How fundamental is the department's role to the Dubai Strategic Plan?
Our role is to make sure that we provide the necessary financial resources to ensure that we are meeting the requirements of the wider plan. For example, the development of infrastructure required the development of the transport sector, for which the main project was the Dubai Metro. We had to ensure there were available resources, and that was done successfully. Even though the metro launch was in September 2009, the peak of the financial crisis, we managed successfully to support it. Similarly, we are also supporting the social side. For example, there is a housing project where a few of the projects were also commissioned during the crisis and launched by His Highness. Similarly, in the financial services sector, there were some concerns about meeting some certain obligations during the crisis. The government was also there to make sure necessary support was given. We always work closely with the other government entities to make sure they have the necessary resources to achieve the requirements of the strategic plan.
In 2009 you established the Dubai Fund for Financial Support, which was in the middle of the crisis. What was the strategy behind the creation of the fund?
The idea was just to support government-related entities (GREs) and also some of the strategic projects of the state to ensure there was no negative impact on these projects. We try to make sure they are able to meet their short-term obligations. Some of the GREs are in charge of very important strategic projects for the government. For example, Dubai World is in charge of DP World, which is a global port operator. Our role was to stand by and give the necessary financial support. Now, the GREs are able to manage the challenges on their own with the improved business conditions. Recently, we have seen that many of them have taken the initiative to restructure their debts and also start new projects successfully.
How confident are you that the successful restructuring of two-thirds of Dubai's debt will pave the way for upward growth?
The debt restructuring was mainly done because the GREs had a mismatch between their short-term borrowing and their long-term projects, which meant they would not be able to meet their obligations. The restructuring allowed them to have a longer time period for the repayment of their debts that would match with their projects, which are mostly in the real estate sector, where recovery takes a long time. Most of the major restructuring has already been done successfully, with the participation of all the major creditors. The smaller GREs are progressing very well also.
You have established the Support Services Center. How successful has that been since it was established?
The Support Services Center is progressing very well. The idea behind it is that it is like an incubator for new entities, to give them the right support rather than waiting on them to develop support services when they have the duty to do the core business that they should be doing. The focus on the support is being taken care of. However, with the successful progress of the center, we find many of the new entities prefer to continue with the support services even after they are well established. And the newcomers of already established entities want to join the Support Services Center. That's how both sides act. There are savings on the budget side, giving them more time to focus on their core business rather than the support.
What positive indicators are there that the Dubai economy is back on track after the global liquidity crisis?
If we first identify the main sectors in the Dubai economy, we find sectors such as logistics, trade, tourism, and aviation. If we review the performance of these sectors from 2007 until now, we find the performance of these sectors has been very good. There is no concern about the main sectors of the Dubai economy. The main issue is with the real estate sector, which was a newcomer to activities in Dubai at the beginning of 2007. Now, this sector is recovering. The real estate cycle usually takes a longer period for recovery, but otherwise we are very optimistic about the near- and long-term future of the main sectors of the Dubai economy. For example, with the aviation sector, the government has approved a strategy that would require the expansion of some infrastructure. We have been working with the airport authorities to make sure the required financial resources are there to meet the requirements of the expansion. If you pass by the airport you can see the work in progress there. The tourism sector has also been performing very well this year and over 2011. Dubai has been successful in attracting tourists, who used to go to other destinations, but because of what they call the Arab Spring, not surprisingly their first choice is now Dubai. We have seen hotel occupancy reach very high numbers. We used to have very quiet summers, but last year was very busy, and hotel occupancy reached record levels, so we are optimistic. The government is also giving the necessary support to the main sectors to progress well and support the economy and the strategies of the government.
How do you prioritize fund allocation?
It all depends on the requirements of the strategy. The Road and Transport Authority (RTA), which is tasked to look after all transport infrastructure projects created through the government, is one example. There are some key projects that require allocations that would be given priority over other projects, and that would apply also to other projects in the municipality, like the sewage plant; it comes to prioritizing the allocation. The Dubai municipality has a second sewage plant that was just commissioned. That was one of the top priorities because of the increasing volumes being sent to the existing sewage plant, which was the only one in Dubai. We work closely with all of the government departments and we don't develop the budget and allocation on our own. Once all the information has been gathered and the discussion has taken place, the summary is presented to the Supreme Committee, which is the final authority prior to presenting it to His Highness. The Supreme Fiscal Committee (SFC) will help us in finalizing the allocation between the government departments to ensure that it is consistent with the strategy.
What about the development of the local capital markets?
I think global markets require transparency, with more and more up-to-date information. The region has not been that active in capital markets in the past, so it will take time for the region to adapt to the requirements of the capital markets or the international investor for receiving transparent up-to-date information. We have been working on this and we have been successful. Through road shows and face-to-face meetings we have made a difference. I think the next stage is to try to make online information available to investors. I think that would be a step forward. We are working all the time to improve the quality and timing of the information, but it takes time to gather information from different sources and stakeholders. We have been successful in developing the capital markets in Dubai. After Dubai entered the capital markets, we had very successful issues in 2009, 2010, 2011, and 2012. Our plan is to improve communications with the investors in sukuks and bonds through road shows and face-to-face meetings.