Prospectus clears up transparency doubts

The prospectus for Dubai's planned US$4 billion bond issue makes refreshing reading.

The prospectus for Dubai's planned US$4 billion (Dh14.69bn) bond issue makes refreshing reading. The Government, stung by suggestions of a lack of transparency on the part of its own departments and related enterprises since the Dubai World crisis nearly a year ago, has done its best to ensure that this time, international investors have as much information as possible on which to base their decisions.

Technically, the document published yesterday is an amendment to a prospectus Dubai issued in October last year, before the Dubai World difficulties broke. It replaces two very important sections of that earlier prospectus: "overview of the emirate of Dubai", and "indebtedness". That is clear recognition of the changed circumstances in which Dubai finds itself since November last year. These new circumstances are addressed realistically and frankly, and there are some grounds for optimism that the worst is behind Dubai.

For example, the document acknowledges the IMF's claim that total GDP for the Emirates fell by 11.9 per cent last year, but sticks to its own estimate of a mere 2.1 per cent fall. Similarly, with regard to Dubai public finances, it declares there will be a deficit of Dh5.99bn this year, but highlights the fact this is a reduction of last year's Dh12.9bn shortfall. Crucially, 30 per cent of the budget will be spent on infrastructure development, underlining the emirate's commitment to long-term capital investment.

Also key for the emirate's continuing attraction as a global centre for business is the line almost thrown away towards the end: "The Government has no plans currently to implement income or corporation taxes." That will be music to the ears of the expatriate workforce. There is a lot more for economists and investors to chew over in the prospectus, but it should be applauded as another welcome step on the road to full transparency.