enhance co-operation between the two nations. Renewable energy and low-carbon technologies would be the centrepiece of efforts to bring in more British business, he said. Masdar City would require services and expertise that British firms could supply, for example, and Abu Dhabi's selection as the location of the headquarters of the International Renewable Energy Agency last week only added to its importance as a centre for renewables.
"If you look at what's happening with the airport, if you look at what's happening with the development of renewables and the low-carbon industry generally, if you look at the way this place is changing, the need for creative industries and the way that they've also developed technology and science, that plays to our strengths as the British economy," he said. Small British businesses in particular could stand to increase their presence in the UAE, inking partnerships in industries ranging from construction to renewable energy, Lord Davies said. These businesses often did not consider coming to the UAE because of a lack of awareness about the pace of development and the scale of emerging business opportunities.
"This is very exciting stuff," he said. "Britain is very, very determined at every level, [at the] political and business levels, to develop a closer strategic tie in Abu Dhabi." afitch@thenational.ae
