ISG1213 Dubai Debt Crisis II

回覆文章
Kooper
YOYO member
文章: 2725
註冊時間: 週三 4月 11, 2007 11:40 pm

ISG1213 Dubai Debt Crisis II

文章 Kooper »

Dear ISG members,

Rather than counting on a single person looking for proper material to study, this time I would like to utilize teamwork to help us get more insight into the topic. Here is what I would like to do.

Questions:
1. What made Dubai boom before the 2008 global financial crisis?
2. What led to the crisis? Why Dubai is more vulnerable to the global recession than countries like Abu Dha?
3. What kind of country is Dubai?

Assignment:
1. Pick an article, video clip or audio file which, to some extent, answers one of the three questions on Dubai and post its link on the forum before Wednesday.

2. Write an essay answering one of the questions (or all of them if you would like) before meeting.
Kooper
YOYO member
文章: 2725
註冊時間: 週三 4月 11, 2007 11:40 pm

Re: ISG1213 Dubai Debt Crisis

文章 Kooper »

Having some idea about what UAE is will help us get to know Dubai better. Here I quoted some information on UAE from Wikipedia.

The United Arab Emirates (UAE) (Arabic: دولة الإمارات العربية المتحدة‎, Dawlat al-Imārāt al-‘Arabīyah al-Muttaḥidah) is a federation of seven emirates situated in the southeast of the Arabian Peninsula in Southwest Asia on the Persian Gulf, bordering Oman and Saudi Arabia. The UAE consists of seven states, termed emirates, which are Abu Dhabi, Dubai, Sharjah, Ajman, Umm al-Quwain, Ras al-Khaimah and Fujairah. The capital and second largest city of the United Arab Emirates is Abu Dhabi. It is also the country's center of political, industrial, and cultural activities.
....
The political system of the United Arab Emirates, based on the 1971 Constitution, comprises several intricately connected governing bodies. Islam is the official religion and Arabic is the official language.
...
The United Arab Emirates has the world's sixth largest oil reserves[9] and possesses one of the most developed economies in the Middle East.


source: http://en.wikipedia.org/wiki/United_Arab_Emirates
Kooper
YOYO member
文章: 2725
註冊時間: 週三 4月 11, 2007 11:40 pm

Re: ISG1213 Dubai Debt Crisis

文章 Kooper »

Articles answering the first question:

Why Dubai? Anatomy of a business success story


Articles answering the 2nd question:

The Dark Side of Dubai's Success
Sherry Liao
YOYO member
文章: 1482
註冊時間: 週五 12月 07, 2007 12:15 pm

Re: ISG1213 Dubai Debt Crisis II

文章 Sherry Liao »

Kooper 寫:2. What led to the crisis? Why Dubai is more vulnerable to the global recession than countries like Abu Dha?
Leverage and Ambition Put Dubai in a Tailspin
http://www.nytimes.com/2009/12/03/busin ... =cse&scp=4

If any of you think this article is too long and are only interested in the cause of Dubai's financial predicament, you may start reading from the 10th paragraph to save your time.
IVY
YOYO member
文章: 61
註冊時間: 週日 4月 16, 2006 11:44 am

Re: ISG1213 Dubai Debt Crisis II

文章 IVY »

1. What made Dubai boom before the 2008 global financial crisis?


Disposing only of limited oil and gas reserves that might be depleted in 20 years, it had wisely started engaging in transforming its economy to the post-oil age as early as the 1970s.
The development, in the 1970s, of Jebel Ali port and Free zone, one of the 10 busiest container ports on earth, and the construction of its international airport, the 20th busiest on earth, have laid the basis for moving into the global transport service industry. Trade and entrepot services, especially towards Iran and Africa, account for 30 percent of its national product, five times as much as oil and gas.
In the wake of the political instability in the region during the 1990s Dubai has been able to attract foreign capital and financial institutions. The government further encourage this trend by the establishment of the Dubai Financial Market in 2001, which has helped turning financial services into a major economic sector, with a share of more than 10 percent of GDP.
After these successful moves into a post-oil service society the government started focusing on luxury tourism and real estate as the driving forces for a next stage of diversification away from fossil fuels.
Consequently, Dubai entered into a surreal construction boom after 2002, which turned into a real estate bubble after the global financial crisis in 2008.



Source: Dubai from Boom to Bust?
http://rhein.blogactiv.eu/2009/07/03/du ... m-to-bust/
jacksonwang
YOYO member
文章: 42
註冊時間: 週五 2月 27, 2009 11:14 am

Re: ISG1213 Dubai Debt Crisis II

文章 jacksonwang »

What led to the crisis? What kind of country is Dubai?
Dubai World owns DP (Dubai Ports) World, the successful ports operator which bought P&O. Other arms of the Dubai government, and the ruling family directly owned holding companies, also own successful companies such as Emirates Airlines and Jumeirah Hotels, as well as stakes in buildings and businesses around the world, including the London Stock Exchange. But the emirate's lack of transparency and relatively untested financial legal system means that no-one knows if these can be demanded as collateral against Dubai World and other government debts.
The emirate has said it has 80 billion of debts, though some analysts say the true figure could be double that. Dubai World, the state-owned holding company whose bail-out plans triggered the current crisis, has liabilities of about 60 billion, though only part of that is debt. The main problem is its real estate subsidiary Nakheel, which has huge bonds coming due, including an Islamic bond for 3.5 billion in December. It appears to have little cash flow to meet payments as well as relying on debt, it also sold most developments off-plan, with new developments now on hold.
The property crash hit Dubai at the time - house prices fell 50 percent in six months. Nakheel was known to be in trouble. But investors assumed that as a state-owned company it would not default on its debt. The government refused to issue detailed statements of how it was to handle Dubai World's debt problems, and rounded on those who said that the crash had undermined Dubai's development model.


Stranger 1: I have lived in Dubai for the past 5 years, It's a bubble waiting to burst and I am sure it soon will. I think it is important to show the real picture of the state of Dubai's economy as the Dubai Media would never publish something detrimental to it's own city. They are all out to hype up the luxury of living in Dubai (might I also add this is for certain nationalities only namely the western nationalities). Dubai is a city that makes the rich richer and the poor poorer. The middle class will never be able to make money here due to the outright discrimination. All the development projects are made by the poor labor class, so the rich can reside in them. The real picture will never be revealed, most things here are fake and they have gone to such a point where everything is materialistic not to mention superficial...even the state of the economy!
Stranger 2 : I was quite sure some years ago while visiting UAE on a buss trip, how come they were constructing so many buildings, without the demand and need to do so, the local business men did not need the so called big and large building for office space that were coming up for occupation at sky high prices, also the prices of the palm island resort homes were in millions that only a few could even think of buying...were are those buyers now....I am told that 70% of those are still not sold...this was like a palace built using pack of cards about to crumble....god save Dubai.
Refer to : ( http://www.telegraph.co.uk/finance/fina ... QandA.html )

Jackson :wink:
頭像
chiron
YOYO member
文章: 520
註冊時間: 週三 10月 03, 2007 4:23 pm

Re: ISG1213 Dubai Debt Crisis II

文章 chiron »

Hi, guys: I post the irrelative content below under another article entitled "Hosting Sequence", but no one replied me. I want to make sure you all get the message, so allow me to post it here again.
chiron 寫:
Kooper 寫:10/4: Kooper (updated on Sep. 28th)
11/22: Chiron (My Sister's Keeper, p.146-216)
11/29: Sherry -2
12/6: Sherry-3
12/13: Janet
12/20: Ivy
Hi, guys: Remember next time we have to read until page 312.
12/27: Chiron (My Sister's Keeper, p. 217-312)
1/31: Chiron (My Sister's Keeper, p. 313-407)
Dear ISG members:
Too dreadful! I found my test is on 12/27, I must swith my term with the host following me. So the revised sequence should be like this:
1/3: Chiron (My Sister's Keeper, p. 217-312)
1/31: Chiron (My Sister's Keeper, p. 313-407)

Is it O.K.?? Sherry?
最後由 chiron 於 週六 12月 12, 2009 10:45 pm 編輯,總共編輯了 1 次。
Please call me Na'vi!
Sherry Liao
YOYO member
文章: 1482
註冊時間: 週五 12月 07, 2007 12:15 pm

Re: ISG1213 Dubai Debt Crisis II

文章 Sherry Liao »

Chiron,

No problem. I will switch with you.
Sherry Liao
YOYO member
文章: 1482
註冊時間: 週五 12月 07, 2007 12:15 pm

Re: ISG1213 Dubai Debt Crisis

文章 Sherry Liao »

Kooper 寫:Articles answering the first question:

Why Dubai? Anatomy of a business success story
"There also developed a symbiotic and friendly relationship between the local citizens and the expatriates. The labor law defined expatriate rights and created a system where both nationals and expatriates could prosper, although nationals retained majority ownership rights of companies and complete control of property.
......
At the same time a massive government-led real estate boom has been unleashed by the decision to allow foreigners to own property in Dubai, and a state-driven expansion of the tourism sector."


Another article I read mentioned that foreigners in Dubai (who once made up roughly 85 percent of the population) have no right to vote, but it seems like they are not upset about it. Foreign workers are more interested in making money and having a cozy lifestyle in Dubai. However, just like how they flocked to the wonderland, they fled the country in the wake of the financial crisis, which made an extraordinary sight at Dubai's airport, as it was clogged with cars abandoned by fleeing expatriates.




"This will compound the well thought out business planning of the emirate with an economic windfall."

Can anyone tell me what this sentence means? I don't even realize the sentence structure. :?
Kooper
YOYO member
文章: 2725
註冊時間: 週三 4月 11, 2007 11:40 pm

Re: ISG1213 Dubai Debt Crisis II

文章 Kooper »

Dubai’s Success

Rising from a small village of pearl fisherman 50 years ago to a commercial and financial hub of the Middle East today, Dubai’s success were attributed to several factors.

Dubai used oil wealth wisely since its oil reserves were found in the 1970s. Unlike most other oil producing countries that invest oil revenues abroad, Dubai invest oil wealth back into its physical infrastructure. Its investment in port infrastructure, for instance, turned Dubai into a trading hub of the Middle East. The creation of various types of free zones made Dubai became the business and commercial hub of the Middle East. Given its limited oil reserves. Dubai started early in reducing its dependency on oil production and successfully diversified its economy into ports, trade, finance, real estate, and tourism.

It is rather easy for Dubai’s companies to borrow money. The close ties between Dubai’s three largest companies, Dubai World, the Investment Corporation of Dubai and Dubai Holding, and the government assured bankers and investors of their ability to pay off loans. The Middle East was flooded with oil cash while viable projects for investment were scarce there, except in Dubai. Taking full advantage of it, Dubai kept pursuing very ambitious plan through high financial leverage. Though very risky, most of them surprisingly succeeded or at least were better than expected.

Dubai established a very unique corporate model known as Dubai Inc., in which its ruler, Sheik Mohammed bin Rashid al-Maktoum, acted like a CEO and these state-owned holding companies actually possessed the trappings of private sector business. Red-tape was cut, planning process was shortened, and the government was efficient and acted quickly.
Sherry Liao
YOYO member
文章: 1482
註冊時間: 週五 12月 07, 2007 12:15 pm

Re: ISG1213 Dubai Debt Crisis II

文章 Sherry Liao »

Dubai, a rapidly growing city features outstanding financial sector and tourism, used to be a miracle of economic development in recent history; however, the release of news on November 25 that the government announced a six-month late payment on debts of its state-run conglomerate has severely damaged the emirate’s reputation, and caused a rash of panic responses over investors around the world.

The causes that led to this crisis actually used to be the strong points of the country in the first place. Decades ago, Sheikh Zayed, the sagacious ruler of the country, foresaw the consequence of running out of oil, and decided to create other ways to make the state prosper. Dubai made efforts on developing commercial and financial activities and resulted in a huge success – it became the business and commercial center of the middle-east world and neighboring countries. The modernization and urbanization made the sand city a desirable place to visit, and for developing infrastructure and economic activities it created numerous job opportunities that attracted many expatriates to pursue their dreams there.

However, the policy makers of the country and the executives of most state-owned enterprises were too ambitious and keen on pursuing a faster pace of development. In order to achieve their growth target and to generate high profit, companies sought more funding from local and foreign banks and bond investors. And even though businesses were operated in a dynamic way, the impression of strong link between the conglomerates and their country helped them raise a considerable amount of funds. Taller and taller buildings were built, real estate prices were soaring, Dubai created a materialistic and luxurious living style, which was built on sand. In the event, when the global financial crisis took place in 2008, the boom turned out to be a bust.

The crisis has put Dubai in a predicament; however, it is not a complete failure. Compare with the conservative but oil-rich neighboring country Abu Dhabi, innovation and progress is the only way for Dubai to go. However, the leaders of the country have to do their best to overcome the difficulties they are now confronting with.
頭像
gavintsai
Member
文章: 732
註冊時間: 週二 4月 29, 2008 7:23 pm
來自: 淡水

Re: ISG1213 Dubai Debt Crisis II

文章 gavintsai »

1. Reference article for answering question 3: what kind of country is Dubai?
http://www.tripadvisor.ca/Travel-g29542 ... ction.html



2. Assignment
Dubai is a former fishing/pearling town founded in 1833. Due to the discovery of oil in 1966, Dubai has been swiftly turned into one the world’s wealthiest country.

The boom times attracted numerous immigrants; 80% of the population makes the country called the expatriate heaven. After Arabic and Persian, English is the third most widely spoken language in the city. As the shopping capital of the Middle East, enormous hotels and mind-bogglingly big malls are ubiquitous. The surrounding Arabic desert, awesome architecture, and monuments enticed more and more tourists. You can socialize Asian, American or European in this multicultural city.

Dubai appears modern; however, before visiting it, you must study the special dos and don’ts in this culture. Such as, avoid photographing Muslim women and don’t sit with the soles of your feet pointing at anyone.



My Skype is supermonster0601
Although I forgot to bring my microphone home, I still can join today's discussion by typing.
See you later, diligent members.


Gavin
janet12tw
Member
文章: 136
註冊時間: 週日 5月 31, 2009 6:13 am

Re: ISG1213 Dubai Debt Crisis II

文章 janet12tw »

Dubai is the second largest emirate in the U.A.E. And with its fine location, it becomes one of the world's leading trading and commercial centers. Dubai's success can be traced back to the early years of the century when the grandfather of H.H. Sheikh Rashid bin Saeed Al Maktoum gained the British shipping line laying between Britain and India, which makes Dubai their main port of call in the 1940s. And in 1960, Dubai soon grows into a prosperous country with the discovery of oil. Tourism is also one of the main attractions in Dubai. Dubai is famous for its shopping festival which always attractacts tons of tourists each year. The crisis for Dubai's economy now is due to the minimal planning and no infrastructure according to a famous phtographer who has been in Dubai.

Source:
http://www.ihrcanada.com/countries/uae/dubai.htm
http://lens.blogs.nytimes.com/2009/11/3 ... eat&st=cse
Kooper
YOYO member
文章: 2725
註冊時間: 週三 4月 11, 2007 11:40 pm

Re: ISG1213 Dubai Debt Crisis II

文章 Kooper »

Sherry Liao 寫:Dubai, a rapidly growing city featuring outstanding financial sector and tourism, used to be a miracle of economic development in recent history; however, the release of news on November 25 that the government announced a six-month late payment on debts of its state-run conglomerate has severely damaged the emirate’s reputation, and caused a rash of panic responses over investors around the world.

The causes that led to this crisis actually used to be the strong points of the country in the first place. Decades ago, Sheikh Zayed, the sagacious ruler of the country, foresaw the consequence of running out of oil, and decided to create other ways to make the state prosper. Dubai made efforts on developing commercial and financial activities and resulted in a huge success – it became the business and commercial center of the Middle Eastern world and neighboring countries. The modernization and urbanization made the sand city a desirable place to visit, and for developing infrastructure and economic activities it created numerous job opportunities that attracted many expatriates to pursue their dreams there.

However, the policy makers of the country and the executives of most state-owned enterprises were too ambitious and keen on pursuing a faster pace of development. In order to achieve their growth target and to generate high profit, companies sought more funding from local and foreign banks and bond investors. And even though businesses were operated in a dynamic way, the impression of strong link between the conglomerates and their country helped them raise a considerable amount of funds. Taller and taller buildings were built, real estate prices were soaring, Dubai created a materialistic and luxurious living style, which was built on sand. In the event, when the global financial crisis took place in 2008, the boom turned out to be a bust.

The crisis has put Dubai in a predicament; however, it is not a complete failure. Compare with the conservative but oil-rich neighboring country Abu Dhabi, innovation and progress is the only way for Dubai to go. However, the leaders of the country have to do their best to overcome the difficulties they are now confronting with.
Sherry Liao
YOYO member
文章: 1482
註冊時間: 週五 12月 07, 2007 12:15 pm

Re: ISG1213 Dubai Debt Crisis II

文章 Sherry Liao »

Kooper, thanks for your corrections.

In that case, this sentence also need some modifications, as it's not grammatically correct, right?
Sherry Liao 寫:Taller and taller buildings were built, real estate prices were soaring, Dubai created a materialistic and luxurious living style, which was built on sand.
I've tried my best to revise it, but just don't know how to put it in a better way. :?
回覆文章