RECESSION IN DUBAI

GROUP 11 : CHANDNI, DHAVNEET, SURBHI,

OMAN , BHAWANI
 UAE

The United Arab Emirates is a federation of seven emirates situated in the southeast of the Arabian Peninsula in
Southwest Asia on the Persian Gulf bordering Oman and Saudi Arabia. The UAE consists of seven states, termed emirates,
which are Abu Dhabi, Dubai, Sharjah, Ajman, Umm al-Quwain, Ras al-Khaimah and Fujairah. The capital and second
largest city of the United Arab Emirates is Abu Dhabi. It is also the country's center of political, industrial and cultural
activities.

Before 1971, the UAE were known as the Trucial States or Trucial Oman, in reference to a nineteenth-century truce
between Britain and several Arab Sheikhs. The name Pirate Coast was also used in reference to the area's emirates in the
18th to early 20th century.

The political system of the United Arab Emirates, based on the 1971 Constitution, comprises several intricately connected
governing bodies. Islam is the official religion and Arabic is the official language.

The UAE, is rich in oil and natural gas, and possesses one of the most developed economies in the Middle East and is
currently the thirty-sixth largest economy by nominal GDP, and is one of the richest countries in the world by per capita
gross domestic product, with a nominal per capita GDP of $54,607 as per the IMF. The country is eleventh largest in
purchasing power and has a relatively high Human Development Index for the Asian continent, ranking 31st globally The
United Arab Emirates is classified as a high income developing economy by the IMF.
 DUBAI
Dubai is one of the seven emirates of the United Arab Emirates (UAE). It is located south of the Persian Gulf on
the Arabian Peninsula and has the largest population with the second-largest land territory by area of all the emirates,
afterAbu Dhabi.] Dubai and Abu Dhabi are the only two emirates to have veto power over critical matters of national
importance in the country's legislature
The earliest recorded mention of Dubai is in 1095, and the earliest settlement known as Dubai town dates from 1799. Dubai
was formally established in the early 19th century by the Al Abu Falasa clan of Bani Yas, and it remained under clan
control when the United Kingdom assumed the protection of Dubai in 1892. Its geographical location made it an important
trading hub and by the beginning of the 20th century, it was an important port. In 1966, the year oil was discovered, Dubai
and the emirate of Qatar set up a new monetary unit to replace the Gulf Rupee. The oil economy led to a massive influx of
foreign workers, quickly expanding the city by 300% and bringing in international oil interests. The modern emirate of
Dubai was created after the UK left the area in 1971. At this time Dubai, together with Abu Dhabi and four other emirates,
formed theUnited Arab Emirates. The following year Ras al Khaimah joined the federation while Qatar and Bahrain chose
to remain independent nations. In 1973, the monetary union with Qatar was dissolved and the UAE Dirham introduced
throughout the UAE. A free trade zone was built around the Jebel Ali port in 1979, allowing foreign companies unrestricted
import of labour and export capital. The Gulf War of 1990 had a negative financial effect on the city, as depositors
withdrew their money and traders withdrew their trade, but subsequently the city recovered in a changing political climate
and thrived.

Today, Dubai has emerged as a global city and a business hub Although Dubai's economy was built on the oil industry,
currently the emirate's model of business, similar to that of Western countries, drives its economy, with the effect that its
main revenues are now from tourism, real estate, and financial services. Dubai has recently attracted world attention through
many innovative large construction projects and sports events. This increased attention has highlighted labour rights and
human rights issues concerning its largely South Asian workforce
Pest analysis:

Organizations go through detailed analysis before any steps are taken towards marketing process. The analysis is all part of
the planning process that helps set priority and plan functions that are to be carried by the organization. The organization’s
marketing environment is made up from:

 The internal environment:

Consists of wages, staff, financing and office technology as a whole.

 The micro-environment:

Include the external customers, agents and distributors, suppliers and competition available on the market.

 The macro-environment:
Consists of political forces, Economic forces, Sociocultural forces and Technological forces. These factors are
recognized as PAST factors.
PEST stands for:

To be able to analyse the United Arab Emirates environment we need to place some general facts about the UAE:

Name: United Arab Emirates. The Emirates are: Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah, and
Fujairah.

Government: Federation of the seven Emirates, each with its own ruler.

President: Sheikh Zayed Bin Sultan Al Nahyan.

Area: 83,600sq. Km (including 200 islands)
Location: Middle East, bordering the Gulf of Oman and the Persian Gulf, between Oman and Saudi Arabia
Population: 2,407,460 and includes 1,576,472 non-nationals July 2001
Language: Arabic (official), Persian, English, Hindi, Urdo
Religion: Muslim 96% (Shi’a 16%), Christian, Hindu, and other 4%
Climate: Desert; cooler in eastern mountains
Currency: The UAE Dirham (Dh) or (AED), 1Dh = 100 fils
Exchange Rate: 3.671 Dh per US $1

Political factors:

The political situation in the UAE is stable. The Emirates banking systems have developed; relationship based banking and
monetary system that is capable to fulfill later stage funding supplies, whether it is equity, loans or leasing. Almost banking
organizations, represented by almost every major financial institution in the world can either invest or assist in accessing
UAE’s emerging capital markets.
Gaining commercial loans in the UAE is based on established credibility and relationships with influential people to create a
more stable political atmosphere. The government mainly sets up the financial politics but there are organizations such as
the ADCCI (Abu Dhabi Camber of Commerce and Industry) that serve as a bridge between the private sector and the
government. ADCCI provides a wide range of services, such as setting up the Sheikh Khalifa Fund to provide technical and
financial support for small-medium enterprises set up by the youth, they also organize trade fairs, sending delegations
abroad to promote Abu Dhabi as a commercial center and initiating training programs that train nationals to join the private
sector.

The strong banking system increases presence of venture capital and government funding provide substantial financial
resources to foreign and local entrepreneurs. The most crucial factor is raising capital for a new foreign entrepreneur is to
establish good relationships with local guarantors or other established foreign entrepreneurs. The best thing to do here is to
get a network of contacts essential for successful business in the system.

Political risk factors:

Four types of political risk factors must be examined in assessing the climate for investment in any given country. They are:
1.Regime change: A change in key government personnel through normal electoral or authorized political processes, or
through illegal means.
2.Political turmoil: General levels of politically inspired violence, including violent strikes, guerrilla action, or civil war

3.Government policy: Decisions with respect to fiscal and monetary policies, trade restrictions or foreign investment
regulations.

4.External events: other countries actions that affect the country of concern. (book: Global Investing page 89).

Taxes:

The UAE does not have any enforced federal income tax legislation for general business nor is any such tax

envisaged in the foreseeable future. Taxation on trade or business income would be, in theory, based on income tax decrees
issued by the individual Emirates prior to the crediting of UAE as federation in 1971. To income tax decree has been
enacted by each Emirate, in practice the enforcement of these decrees is restricted to foreign banks and oil companies.

To incant investors there is no personal taxation in the UAE. Except for oil and gas-producing companies that pay royalties
and taxes on their proceeds and foreign banks that pay 20% of their profits, there are no direct corporate income taxes; there
are no preservation taxes. In the free zones, enterprises are granted at least a 15-year tax exemption guarantee regardless of
the changes in the laws. The currency is fully convertible and there are no taxes on the repatriation of capital or earnings.
Further, there are no foreign exchange controls, quotas or trade barriers and import duties and tariffs are extremely low.
(Book: Banking in the UAE)
Economic factors:

In the last fifteen years the economy of UAE has move very quickly. The discovery of oil and its development provided the
drive to the local trade, which earlier mainly represented the entrepot trading activities of Dubai. The primary trade strength
of the UAE has been reconfirmed by the really strong economy, which was almost unconstrained by the Gulf War and other
regional events. (book: UAE Economy) The banking system consists of the Central Bank, 21 national banks with 281
branches, 28 foreign banks with around 1,001 branches, one restricted license bank, two investment banks and 10
representative offices. The Central Bank acts as the government’s advisor on financial and monetary matters, issues
currency and controls the banking sector. The national banks have a dominant share of the market. The leading institutions
are National Bank of Abu Dhabi, Emirates Bank International, National Bank of Dubai, Abu Dhabi Commercial Bank and
Mashreq bank. The foreign commercial banks have about 25% of the market share and hold roughly the same amount in
total bank assets .The regulation of the UAE financial market was taken a further step in March 2000 with the launch of the
Dubai Financial Market, which made the buying and selling of stocks official previously, this had to be carried out
informally through private investment agencies. With less than 10 companies listed and Volume of $1 million in daily
transactions, the Dubai Financial Market is early to provide an environment sufficiently attractive to act as a magnet for the
massive overseas reserves (estimated at $600 billion by the IMF).There are even investments for foreigners now in the
Emirates. A recent announcement made by public joint stock company EMAAR properties (owned 32% by the Dubai
government) to allow foreigners to own up to 20 percent of shares is a major move towards opening up of the UAE
financial market to international capital. Economic analysis in the UAE is difficult as there are delays by the federal and
emirate governments in publishing comprehensive and accurate statistics in a timely manner. The private sector institutions
including banks and foreign oil companies are not allowed to disseminate statistics directly to the public. The UAE has an
open economy with one of the highest GDP per capita in the world and a sizable annual surplus.

Social Factors:

The social factors are important data in the process of analyzing any market in the world. It includes the
demographic and cultural aspects of the external macro-environment. It helps the organization to make the
right decisions regarding customer’s needs. In general, the social factors in the UAE have a great impact in
determining the size of the UAE labor force. There are some essential forces that should be considered while
planning to begin a new business in the UAE such as:

 Religion

Islam is the major religion in the UAE. The people are following the rules and regulation of Islam. People in
the UAE are respecting all the principle of their religion. However there are some products, which are
forbidden in Islam like alcohol and gambling.
  Language

Arabic is the official language in the UAE. Business relation use English and it is the second language in the
country.

Technological Factors:

Technology affects distribution channels, transaction processing, marketing, credit analysis and risk
management. It enables the new products and services and new business processes to manage the business
and to compete differently. That may encourage Ms. Prakesh to think of open a web site with his
business.

The Internet is widely used in the UAE by all facets of society: individuals, schools, businesses, and the
government. ETISALAT claims that average monthly usage is 1.6 million hours for over 500,000 people.
Moreover, ETISALAT discovered that average usage per user is 72 hours a month. Almost 20 percent of the
population has access to the Internet. 

Tourism in Dubai:

Dubai Mall is one of the largest malls in the world.Tourism is an important part of the Dubai government's
strategy to maintain the flow of foreign cash into the emirate. Dubai's lure for tourists is based mainly on
shopping, but also on its possession of other ancient and modern attractions. As of 2007, Dubai was the 8th
most visited city of the world. Dubai is expected to accommodate over 15 million tourists by 2015. Dubai is
the most populous emirate of the seven emirates of United Arab Emirates. It is distinct from other members
of the UAE in that a large part of the emirate's revenues are from tourism.

Dubai has been called the "shopping capital of the Middle East". Dubai alone has more than 70 shopping
malls, including the world's 7th largest shopping mall, Dubai Mall. The city draws large numbers of
shopping tourists from countries within the region and from as far as Eastern Europe, Africa and the Indian
Subcontinent. While boutiques, some electronics shops, department stores and supermarkets operate on a
fixed-price basis, most other outlets consider friendly negotiation a way of life.

Dubai is also known for its souk districts located on either side of the creek. Traditionally, dhows from the
Far East, China, Sri Lanka, and India would discharge their cargo and the goods would be bargained over in
the souks adjacent to the docks.  Many boutiques and jewellery stores are also found in the city. Dubai is
known as "the City of Gold" and Gold Souk in Deira houses nearly 250 gold retail shops. Dubai Duty
Free at the Dubai International Airport offers merchandise catering to the multinational passengers using the
airport.

Architecture:

Dubai has a rich collection of buildings and structures of various architectural styles. Many modern
interpretations of  Islamic architecture can be found in Dubai, due to a boom in construction and
architectural innovation in the Arab World in general, and in Dubai in particular, that has been supported by
the top architectural and engineering design firms of New York and Chicago.  As a result of this boom,
modern Islamic - and world - architecture has literally been taken to new levels in the last decade in
skyscraper building design and technology, culminating in 2010 with the completion of the Burj
Khalifa (Khalifa Tower), now by far the world's tallest building at 828 m (2,716 feet). The Burj Khalifa's
design is derived from the patterning systems embodied in Islamic architecture, with the triple-lobed
footprint of the building based on an abstracted version of the desert flower hymenocallis which is native to
the Dubai region. The completion of the Khalifa Tower, following the construction boom that began in the
1980s, accelerated in the 1990s, and took on a rapid pace of construction unparalled in modern human
history during the decade of the 2000s, left Dubai with the world's tallest skyline as of January 4, 2010.

Parks:

Dubai has numerous small parks and gardens. In addition, there are a number of large parks, amusement
parks and heritage villages. Dubai Municipality's Strategic Plan for 2007–2011 seeks to increase the per
capita green area to 23.4 m² (27.98 yd²) and the cultivated land in urban areas to 3.15% by 2011 The
Municipality has started a greenery project which will be completed in four phases planting 10,000 trees in
each phase. Famous parks include:

 Creekside Park, Bur Dubai

 Safa Park, Sheikh Zayed Road

 Al Mumzar Beach Park, Deira

 Jumeirah Open Beach Park, Jumeirah Beach Road

 Za'abeel Park, Sheikh Zayed road

  Mushrif Park, Deira, Dubai

 Wild Wadi Water Park, Jumeirah Beach Road

 Wonderland Amusement Park, Bur Dubai

Sanitation issues:

Currently, human waste is collected daily from thousands of septic tanks across the city and driven by
tankers to the city's only sewage treatment plant at Al-Awir. Dubai's rapid growth means that it is stretching
its limited sewage treatment infrastructure to its limits. Because of the long queues and delays, some tanker
drivers resort to illegally dumping the effluent into storm drains or behind dunes in the desert. Sewage
dumped into storm drains flows directly into the Persian Gulf, near to the city's prime swimming beaches.
Doctors have warned that tourists using the beaches run the risk of contracting serious illnesses like typhoid
and hepatitis. Dubai municipality says that it is committed to catching the culprits and has imposed fines of
up to $25,000 and threatened to confiscate tankers if dumping persists. The municipality maintains that test
results show samples of the water are "within the standard".

DUBAI CRISIS:
Dubai, home to the world’s tallest tower and the biggest man-made islands, is in a financial crisis.The dream city, where

lakhs of expat Indians make a living, is trying to salvage Dubai World, the emirate’s flagship in the industrial world, which

is struggling to pay back a $ 59 billion loan (around Rs 275,000 crore).

What is Dubai World?

“The Sun Never Sets on Dubai World”, is its tagline. The investment portfolio of Dubai World, owned by the Dubai

Emirate and one of the largest holding companies in the world, extends across 100 different cities in the world. It is spread

across a wide spectrum of strategic industries and sectors ranging from ports management, property

development, hospitality and tourism, free zone operations, private equity investment, retail to sectors as diverse as aviation,

commodities exchange and financial services. Dubai World owns and invests in companies that are the driving force behind

iconic property projects such as ‘The Palm’, ‘The World’ and DP World which is the 3rd largest marine terminal operator in

the world.

The origin of problem:

In November, the Dubai government announced it was planning to ask creditors to freeze repayment of debt worth billions
of dollars of two of its flagship firms - Dubai World and real estate developer Nakheel. Dubai World, which runs 49 ports
around the world,  is the conglomerate that spearheaded the Emirate's breakneck growth. It has USD 60 billion in liabilities
and will seek a six-month standstill on its debts with all lenders. Nakheel was the builder of the famous three palm-shaped
islands off the coast ofDubai. 

How did it get into a debt trap?

The company ia a classic example of huge borrowing beyond its means. In short, the company borrowed a huge amount

from banks to finance its various projects during the 2005-08 boom period but failed to come up with a repayment plan. The

global crisis of 2008 triggered the crisis and it never recovered from the blow. Dubai accumulated $80 billion of debt by

expanding in banking, real estate and transportation before the financial markets were hit by the global crisis. Dubai World

accounts for $59 billion of these liabilities and it doesn’t have money to repay this debt. Dubai suffered the world’s steepest

property slump in the global credit crisis as home prices fell 50 per cent from their 2008 peak.

Extent of the problem:

The emirate has said it has $80bn of debts, though some analysts say the true figure could be double that. Dubai World, the
state-owned holding company whose bail-out plans triggered the current crisis, has liabilities of about $60bn, though only
part of that is debt. The main problem is its real estate subsidiary Nakheel, which has huge bonds coming due, including an
Islamic bond for $3.5bn in December. It appears to have little cash flow to meet payments - as well as relying on debt, it
also sold most developments off-plan, with new developments now on hold.

According to Dubai’s Department of Finance, the company will ask creditors for a “standstill” agreement as it negotiates to

extend maturities, including $3.52 billion of Islamic bonds due December 14 from its property unit Nakheel PJSC. Abu

Dhabi is also trying to salvage the company by arranging funds. However, rating agencies Moody’s Investors Service and

Standard & Poor’s cut the ratings on several state companies, and said they may consider the plan a default. The

company had total assets of $99.6 billion at the end of 2008 and total revenue of $14.2 billion.

Dubai-economic position:
That is Dubai-sky piercing towers, rotating buildings, spectacular architectural designs ,flow of petro-dollars ,broad and
clean road notworks etc .Businessmen, investers, and lusury-seekers, used to visit Dubai with all zeal.
Some weeks ago, Dubai had issued to international investers, bonds worth $1.9trillion,whiched sent the message that its
economic position is unshakable!
But now that foundation has shaken!

Inability to repay loan instalments:

DUBAI government has announced just recently, that it is, for the timebeing , not in a position to repay its outstanding debt
of $7,40,000.At the same time, Government owned mega finance institution-DUBAI WORLD also declared that it may not
be able to repay any loan for 6months.This 'Dubai World' is engaged in different business enterprises like-transport, ship
building ,township building ,etc. A sister-concern of Dubai world ,a building construction company, named NAKHEEL is
also telling that it requires some more time to repay its debt instalments.
All these indicate that Dubai's financial foundation is ...... SHAKING!

Reasons:
Dubai, unlike other six emirates of UAE is not a country rich with oil resources. This city state is purely a business city
wholly depending upon tourism and other businesses. Dubai World, in a haste to attract world enterprenuers started
spending more and more on building fine roads, star hotels ,etc. Foreign institutional investers also invested much here,
especially during the last four years .But, for some reason, may be due to economic crisis mainly, FIIs did not turn to Dubai
for investment..AS a result, real-estate business Dubai suddenly collapsed. This made an impact on other businesses also.
Effects:
Dubai world, has business tie-ups in different countries including India. These projects, may be delayed( resulting in cost
increase), or dropped, or prolonged .Unemployment problem may arise in Dubai. Enterprises may have to retrench a portion
of their employees.!0 lakh Indians are working in Dubai and other UAE countries. Foreign Institutional investers, who have
business ties with Dubai World, may face loss.70 financial institutions have lent credits to Dubai world. Banks in Duabi
may face crisis .When the world is recovering from last year's economic recession, this may push it back to same position.

Measures to control financial crisis:

Dubai Ruler His Hihness Shaikh Mohammed bin Rashid Al Maktoum has approved a most recent Real Estate Regulatory
Authority's (RERA) price index for controlling unnecessary rent hike. The move is in line with Dubai's plan to stabilize the
crisis ridden real estate market of Emirates by introducing new formula for rent index besides promoting landlord-tenant
relationships.
The earlier law passed in January 2009 was intended to use in conjunction with an index of the Real Estate Regulatory
Agency (RERA). Mahmoud Hesham Al Burai, RERA Director of Development said that the new law would work on the
same principal as the rental index.

Official news agency WAM stated, "For properties rented in 2009 or earlier, the maximum increase in rent shall be as per
the previous decree for 2009. The decree approves the (RERA) price index, which shall be followed as the reference for
setting any increase in rent values in 2010."

Arnel G. Ramos, a Dubai resident, hoped that the new legislation would prove beneficial for Expatriates and concerned
builders and tenets would follow it rigorously. The recent decree allows 5 per cent rent hike subjected to guidelines by
RERA.

Role of Abu Dhabi:

There is cause for concern in Abu Dhabi’s reaction to the crisis that is unfolding one step at a time in Dubai. Indeed, it has
been ascribed to officials in the UAE government that the state will not provide complete coverage of the debts of
companies in difficulty in Dubai, but will rather “look into each case on its own”.

From a financial point of view, Abu Dhabi is approaching the problem of the delay in settling Dubai’s debts, the latter
having asked for an additional six months to pay the interests on its massive loans, with a kind of professional caution, if
one may say, at a time when loaning parties had based their expectations on “political” intervention on the part of the
government of the United Arab Emirates, or on that of the Emirate of Abu Dhabi, to face any financial difficulty that might
arise before Dubai, which had kept the world engrossed with its extravagant projects and excessive spending. Yet the past
few days have shown that Abu Dhabi has a different opinion.
Lesson from Dubai Crisis:
Dubai at the moment has a debt worth over $80 billion dollars in which Dubai is trying to pay off. Some say the real debt is
actually over $160 billion dollars. What ever the case is, Dubai is potentially going to be the biggest failing state that there
will ever be. Dubai has spent their money from their income derived from their annual billions of dollars a year oil exports
in a very poor manner. So what lessons can we learn from the Dubai debt crisis?

1. Out of control spending

One of the biggest reasons why Dubai is failing is because they spent too much on things that were wasteful. For instance,
in one of Dubai's famous hotel, the Palazzo Versace hotel, they have beaches that are refrigerated so it doesn't feel too hot
when sitting or lying down on the sand. It cost them millions of dollars to build. There was no limit in what they could
spend, and many companies and workers exploited that fact. So billions of dollars were wasted draining into resources that
weren't needed at all.

2. Lack of Future Planning

Dubai is a hot arid desert coastal town which has not much resources and is distant to vital strategic assets. For instance,
Dubai has to ship fresh water from ships to get running fresh water to the people. Investment was invested mainly in hotels
and big resorts and not in education. Also, Dubai does not have any plan for any oil shortages. If they had an oil shortage
now, Dubai will be a ghost town, and will never pay off their debts for hundreds of years. The people running Dubai lacked
insight into future strategic planning.

3. Poor Management
One of the sad disasters about Dubai is that Dubai was very rich but had poor management running the country or
companies. For instance, The World Island hotel has man made islands where ships and trucks of sands have to be move to
build these islands. At the moment, these islands are sinking. Billions of dollars was wasted. Also, hundreds of apartments
are left empty because of too much construction of apartments close together and too fast. This is a result of poor
management

Can Dubai survive?

Dubai crisis serious, but hope is on the horizon, say expats.The surprising move to restructure government-controlled Dubai
World and its property arm Nakheel following the news of Dubai World seeking delay in repayment of some of its $59
billion debt last week sent shivers down the spine of investors worldwide. Qatar Tribune’s Joseph Varghese spoke to some
of the Indian expatriates for their reaction on the current financial crisis. But the recent developments are a great blow to its
economy and things are still not right with the financial institutions in Dubai. I think that the city-state will take more time
to recover from the last year’s global recession. 
If the newspaper reports are true, many of the employees working in different institutions there might even lose their jobs. 
I left the Emirates in last June as I was asked to go on leave for a year. 
I could read the red signal. 
I turned to Qatar and succeeded in getting a job. 
I fear that the UAE job market may suffer for a longer period than was expected. 
This is something that we have to wait and watch for the whole situation to unfold. 
GEORGE JOSEPH Engineer I think the problem is not that serious as being portrayed by the media. 

Considering the financial clout of the country and the organisations like the Dubai World, it may be an accidental default. 
But it has come at a very wrong time when most the people are under the impression that the world is fast recovering from
the financial recession and most of the countries have started showing signs of positive development. 
I do not think that this default can be taken as a signal for any kind of financial collapse in Dubai. 
It can be rectified quickly. 

IMPACT ON INDIA:

The financial crisis in Dubai will not affect India but may prompt investors to take a relook at emerging markets, according
to World Bank President Robert Zoellick.

“I do not think it will have an effect on Indian markets,” Zoellick told reporters after a meeting with a select group of policy
makers on the final day of his four-day visit to India. He said though the financial problems in Dubai were manageable, they
might prompt a second or a third look at investments in emerging markets due to the nervousness in the financial system

NEW DELHI: A majority of big real estate developers in India said they are insulated from the financial crisis in Dubai
and it will not have any impact in the country's property market. 
DLF, Unitech, Parsvnath Developers and Emaar MGF all said they have no exposure in Dubai, while Omaxe said it has an
investment of Rs 40 crore which it has asked for refund. 
But Consultant Jones Lang LaSalle Meghraj Country Head Anuj Puri cautioned that if the corporate debt default in Dubai
turns into a sovereign default, there would be real economic issues, which may not only hit India but others also. 
"Indian property market is very robust and largely dominated by internal demand. So there will be no adverse impact on
us," DLF Executive Director Rajiv Talwar said. 
OLD-TIMERS will tell you that Dubai's early growth as a trading port had a lot to do with Indian workers.
Newcomers to the desert city don't need to be told about who is building the numerous high-rise edifices that dot the city.
They just have to look around. Indians simply outnumber all other races. They form nearly half the population of Dubai
while locals number only 18 per cent. So when Dubai suffers a jolt, its repercussions are bound to affect India and Indians.
Or has India grown immune to such shocks? Table ! takes a closer look at the impact the financial crisis in the desert
emirate will have on India and Indians.

Stock market:
THE Indian stock market was not prepared for two surprises in three days - the Dubai announcement and the Indian GDP
results .On Nov 26, Dubai World, with total debts of US$59 billion, asked creditors to postpone its forthcoming payments
until May next year. The following day, markets tanked all over the world. The Bombay Stock Exchange lost 390 points.

A sweet surprise came when the markets opened after the weekend. India's Central Statistical Organisation announced that
the country's Gross Domestic Product grew 7.9 per cent from a year earlier in the July-September period.

If not for the Dubai crisis, India's markets would have soared much higher on hearing this news. After all, a Dow Jones
Newswires poll of 13 analysts before the announcement had forecast only a 6.3 per cent rise - considered very bullish.The
markets are slowly digesting the news and stocks are on the way up in India, while the rest of the world is dusting its way
out from the Dubai desert storm . OCBC Bank's vice-president (wealth management, Singapore) Vasu Menon tells tabla!:
"The Dubai crisis is unlikely to have a significant impact on India where the banking system and real estate sectors do not
have much exposure in Dubai. India also enjoys strong fundamentals. India's exceptional growth prospects should augur
well for its stock markets and the Dubai crisis is unlikely to derail the bourse's promising medium-term prospects."

Real estate:
THE Indian property developers who did venture into Dubai are likely to be impacted in a big way.

Jones Lang LaSalle Meghraj's chairman and country head for India Anuj Puri tells table !: "There will be a negative impact
on Indian developers in Dubai, since this is a situation where prices are expected to come down in Dubai. These players
would have acquired projects to sell them at a particular price. With pricing taking a beating, the profitability of these
projects is reduced."Construction companies who had gone to Dubai to carry on contract jobs would also be affected, since
payments would get delayed and project sizes will be curtailed, thereby affecting their bottom-line. Many projects will get
delayed or trapped, meaning a decrease in business. Commitments from Dubai-based companies into India will
also reduce."Those involved in construction in Dubai include Nagarjuna Constructions, Larsen & Tubro, Omaxe and BSEL
Infra.

Indian workers:
OVERSEAS Indian affairs minister Vayalar Ravi feels that the government does not anticipate a surge in people returning
from Dubai and is confident that the crisis will blow over .But Kerala finance minister T.M. Thomas Isaac has told the
media that he is very "anxious" about the possible slowdown in construction activity. He thinks that could take a toll on
workers from the state who are in that industry and form the majority of Indians in Dubai .India's consul-general in Dubai
Venu Rajamony had this to tell table ! in an e-mail: "The recent announcement by Dubai World had no direct impact on
India and there is no cause for any kind of panic. This decision is not going to lead to any sudden job losses of Indians or an
exodus back to India."

Prof Mukul Asher from the LKY School of Public Policy, who specialises in social security issues in Asia, tells tabla! the
impact on Indian workers would depend on the extent to which economic activity in labour intensive sectors, such as
construction and tourism, is impacted."The crisis however underscores the need for high remittance-dependent economies
such as Kerala that it is essential to create conditions to utilise human capital, a result-oriented mindset and entrepreneurship
that returnees from overseas bring to the local economies," says the professor.
"These returnees require appropriate social and physical amenities, such as schools, health facilities, and housing; and a
friendly business environment if the origin states (and countries) are to benefit from overseas workers on a sustainable
basis."

Banks:
IN RECENT years, Indian banks have made significant progress in expanding their network overseas and Dubai is one city
where many set up shop. According to The Times Of India, the crisis may not have a major impact on India's big banks,
barring Bank of Baroda. That bank's total exposure in Dubai is around Rs4,000 crores. Its chairman M.D. Mallya, however,
told the paper "we feel that the asset quality (in which we have invested) is good. We don't foresee any major impact of the
Dubai crisis". The Reserve Bank of India has asked Indian banks to furnish details of their lending to Dubai-based firms as a
pre-cautionary step. Indian media reported that State Bank of India, which was recently granted a full-fledged banking
licence in the UAE, does not have significant exposure in Dubai yet.

Entertainment:
THE crisis rattled Bollywood initially. The Dubai premiere of Paa, the big Amitabh-Abhishek Bachchan starrer, was called
off by the distributor Reliance Big Pictures. Some concerts and shows were also cancelled .The Middle East, particularly
Dubai, is one of the biggest overseas markets for the Mumbai film industry ,generating almost 50 per cent of its
international revenue .Movie analyst Komal Nahata told the Hindustan Times: "For an A-grade film, over 40 per cent of the
collection comes from overseas and Dubai contributes a major 10 to 15 per cent. Dubai is one of the few overseas markets
where Hindi films release on Thursdays. A bad audience response there, in the wake of the crisis, would affect the business
here in India. So producers might skip releasing their films in Dubai for a while."
Bollywood's stake in Dubai goes beyond movies. Shah Rukh Khan owns a 5,000 sq ft villa costing Rs8 crores in The Palms
and has some investment in a beachfront residential development called Shahrukh Boulevard .Hrithik Roshan , Kareena
Kapoor and Suniel Shetty have also reportedly invested in the city's real estate market while Abhishek and wife Aishwarya
own a designer villa in Sanctuary Falls, a resortstyle villa community within Jumeirah Golf Estates.

Other Businesses:
The UAE was India's top destination for exports for the year ending March this year, displacing the US. The country's total
exports to the UAE grew by a phenomenal 53 per cent to US$23.92 billion this financial year from US$15.63 billion in
2008.Dubai is the gateway for India's exports to the Middle East and this is unlikely to change in the near future.
Fashion designer Neeta Lulla, who has Dubai clients regularly visiting her Mumbai outlet, tells tabla! that they have cut
spending by 25 to 30 per cent: "They are still spending on essentials since it is the wedding season but the frivolous
spending has been curbed."Dubai has investments in India too. DP World, part of Dubai World, runs five container
terminals in India, accounting for 40 per cent of India's container traffic. The company has invested over US$2 billion in
India and had said it would spend US$12 billion more in the next five years.
Mr Rajamony , India's consul-general in Dubai, says that "officials of the Dubai Port World have reassured us that their
projects in India will continue as before and there is no reduction in their commitment or investments in India.-tabla!

Strengths Weaknesses
   Fast decision making    Negative image of the Middle East
   Oil money, booming economy    Barren desert, the lack of natural resources
   Political neutrality and impartiality    Only 20% of UAE nationals
   The lack of fundamental infrastructure: transportation,
   Unique beauty, hotels and attractions
water
   Luxury experience includes relaxing beaches and
   Luxuries might appeal too small a segment
invigorating sport and exploration opportunities
   Safe environment  
   
Opportunities Threats
   Increasing oil price    Strong competitors: within the region: Abu Dhabi, Qatar;
 outside of region: Singapore, Hong Kong
   Increase job opportunities for immigrants and natives    Oil running out in 30 years
 Terrorism and war could further negative image of
   Growing luxury market
Middle East, UAE
 Increase in foreign investment  Limited media coverage