DSP 2015 to tackle issues

Soaring rents, inflation, chaotic traffic and a near-vertically rising cost of living are dampening the comforts of Dubai's cosmopolitan life, which has become a victim of the city's high-growth economy.

These factors are taking their toll on the finances and happiness of many fixed income families and worrying the breadwinners living in the city.

However, not everything is negative in this growing metropolis. At least 2,000 towers are in various stages of development.

Among these, 850 commercial towers and 1,000 low-rise residential buildings are being planned in the Jebel Ali World Central Airport city alone.

Thirty hotels and resorts are being built on the Palm Jumeirah island and another 50-odd hotels are being planned in Dubailand with an additional 30 in Bawadi.

But what does this mean to an average resident or a foreign contract labourer? Not much, especially when he gets a Dh200 increment that does not help him to make ends meet.

The pegged currency, whose value falls as the US dollar nosedives, adds to the problem by raising the number of UAE dirhams he needs to remit the same amount he sends his family every month.

Inflation

A roughly 10 per cent real GDP growth is putting strong pressure on wages and house rents in the UAE and Qatar and supply constraints are creating high inflation which, at 10 per cent, is making places such as Dubai unattractive for investors, a senior official of the International Monetary Fund (IMF) said recently.

An additional 40,000 housing units could reduce pressure in places such as Dubai and Sharjah, but may not be enough to contain the near-vertical hike in house rents, Mohsin S. Khan, Director of the IMF's Middle East and Central Asia department, told Gulf News recently.

"But inflation is rising, fuelled by rapid demand growth and strong foreign inflows. With monetary policy largely accommodative in many countries, inflation is expected to average nearly nine per cent in 2007 compared with 7-1/2 per cent last year. The uptick is particularly notable in some oil-exporting countries. In these countries, higher inflation is beginning to translate into more appreciated real exchange rates, as would be expected in response to increased oil prices," said Khan.

Solution

The good news is that the government is aware of this and that's why, in late 2005, the Government of Dubai broke the tradition of the emirate's free economy and announced a 15 per cent rent cap and then brought it down to seven per cent the next year.

This has been a difficult decision for a government that has always supported free economic policies. However, it is time for a reality check and the government also imposed a limit on the education sector capping the tuition fee hike to a maximum of 16 per cent.

It is at this critical juncture that the government unveiled its Dubai Strategic Plan 2015. Among its key highlights, the DSP 2015 suggests enhanced government-driven interventions to ensure adequate low and medium-income housing, ensure equality and acceptable working conditions for the workforce, and attract and retain required expertise while ensuring adequate community policies.

The Plan also suggests improved mechanisms for resolving rental disputes while at the same time facilitating resolution labour disputes.

On a broader perspective, it talks of improvement in legislation and increases the share of public transportation to reduce the number of private cars.