0132 GMT January 23, 2020
The vehicles are testament to the rising number of ‘skips’ afflicting Dubai — indebted expatriates who have left the city state rather than face debtors’ prison as an economic downturn squeezes the business and finance hub, according to FT.
Throughout the oil-rich Persian Gulf, the slump in crude prices is forcing governments to slash spending and delay projects, while private companies shed staff and, in some cases, shut down.
“There is a material slowdown under way, and it still has some way to run,” said Simon Williams, chief Middle East economist at HSBC. “Low oil prices are part of the problem. Dubai may not be an oil producer, but it exports its services to the rest of the Persian Gulf where demand is weakening.”
Abandoned vehicles were a totemic image of Dubai’s last crisis in 2009, when the emirate was forced to turn to its oil-rich brother emirate Abu Dhabi, capital of the United Arab Emirates, for a $20 billion bailout.
This year’s slowdown has not reached the crisis-levels of that recession, and Dubai is less affected than other oil-dependent peers, such as Qatar or Abu Dhabi. But the emirate is still burdened with debts of around 140 percent of gross domestic product and faces loan and bond repayments of $22 billion through 2018.
And the government’s problems are aggravating the woes of struggling private companies. Between the third quarter of 2015 and the first three months of this year, 237 small business owners left the UAE as increasingly late invoices forced firms to miss their debt repayments, according to Coface, a credit insurance firm that monitors the trade credit of 20,000 UAE companies.
One consequence is abandoned cars at the airport. Bouncing cheques and bankruptcy are treated as criminal offences in Dubai, causing many indebted expatriates to dump their vehicles and other possessions and jump on a flight out of the emirate rather than risk jail.
Cheeky graffiti scrawled on to the dusty windscreens of deluxe Range Rovers abandoned at the airport reflect the darker realities of modern day Dubai. “I don’t have money,” reads one message. “I do,” retorts another. “Sell the car and get money,” reads a third message.
“These runaway cases are triple, what we used to have,” said Massimo Falcioni, Middle East chief executive at Coface.
In metals and construction, the sectors hardest hit by the slowdown, companies are facing four-month delays in payments from clients, he said, meaning they have to wait eight months on average to receive their cash.
Falcioni said the number of bankruptcies is stabilizing as weaker companies have already folded, and he predicts better prospects ahead as the emirate gears up to spend on infrastructure in preparation for hosting the World Expo in 2020.