Lessening the pain of downturn

Hamburg: Hesham Al Shirawi is on the board of Dubai Chamber of Commerce and Industry, the chamber's second vice-chairman and chairman of the Electronics Group, which is the Electronics Merchants Association in the UAE.

Al Shirawi is also the chief executive officer of Oasis Enterprises, an electronics retailer part of Al Shirawi Group. He is a member of the board of directors of the group, one of the leading conglomerates in the UAE. It is involved in the manufacturing, trading, marketing and distribution activities.

Al Shirawi holds an MBA in finance from the California State College, San Bernardino. He also holds a bachelor's degree in electrical engineering from the University of Southern California.

In an exclusive interview with Gulf News, Al Shirawi said he is in favour of delinking the dirham with the dollar "because we keep on importing other countries' financial crises".

The interview took place in Hamburg at the recently-held Dubai-Hamburg Business Forum, organised by Dubai Chamber and Hamburg Chamber of Commerce.

Gulf News: The CEO of Hamburg Chamber of Commerce said the impact of the crisis would have been more severe if they did not have the euro. Do you think now would be a good time to revaluate the Gulf currencies and have a joint Gulf currency?
Hesham Al Shirawi: I would like the dirham to depeg with the dollar, because we keep on importing inflation, importing other countries' financial crises.

We are exposed to monetary policies of other countries that may or may not match our requirements and the value of the dirham does not reflect the health of our economy or economies in the GCC.

In terms of financial investment, what do you hope to get out of the forum?
I wouldn't say we want to embark immediately on the direct projects or investments, involving people bringing a huge amount of money and placing it here or there. Of course, if that happens we won't be against it.

What we want is that people in the areas of logistics and foreign trade, banking and finance, IT and media, healthcare and energy to come together and explore avenues of cooperation.

In Dubai, we are ahead of most of our peers in all of these areas. But we are still behind in terms of international standards in healthcare and we should benefit from a place such as Hamburg, which is quite advanced in these areas.

The similarities that exist between the two cities are unbelievable. In Dubai Chamber, we have not selected Hamburg arbitrarily. It has been selected after a long period of study and analysis and brainstorming.

There are many areas that we have mistakes in now and I'm sure they have been through that a 100 years ago. So why not learn from them? If we can achieve what people executed in 50 years, in 30 years, I would call that a great success.

What needs to be done to improve the UAE healthcare system?
There are three nurses for every doctor in the public sector and one nurse for every 10 doctors in the private sector. Something is wrong.

The concept of e-health is not only not understood, it's not even heard of in our region, like the advanced medical techniques, the number available in the hospitals, especially in the areas of diabetes, cardiovascular-related activities, prostate issues.

They are quite advanced in these areas, while we, honestly, and I'm sad to say, are very behind. So why not send our students, nurses, doctors there to get adequate training?

What will their benefit be?
The students coming back will be used to their systems so we will keep purchasing their equipment and the activity will continue. We could simply send people without an agreement, but that wouldn't benefit them or us. We want to do it efficiently. If we can do this over a five to seven-year plan, the healthcare industry back home will turn 180 degrees.

You said earlier that Dubai hasn't yet seen the full effect of the financial situation. When do you think we will and which sectors will be worst affected?
I would say the sectors in which people were investing in projects with other people's money will be affected more. Companies that have a vast experience of business will be able to handle this crisis, like they have with previous crises.

They know how to take certain preventative actions and precautionary measures to be able to minimise the impact of any form of crisis.

But the companies that do not have enough experience or the companies that came into being when the economy was booming could still achieve success due to the vast availability of liquidity and due to the sheer growth of the economy.

These companies have no experience of handling a situation when it goes south. These people will be affected. Mega-projects might be reduced or delayed, medium-sized projects will continue, projects that have a clear feasibility study and a clear payback period will continue. Show-off projects will be cancelled and that is good for the economy.

Is it possible that Dubai will never see the full impact of the crisis?
There will be no way we can completely avoid the impact, but yes, we can reduce its intensity. The biggest problem right now is not the lack of liquidity. The problem is that banks are not lending to each other for two reasons: they either don't know the other bank or they over-know the other bank.

And because previously we used to lend other institutes based on the ratings, ratings companies used to provide you the double As, triple As and most of them have proven not to be accurate.

This resulted in us lending to credit companies that are not worth the size of credit extension they were given. Show me a decade without a crisis. This is just one more and it won't be the last one.

Do you think the UAE, especially with the job losses, will create a personal debt issue, where debts can't be repaid?
All possibilities exist. But I would say we should use our discretionary powers in order to deal with situations in a very logical and practical way to minimise the damages.

Now, who would be firing people and laying off people?
Projects or companies that are over-staffed. They are an excess. If these people were not so effective or efficient or productive, then I don't think they had that much of a loan given to them prior to their departure.

Of course, I'm not saying this is 100 per cent. There are people who have friends in banks, there are people who know somebody. Dubai is a very small place.

The personal debt that exists is quite high. And there might be some bad debt later. But what is worse - carrying on people, paying their expenses, without any productivity or writing out certain bad debts?

We should compare those two figures, keeping them or absorbing their bad debt. And we might not necessarily absolve their bad debt in its entirety. There could be some salvage value, probably for houses, for flats, for cars.

There is always a secondary market. But if personal debt is considered a danger, or a risk, then we should have a certain body that studies all cases and takes decisions on the merits of each case.

Maybe you can grant a person a discount if he pays a certain percentage, that way you reduce. And not all of these will come at a single time.