Business | General
Profitable year despite costs
Traffic, rents, inflation and the falling value of the US dollar-pegged UAE dirham continued to dominate the list of public worries in the UAE in 2007.
- By Saifur Rahman, Business News Editor
- Published: 00:28 December 31, 2007
Traffic, rents, inflation and the falling value of the US dollar-pegged UAE dirham continued to dominate the list of public worries in the UAE in 2007.
While the falling value of the dirham would probably top the list, increasing house rents as well as the landlords' innovative tactics to bypass the rent cap continued to add salt to the injuries suffered by the majority.
However, for many lucky ones 2007 ended with a good feeling, as their paycheques got bigger and that helped cover the extra costs.
The good news is that on average, the income and salary level improved across the country.
The bad news, however, is that for the majority it's not enough to cover the extra costs. Real income of residents declined by 20 to 30 per cent due to a combination of factors – high economic growth, imported inflation and a weakening US currency.
The loss in income due to the falling value of dirham was felt to such an extent that it affected a majority of the country's nearly three million workers who suddenly realised that they have to shell out more dirhams to remit the same amount of money – simply because the value of their currencies appreciated against the US dollar and eventually the UAE dirham.
Apart from these, the year will be remembered for some landmark decisions and news as well. Establishment of RERA The Dubai government in July launched the Real Estate Regulatory Agency (RERA) to regulate and discipline the rapidly-growing real estate sector.
As a government entity under the Land Department, RERA's main objective is to establish the foundation of a globally attractive real estate sector that satisfies and guarantees all stakeholders' rights and expectations.
Dubai Urban Development Plan In August, the government announced the Dubai Urban Development Framework (DUDF), which will tackle all issues related to urbanisation, traffic impact and environmental aspects to offer a comprehensive master plan for sustainable growth to 2020 and beyond.
Abu Dhabi Plan 2030 Following the DUDF, Abu Dhabi announced its urban vision for 2030, which comes at an appropriate time when the hydrocarbon-rich emirate of the UAE, which occupies nearly 85 per cent of the country's landmass, prepares for a massive surge in economic activities as part of its diversification plan.
The Urban Structure Framework Plan 2030 has been devised for a structured growth of the city's urban landscape and offers a balanced diet for its economy as well as environment.
More than Dh600 billion worth of projects are in various stages of development in Abu Dhabi, which has 96 billion barrels of proven oil reserves – enough for 100 years supply at current production rates.
The Abu Dhabi Plan 2030 envisages an additional Dh600 billion investment in projects that will more than triple the size of its economy and quadruple certain sectors of it in 23 years. Privatisation of public assets The Cabinet in October approved the privatisation of the utility sector.
The decision involves privatisation of assets belonging to the Federal Electricity and Water Authority (FEWA), part of the Federal Government, which supplies water and electricity in parts of the Northern Emirates.
The move marks a major shift from the tradition of owning and managing the state's assets towards allowing private participation. It is, however, not clear which model the Federal Government will adopt – initial public offering (IPO) or selling stakes to private partners.
DP World IPO In November, DP World, the Dubai Government-owned global container terminal operator, floated shares to institutional and retail investors through an initial public offering (IPO) that was 15 times oversubscribed – giving it the confidence it needed.
Dubai Civil Aviation Authority The government in November took a step closer to realising its aviation vision by restructuring the civil aviation sector and by establishing Dubai Civil Aviation Authority (DCAA), which replaced the Department of Civil Aviation.
In a separate statement, the government also created Dubai City of Aviation – the umbrella organisation that will incorporate the Dubai Airports Company, Dubai World Central, Dubai Air Traffic Navigation and others.
Emirates places massive orders Emirates, the most profitable Arab carrier, placed a series of orders for 143 aircraft worth $34.9 billion at list prices at the Dubai Airshow in November – marking the single largest order in aviation history.
The orderbook involved the purchase of 120 A350 XWB mid-size aircraft, 11 A380s and 12 B777s. The deals are crucial for the airline as its remaining orderbook of 111 planes pending, valued at $30 billion, will be delivered by 2011-12. Record Federal Budget The Cabinet in November approved the 2008 federal budget of Dh34.9 billion, an increase of Dh6.7 billion over the 2007 budget which stood at Dh23.8 billion.
This is the biggest budget in the UAE's history and has the highest increase rate in the history of the federation. The government ordered a pay hike of 70 per cent of basic salaries for federal government employees, including civilians and security personnel of the interior ministry. It takes effect in January 2008.
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