Dubai: The Dubai Chamber of Commerce and Industry is urging companies to use its credit rating service in an effort to bring in more foreign investment.
Dr Belaid Rettab, senior director in the economic research and sustainable business development sector at the Dubai Chamber, told Gulf News that the Credit Rating Service established in 2005 helps raise confidence in UAE companies.
"Credit ratings provide a formal evaluation of a company's credit history and serve as an effective risk assessment tool," Rettab said.
"They encourage investment worldwide by mitigating and managing commercial risks to companies.
"The services help improve the investment decision-making process and enhance efficiency in both markets and companies."
When the service was set up, he said, it was intended to enhance the levels of transparency and credibility among companies, expand the scope of commercial transactions and encourage the influx of investments in global markets by minimising commercial risks of companies.
"These services can be utilised to help companies compete and face the growing challenges in the global markets," Rettab added.
"The rating will be useful in the case of a credit request by a bank or in any business transaction. The rated company is a more transparent company when it comes to its financial position and its ability to repay obligations. That's why the rating will afford confidence to companies conducting businesses with a rated company. It also helps banks when evaluating a credit extension to a rated company."
Rettab also stressed that all Dubai companies in all sectors would be able to apply for credit ratings.
"The ratings cover companies within all sectors and industries, thus the ratings are not inclusive to particular businesses or sectors. The ratings are prepared based on a rating model that is recognised worldwide."
Rettab pointed out how business owners came to learn about the importance and benefit of the service as the number of credit rating requests the Chamber receives has been increasing steadily since the service was launched.
"In 2011 we received 181 credit rating requests, whereas in 2010 we received 260 requests.
"If we look back to January and February 2012, we find that we received 20 and 27 requests respectively."
The Dubai Chamber has received 2,000 requests for credit ratings since its inception.
While the service is available to all business sectors, however, Rettab remarked that the two main sectors seeking credit ratings are trading and legal firms, which comprise about 80 per cent of the requests.
While global agencies offer ratings mostly for big companies and countries and have little information on SMEs, the credit rating service offered by the Dubai Chamber focuses mainly on SMEs in addition to big companies, Rettab said.