Opinion | Editorials
GCC should learn from financial crisis
New strategies are needed within the region to manage assets better.
- Gulf News
- Published: 23:22 November 6, 2008
The Gulf states should draw lessons from the latest global financial crisis and develop new strategies to better manage their assets. Hamad Bu Amim, director-general of the Dubai Chamber of Commerce and Industry, said that the regional economies are also in the middle of this turmoil.
"They need to speed up cooperation and use the economy of scale in establishing the GCC single currency and monetary union," he said. "They need to review their financial risk management and establish a common institutional floor to build up future financial systems. There are clear moves towards nationalising significant parts of the financial systems, and reviewing domestic economy control systems and re-establishing good governance's checks and balances. It is almost certain that in the future, many economies will reduce their financial dependency on global financial markets," he said.
There could be a need to protect minority shareholders and to regulate bankruptcy. In the absence of a bankruptcy law, shareholders of troubled companies usually disappear from the market, leaving lots of debts and cheques that bounce. Bu Amim hinted that strengthening regulations in this regard might come in handy.
The UAE financial market is not immune to negative influences from Wall Street. The value of the assets acquired by Gulf investors has already declined significantly. The GCC's total assets in the US have exceeded $2.5 trillion (Dh9.18 trillion). But amid the financial turmoil they could have fallen in value. One of the major concerns lies with the real estate sector, for example. Although the Gulf economies are on a firm footing, the countries should not rest on their laurels.
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