UAE - Market Situation

[kamranACA]

Dears,

Following has been reported by Business Recorder

Half of UAE expatriates consider moving survey

DUBAI (February 23 2009) Nearly half the expatriates in the United Arab Emirates are considering relocating as the global economic downturn hits the second-largest Arab economy, according to a survey published on Sunday. The survey by YouGov, an Internet-based market research firm, also found that 54 percent of the 779 foreigners questioned were nervous about job security.

"The shock of the current economic crisis on the lifestyles of UAE consumers has also begun to shift the perspectives of many residents," said the report by YouGov, which conducted the survey between January 20-29.

"Forty-six percent indicated that the current economic climate in the UAE is making them consider relocating to another country," up from 38 percent in December, it said.

More than half of those surveyed said either a close friend or family member has lost their job in the last three months, mainly in the real estate or finance sectors, it said. YouGov said consumers were cutting down on spending and avoiding shopping malls because of the economic crisis. After a six-year oil-fuelled boom, the UAE - where foreigners make up 90 percent of the workforce - was hit by the global financial crisis which has caused project delays, hundreds of job cuts and forced many expats to leave.

The UAE, the world's fifth-largest oil exporter, has also suffered from a sharp decline in the oil price, which has lost more than 100 dollars since a peak of 147 dollars in July.

Figures released in December said the UAE population stood at 6.4 million at the end of 2007, but that only 14 percent were nationals. Foreign workers mainly come from South and Southeast Asia, many of whom are low-paid, while Westerners are attracted by tax breaks and a potentially lavish lifestyle.

Copyright Agence France-Presse, 2009

http//www.brecorde r.com/index. php?id=896714&currPageNo=2&query=&search=&term=&supDate=


Regards,


KAMRAN.

[tariqab]

Dears

UAE economic scenario depicted by YouGov is quite right, because same condition is prevailing in Market as they described.
Current Economic meltdown affected UAE in three ways.
a) Crude oil price declining that decreased UAE exports.
b) Most of real estate investors’ Target Market was USA & European Countries.
c) Those who have money, they are not ready to buy non-essential items because of uncertainty. The phenomenon of “market goes by the sentiments of people” is working.


Last week I visited SONAPUR LABOUR CAMP (near Dubai), that is consider a biggest labour camp on globe, there are many big shopping malls in this area, I was surprised that there was no hustle and bustle as compare last year. Its mean so many workers have been retrenched during last three months, rest having no job security.


Regards
Tariq

[kamranACA]

Dears,

Today some one came to me, and during discussion he told that almost 15K people are leaving Dubai every week. May it be true or not, but it is a fact that compared to the days of boom, UAE as a whole looks somewhat deserted.

I guess this recession will continue at least for 5 years or may be beyond this limit.


Regards,


KAMRAN.

[tariqab]

Dears

As per my guess it the Economic Downtern will not more than 02 years here in UAE, because Government initiated some steps to improve the Economy. Because of these steps, UAE stock is showing good results for current week. Today and yesterday total volume of trade in value was 1.4Billion & 1.5Billion respectively.

Dubai and Abu Dhabi Governement also provided liquidity to some banks and two or three big real estate companies to make some temporary arrangements to boost economic acitivities.

Regards
Tariq

[SarfarazCA]

According to my information property prices have been reduced by almost 40% ...

[rabia-k]

property prices have been reduced by 40% but GOD knows when will rents be reduced by 40%??

[kamranACA]

Tariq,

May God your assessment come true.

However, I don't see UAE's economy to change isolated from rest of the world.

Regards,


KAMRAN.

[sumairalam]

Dear Members,

In this financial crisis UAE economy is clearly divided in to two parts Abu Dhabi (including Ras Al Khaimah / Um Al Qwain / Fujerah ) and Dubai ( including Sharjah / Ajman).

This is Dubai economy that suffers most whereas Abu Dhabi is not effected as compare to Dubai. Abu Dhabi is heavily dependent on Oil and investments he made throughout the world ( especially in Africa / South America). Oil prices are increasing and economies of North America and Africa are booming. Brazil rated Ist in the economy growth. Whereas Sudan and Tanzania are the investors favorite for Construction industry.

Ras Al Khaimah economy is dependent on export and supply of non-metal minerals for cement and construction industry. RAK Ceramic world largest and various steel industries also strengthen the economy of the state.

As a matter of fact people are arriving daily to UAE , population is increasing on daily basis requiring shelter , food and necessities.
So the demand of houses , food and others related item will not decrease.

Dubai is the worst effected state in this whole scenario, the housing industry bubble is burst and supply is more than demand. Due to some ( in my opinion) wrong decisions like cancellation of Jabel Ali Airport project and water front project ( World largest triple the size of Hong Kong) effects badly to the common person.

But the cultural and economy of UAE is very much different from others country. Usually in a countries like Pakistan , UK ,USA the enterepenaures are national they put the capital as they have to live there and they want to do business in the country they lived. In UAE the situation is reversed 80% of the total population is not the citizen , owners of the companies are not the real owners but only having the Power of Attorney. The situation will become drastic if the trust between the local and expatriates shatters.

Govt knows these things very well and they are on quick moves to overcome the economy crisis.

Announcement of mega project like Abu Dhabi Metro , and RAK ( funded by Abu Dhabi)train system will increase the efficiency of the econmy.

Abudhabi has sufficient capital to strengthen the Dubai economy ( both Kings are cousin).

Majority of the layoffs are seen in Nakheel Properties and Dubai Properties ( Water front project / Jabel Ali Airport Projects). As you can assume the strength of workers for these projects.


Regarding the points raised by others respected members please note that

the more any country economy dependent on USA, the more it suffers.

Dubai airport is the second busiest airport in terms of passenger handling.

90% of the people laid -off got the job in UAE market. ( except for construction workers). Construction workers have to go home at the end of projects either this year or next. Construction industry has its limits.

Yes, job is more at risk in this period but people having multiple experience or can do multiple job task are less to worry.

Property prices are not reduced by 40% but the profit on property are reduced.

If some one visited Global Village on Friday 20 second last day of the event . He would not never think about the crisis, when you parked your car 2 Km away due to full parking, stand in que for getting entry tickets and waited for 20 mins to got the table at Bundo Khan restaurant you wouldn't believe that city is in financial crisis.


Majority of the Indians ( more than 50% of the total expatriates) always wanted to go back to their home - currency conversion rate is not in their favour and construction industry in their home country is paying healthy salaries. Nowadays you are unable to hire skilled workers from India.

The workforce coming from India/ Sri Lanka / Pakistan having experience in Sales joins Consumer Banking , as the other industries usually requires arabic and uae driving license. And DSA will become the only choice for them. 90% layoff in Finance Industry are from DSA/ consumer banking.


I just reflect the positive side of the UAE economy and try to show the other side of the pictures. I know that real crisis is for the one who is fired from the job, but still I believe that people who are managing their budget well and live within their salary limits are less effected. We all here to work and save money , if we start living the lavish life and spend whole ( or more than whole) what we earned then we will be in trouble whatever the economy situation.

In my opinion worrying is the psychological effect rather than the crisis itself. ( In respect of UAE economy)

Best Regards

[kamranACA]

Sumair,

It's quite heartening to read what you wrote.

However, we have witnessed certain very disturbing things which never happened earlier in this region. One of fresh CFAs (my friend's friend) went to Dubai during last quarter and he got a job of 7,000 UAE Derhams. Some of the people in finance and accounts personally known to me have been fired out.

Still, your picture is positive and raises a good ray of hope for the coming days.

Regards,


KAMRAN.

[sumairalam]

Dear Member,

News from UAE

This is why it was good news, two days ago, to hear from an official in the Ministry of Labour that the government is considering a review of the six-month ban imposed on anyone who leaves their job. At present the law requires anyone who has left an employer to leave the country for six months before finding alternative work, unless the employee is in certain defined categories of managerial employment, and if the employer has no objection to him or her finding alternative employment.

The purpose of the six-month ban was to stop employees coming to the UAE at the expense of one company and then jumping around all sorts of employers. However, these controls on the labour market served well when the economy was booming. Recession requires a different attitude and people who lose their jobs should be able to find another visa so that they can stay in the country and find work with other companies fairly quickly. Not many people can survive without work for more than a few weeks, since bills such as rent, school fees, or savings plans all eat up money very fast.

The UAE has a skilled and motivated work force. The government needs to help keep the workforce here during the times of recession so that the UAE’s companies are ready for the recovery when it comes.

http//www.gulfnews.com/opinion/editorial_opinion/nation/10290927.html

[rabia-k]

the six month ban doesn't apply if you have been working with the same employer for 3 yrs. neither does it apply if u have an NOC.

[Toronto_Boy]

Dear sumairalam and rabia-k

Does this mean an employee cannot switch jobs before 3 years (without leaving country for 6 months) with each of employer, unless he/she has NOC? Does this mean an employee must have to remain with each of later employers also for 3 years, even if the employee has completed 3 years with previous employer(s)?

Could anyone shed some light.

Thanks

[rabia-k]

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by Toronto_Boy</i>
<br />Dear sumairalam and rabia-k

Does this mean an employee cannot switch jobs before 3 years (without leaving country for 6 months) with each of employer, unless he/she has NOC? Does this mean an employee must have to remain with each of later employers also for 3 years, even if the employee has completed 3 years with previous employer(s)?

Could anyone shed some light.

Thanks
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">

an employee can switch jobs before 3 yrs , but the ministry of labour will automatically put a 6 month ban on him uless he gets an NOC from his present employer. the employee may have to pay fee of around dhs 5000 to the ministry. it also depends on which category of professionals you fall in as some are exempted from the ban.i am not 100% sure of the 3 yrs rule.
categories exempt from ban
1 )Engineers.

2)Doctors, chemists, and nurses.

3)Agricultural advisors.

4)Qualified accountants and auditors

5)Administration officers who are graduates.

6)Technicians in electronics, scientific equipment and labs.

7)Licenced Drivers for driving heavy vehicles and buses.

8)Persons working in private oil companies when transferred between those companies.

this is an excellent website for all your queries about the labour laws in uae

http//www.godubai.com/jobs/AR1.asp?article_id=2002/GTY%23155#13

[sumairalam]

Dear ,

The immigration and residency rules are very much complex in UAE. But generally speaking to switch from one employer to another , the employee need No objection certificate (NOC) from current employer.

When Labour Card is canceled 6 months Automatic ban is imposed, means you are not allowed to work for another company for six months.

I am quoting the exact procedure for change of sponsorship for ready reference

"
B6-Transfer of Sponsorship

B61-From a Sponsor to Another

Definition
It’s changing the job from the current sponsor to a new sponsor, who will have to follow all the conditions and the procedures designed for the transfer.

Step 1 First approval
The new employer should get permission from previous employer to apply for transfer of sponsorship of a worker associated in his firm, after getting an approval from the Ministry of Labour.

[Unquote This refers to NOC]



Step 2
Final approval


Application Form
Internal Labour Permit application (Transfer of Sponsorship)

Conditions

• The worker must have a valid residence permit affixed to his passport.
• The worker must have a valid labour card.
• If there is no suitable UAE National or GCC citizen to fill up the post.
• The job that will be performed by the worker with the new sponsor must be in conformity with the worker’s qualifications and experience and the activity of the firm.
• The worker must have spent a specified period in the service of the original sponsor prior to his transfer. This period will be calculated from the date the labour card is issued or renewed, and will be as follows for all categories
- One year for holders of Masters and PhD degrees. They are allowed to transfer their sponsorship for unlimited number of times.
- At least two years for holders of Bachelors degree or its equivalent. They are allowed to change their sponsorship twice during their stay in the country. However, they may be exempted from the condition of service period upon payment of a fee at AED 3,000 and provided they have spent at least one year with the original employer.
- At least three years for other categories with lower qualifications, who are allowed to transfer their sponsorship only once during their tenure in the country. They may also be exempted from the condition of service period upon payment of a fee at AED 3,000 and provided they have spent at least one year with the original employer.
• All labour categories can be exempted from the condition of service period provided they pay AED 3,000 under the following conditions
- if the company announces its bankruptcy, is closed down or liquidated as a result of a court ruling;
- in the event the Ministry of Labour cancels the company’s license (firm card);
- if the ownership of a company has been transferred to another owner;
- if a company has been merged or incorporated within another company;
- if the company has been divided to heirs after its owner’s death or any other reason;
- in case a stake of the company has been sold to another company; or,
- If the company’s owner dies, leading to its closure.


• The 1 year clause can be exempted based on the following conditions
- The approval from the current sponsor
- The minimum qualification should be a high school certificate
- The following fees should be paid
#61607; transfer of sponsorship approval fees
#61607; The fees for the exemption of the service period (3000 AED)
#61607; 500 AED for each month to complete the one year service period
• The approval from the Minister or the Undersecretary.

"


This law does not apply to Free Zones / Special Zones.


Best Regards

[CFANerd]

It was very interesting to read all this although I could only read a portion of every post, being very long. Finally we are into discussion that is really mind bending. If I am not wrong SUMAIRALAM said economies of US is booming due to rising oil prices. I disagree. Crude oil has gone down to 46 dollars approx. a barrel from as high as 140 dollars a barrel. OPEC is considering tightening the supplies to raise the oil prices in future which might cause prices to go up but for US there is still no hope of recovery. This global recession will last for years to come. We shouldn't forget the fact that these Middle Eastern countries are heavily invested in US treasuries. So far what we have seen is just a TEASER, the whole movie is yet to come. Dubai was or will be bailed out by Abu Dhabi. Dubai has amassed thousands of abandoned cars on the sides of roads. Who do you think will take all these assets or unfinished real estate projects?
The truth is capitalism is teetering at its edges. All these Arab countries will have to support US in order to save their own asses. Arabs already bailed out Master Card once. Now if all the economies in the world won't support US all their investments will be gone just like others. But US still can't pay back these countries because it has no MONEY left. All these countries will have to write off their loans at some point in future. Dubai still must have money but if it did the same thing as US.i.e bailing out the banks and institutions it will be adding fuel to fire. Truth is nobody is safe from these crises. Now it's dollar's turn to meet its fate. Interestingly, Dubai must be having huge dollar reserves, what if they are worth are few pennies in a year or two? Won't it be interesting to see $100 worth 10 dollars? Banks who have unpaid car loans and mortgages will starting defaulting one by one, which will create a credit freeze. People who benefited from these crises are still getting more money from govts. I don't know much about Dubai but I know it probably doesn't have a sound financial structure. It is heavily dependent upon oil exports and foreign investment which now will turn out to be a bad investment for all the foreigners. Consumer sentiment will stay low and joblessness will surge. Govts. themselves can't create jobs. Private sector does this job. Govt. only gets the money that is paid in taxes by people. If govts. keep printing money to bail out everybody they will cause hyper inflation. Dubai has no other exports except oil. Russia already has second biggest reserves in oil in the world and will be competing in global market. Alaska is rich with oil. There is no easy solution to this problem except to stop these people from gambling with investors' money. Now speculators are in commodities. Anybody seen gold prices lately? Except oil every commodity is up. How brutal that people are dying with hunger due to astronomical food prices and these pigs speculators are still putting pressures on commodity prices.
The only reason US is still standing is due to its reputation and people's confidence in it. The day that's gone, we'll see a ripple effect. You have every single bull crap thing pegged to US dollar.
Dubai is just a blip on the screen. It will definitely be hard for people who lost their jobs due to Dubai's strict immigration policies. So bottom line stay away from Dubai.
I am not an economist nor any other investment related professional. These are only my views based on my own findings. Please don't take these as any kind of future predictability or an advice.