Speech Mohammed Ali Alabbar's comments
Below is a copy of the full speech given by Mohammed Ali Alabbar, a member of the Dubai Executive Council, at the Dubai International Financial Centre. Thank you, Your Excellency, for that kind introduction. I am grateful to the Dubai International Financial Centre for facilitating this Forum, and to all of you for joining us here this morning. Excellencies, ladies and gentlemen, distinguished guests, it has been said that in a rising market, everyone is a financial genius. At this moment in history, I have to say, I am not sure how many of us feel like geniuses.
Today, I am here to talk of Dubai and our shared and proud identity as part of the United Arab Emirates. I will not mince words. I am here to state facts. These are serious times that require frank talk and real action. All of us know that to be true. So let us speak clearly and honestly and openly. Across the world, we face real challenges. Whether we are in New York or London or Tokyo ... or in Mumbai, Shanghai or here in Dubai.
The current challenges to the stability of the global financial system are without precedent. The necessity of taking action to address those challenges has never been more important. Ladies and gentlemen, here in Dubai, we are rising to the challenge of managing the new economic realities. Dubai, my friends, is a great city. We have accomplished so much in such a short time. For the past 18 years, we have witnessed remarkable growth across all sectors of our diverse and dynamic economy.
We have built roads and bridges, schools and hospitals, ports and airports, financial centres and power stations. We have built iconic structures and strong business clusters. Just look around the city and you will see for yourself. Imagine if we were to start building all this today. Yes, we accept the challenges that face us and the world. Yes, we recognise this new reality. But our feet are firmly planted on the ground - and our eyes remain fixed on new horizons, on a future that remains bright. Here in Dubai, we are realists. And we are also optimists.
We have risen to great challenges before, and we will rise to them again. Here in this city, we draw great strength from the collective experience of the country as a whole, and from the wisdom of our inspired political leadership. Now, let me tell you how we will rise to the challenge of change. Six weeks ago, the Government of Dubai formed a working group to analyse and address the economic challenges that face us. Let me tell you more about this important initiative and lay out for you its structure, mandate and goals.
The Advisory Council, as it has been named, was formed at the direction of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and prime minister of the UAE and Ruler of Dubai, and will help ensure the long-term stability and growth of the key sectors of our economy. I am honoured to have been nominated to lead the Council, and am joined by key decision-makers with unique insights into critical areas such as Government finances, real estate, banking and equity markets.
My fellow members of the Council include Their Excellencies: Mohammed Al Gergawi, UAE Minister of Cabinet Affairs and Chairman of Dubai Holding Mohammed Al Shaibani, Director-General of His Highness the Ruler's Court and Chief Executive of the Investment Corporation of Dubai Sultan Bin Sulayem, Chairman of Dubai World Dr. Omar Bin Sulaiman, Governor of the Dubai International Financial Centre and Vice-Chairman of the UAE Central Bank
Nasser Bin Hassan Al-Shaikh, Director-General of the Dubai Department of Finance Essa Kazim, Chairman of Borse Dubai and the Dubai Financial Market Abdul Aziz Al Muhairi, Managing Director of the Investment Corporation of Dubai and Marwan bin Ghalita, Chief Executive of the Real Estate Regulatory Authority The Advisory Council, which is already at work, meets frequently to review the state of key sectors of the economy. Our mandate encompasses all sectors of the economy, which we will review with leaders in each area, as and when necessary.
We will formulate recommendations based on our findings, which will then be submitted to the Government for action and implementation. Make no mistake: We will act in a timely manner. And we will be transparent in those actions. Let me give you an example of how we will do that. Just two days ago, with the support of the Council and the UAE Ministry of Finance, it was announced that Amlak Finance and Tamweel would merge with the Real Estate Bank of the UAE. This is a significant measure that will provide greater stability to the sector, and allow increased flexibility in how real estate finance is funded and provided in the UAE.
This decisive action demonstrates how serious we are about addressing the current challenges - and shows how we will act moving ahead. Let me now turn to another area of the same sector where we are taking equally important action. Today, Dubai's three largest developers control about 70 per cent of the supply onto the market. The Council, acting in co-operation with them as well as other private developers, is managing the current and future supply of new projects onto the market. Let me assure you that we have our finger on the pulse of the real estate sector.
For more than a decade, this sector has experienced rapid and sustained growth. Like Dubai itself, and to support this city's expansion, the property market has boomed. Today, the real estate sector is witnessing a healthy correction. This is a consequence of global financial conditions - and is inherent to the very nature of the market. As we all know, real estate is cyclical. Monitoring supply and sales, the Advisory Council is managing this important sector of our economy, ensuring that new supply is properly managed and that current and future demand is adequately met.
The city continues to attract international investors and professionals who want to be part of the Dubai success story and sought-after global lifestyle. That is one more example of the work we are carrying out. There has recently been a lot of talk about the debt obligations of Dubai. There is confusion and therefore concern about how much Dubai owes, and how this debt will be refinanced. Let us put an end to such speculation.
Currently, the Dubai Government's sovereign debt obligations stand at $10 billion (DH 37 billion). While our key sovereign assets are currently being evaluated, I can give you a rough estimation of their value, being over $90 billion (Dh 330 billion). And this does not include our airports, bridges and the Metro. At the same time, the total debt obligations of affiliated companies stand at $70 billion (DH 256 billion), compared with assets valued at US$260 billion (Dh950 billion).
Ladies and gentlemen, as you can see, the total value of the assets of the government and affiliate companies in Dubai is well over Dh 1.3 trillion. Let me therefore state categorically: the Government can and will meet all its obligations going forward. Let there be no doubt about this fact. It is also important to appreciate that Dubai's borrowing is not used to cover state expenditures or fuel consumption. It is funding our long-term, risk-free infrastructure development. Our debt serves Government institutions and state-owned entities that have positive cash flows and that have extremely strong long-term value.
Will the Government step in and help associated and affiliate companies if and when the need arises? Yes, we will. And I hope this statement is clear. Think now about the timely and appropriate intervention that has already taken place at the Federal level to ensure the stability of the country's financial system. I think that serves as a reminder that we stand by our guarantees, as one country. Going forward, the Central Bank will continue to act appropriately and in the best interests of our nation, whenever necessary.
That said, we are rationalising our expenditures and consolidating our activities. To sustain Dubai's growth, we must manage the new economic realities. Dubai, my friends, is a great city. And it is part of a young and dynamic wider region, including our shared Middle East and across the seas to India. We are rich in oil, rich in gas, rich in youth and vitality and ideas. For so long, Dubai has served as a beacon of hope to people from across this diverse region, representing all that can be accomplished when you have the means and the will.
Dubai represents the opportunity to achieve economic dignity. Dubai is a platform from which people and companies can grow and succeed. People like you, and me. Companies like yours, and mine. Today, however, everywhere on earth, the world's faith in the future is being put to the test. Yet here in Dubai, while we recognise with humility that many challenges lie ahead, we will spare no effort to secure our future.
We recognise the challenges before us. But this city, as part of one strong nation, will continue to grow and thrive. As His Highness Sheikh Mohammed said recently: "Dubai's direction is straight and forward, and we will continue our growth story." Ladies and gentlemen, I wish you a good conference and thank you for your attention. Thank you.