Dubai 2015 strategy under review

DUBAI // The economic component of the Dubai Strategic Plan 2015 is being revised to stabilise the emirate's financial system and safeguard jobs, a chief government economist said yesterday. In particular, the rule that expatriates must leave the emirate within 30 days of being dismissed may be changed. Dr Raed Safadi, the director of the strategic planning and policy section of the Department of Economic Development, said that "every single policy was being reviewed and scrutinised right now". "The economic pillar of Dubai's Strategic Plan is being revised otherwise we'd be in denial," Dr Safadi said yesterday. "We need to trace growth strategically and assess labour, capital and all the issues associated with the economic fundamentals of Dubai." When the plan was announced in early 2007, its focus was on growth of the emirate's non-oil sectors, while taking into account infrastructure, social and economic development, land, the environment and security. Dr Safadi said protecting jobs to assist Dubai's future growth was of paramount concern to the Government, and the rule stipulating that foreign workers who lost their jobs have to leave within 30 days was under review. Thousands of jobs have been lost across the property, construction and banking sectors since the global financial crisis began to his the economy. "Growth will not come back unless the financial system is stabilised ... and jobs are created ... our mind is focused on the job market and safeguarding that," Dr Safadi said. Details on how funds from the US$10 billion (Dh36.73bn) sovereign bond would be dispersed to Dubai government-related companies would be announced in two weeks, he said. The bond is part of a $20bn programme, $10bn of which has been underwritten by the Central Bank, to enable firms to meet their financing obligations. "For the short-term, $20bn will do the trick, but if Dubai needs more, we have more," Dr Safadi said. In February, Nasser al Shaikh, the director general of the Dubai Department of Finance, said that among the considerations of the revised economic plan was a stimulus package for small and medium-sized companies. "It's a new environment and we'll take certain steps to see how we can work in today's environment," Mr al Shaikh said. The revised plan was unlikely to restrict Dubai's open-market environment, which has driven growth since the 1980s, and would strive to limit inflation that hit about 12.5 per cent last year, Dr Safadi said. "The openness aspect is fundamental, there's no way you can revisit it," he said. "It will continue no matter what pressure comes from outside ... and we don't want inflation to be as high as it was in 2008, or go beyond the reasonable limit." Dr Safadi said details of the review would be announced in due course. "We are being pushed by the market and are working as fast as we can." But economists said no one could tell when Dubai would start to recover. "The lack of data available on the impact the current financial crisis is having on Dubai makes it near impossible to predict when the recovery would begin, and to what the extent the global crisis would have an impact on Dubai," said Dr Eisa Abdelgalil, the chief economist at Dubai Chamber of Commerce and Industry. "The dependency on economic slowdown-prone sectors, such as real estate, and dependency on foreign labour and capital have had a major impact on the emirate." But Dubai has the opportunity to rethink its economic model and diversification due to its leadership, easy process of decision making and flexible economic structure. "Powerful decisions can happen here overnight. Look at the United States where the decision making takes an eternity to materialise," Mr Abdelgalil said. He said he feared a protracted economic recession in the UAE's export markets, emigration of skilled labour, loss of consumer and business confidence and the loss of faith in the Dubai's model could happen if emergency measures were not introduced immediately. "Real GDP growth will weaken in 2009 due to weaknesses of its components, while there will be a fall in credit and money growth in 2009 due to banks' little appetite for new loans," Mr Abdelgalil said. "Less domestic demand pressure will reduce domestic inflation." He said he also expected a fall in food and commodity prices to reduce imported inflation. "The key risk outlook is a lower oil prices in 2009." agiuffrida@thenational.ae shafez@thenational.ae