Panic grips a country when a calamity strikes violently. This is true in the case of economic calamity too. What Dubai now experiences is a severe crisis where everyone keeps fingers crossed. All are finding themselves at cross roads without getting an idea of the direction in which they should go. Property prices have collapsed. Many have lost jobs and income. Loans for acquisition of assets or property remain unpaid. Assets cannot be sold due to catastrophic fall in prices and bearing expectations. People do not have access to funds for investment in view of the reduced availability of bank credit. There is default of loans and EMIs. Sale of property at prices as low as 50 % invites huge loss. Even with such sale liability remain sizeable and unmanageable. Rents have gone low and do not cover EMI even up to half the amount. Banks also have lost money. Builders are unable to complete projects and hand over. Government loses revenue arising from licenses and spillover of economic benefits.
While panic does not solve problems we have to find a solution with a firm determination to succeed. The first thing required is for the government and those concerned with stimulating and regulating economic activity to resolve that the crisis must be solved and can be solved. When techniques are not adequate to effect a speedy recovery we have to rely on wisdom which is far more dependable and effective than techniques.
The role of wisdom involves using the heart for a solution. Here it becomes a question of sacrifices by all agencies concerned. The government will have to acquire assets by large-scale public spending and offer them at low rents. The available reserves should be used for this This should attract new business. Banks should be prepared to scale down the liability by reducing interest or waiving it completely. The lending policy to builders or recovery from builders could be on the basis of dynamic pricing. This means recovery percentage should be in direct proportion to the market variation. This could be determined at 6 monthly intervals. The same benefit could be given to customers who have taken loans to purchase homes on EMI basis. The quantum of EMI could be varied with the variation in market prices.
Part of the loss could be shared by the people and when prices look up the EMIs could be raised. The position is subject to review on 6 month or annual basis.
Businessmen could be attracted with reduced licence fees and liberalized visa conditions. The workers will be prepared to accept lower wages during the transition period when the recession ends and recovery starts. The objective is to raise the image of Dubai as worthwhile destination for investment .It should be restored to its glory and position as the Queen of the Gulf.
This calls for an innovative solution based on sacrifice by all agencies concerned and relying on wisdom building on its strength of low rent and low overheads. Once the upswing picks up it will get fuel and rise on its own momentum. The economy will receive a stimulus and incomplete projects will be completed.
The people on their part will have to sacrifice by way of reducing their luxurious style of living and aligning their life style with national interest for conservation of resources. Lower salaries, resorting to public transportation and focussing on essentials of living should be the basic philosophy to be followed. It is a good sign that Dubai and Abu Dhabi are going ahead with their public transportation and metro projects. Dubai has completed the metro system. Sustaining the environment is another area of employment and growth.
The author is sure with wisdom taking over the driver’s seat backed by necessary management techniques and principles of sustainable growth Dubai should be able to come out of the present crisis and attain the supreme position it had a few years ago. The cornerstone of economic policy should be sustainable growth,sustainable environment and sustainable lifestyle and not unlimited luxury and stupidity.