ABU DHABI // A global financial consultant has countered popular opinion and said debt alone is not necessarily bad, but so-called deadly debt has become a cultural problem.
“Governments take debts, businessmen take debts - the worst debt is when you have no assets and no investments,” said Salah Al Halyan, managing director of Baizat, a financial consultancy.
While most people around the world are in debt for a variety of reasons, the majority of Emiratis have bad or “deadly debt” – that which is never cleared and not taken for an asset.
“The culture here in the UAE is that you start with debt from day one,” said Mr Al Halyan, an Emirati himself. “If you start work, then on your first day, banks will approach you because they now know you have earning power – especially if you work in the government. Then you are considered ‘a good potential loan taker’ so they tempt you and run behind you.”
Too many Emiratis, he said, fall prey to this temptation.
“It has something to do with the new culture, because income is guaranteed, and the spread of consumerism.”
Previous generations were more savvy.
“The old culture didn’t do that. They were not on welfare and everyone had their private business and took risks. With the new culture and oil money, everyone is comfortable and has a government job. They are dependent on the government, receive high salaries and the culture has become one of spending in addition to increasing consumerism around the world during the last 20 years, and increasing household debt.”
Saeed Al Mammeri, 70, said that life to be more simple and Emiratis were not as “showy”.
“Life was cheap and everything was free. My children were all in Government schools and health care was free. We didn’t travel and the furthest we would go would be to Oman or Bahrain. Now everybody wants to go to London and Paris. They want big weddings and expensive cars to show off to their friends.”
Mr Al Mammeri, a father of 10, said that when he and his friends took loans it was always for a business.
“I took my first loan in 1985 for a car rental shop which later failed because my employees were thieves and stole from me. I sold it.”
He has no debt now, but is vexed that each of his seven sons is in debt.
“I keep fighting with them and telling them to hold onto their money... To save it ... but they don’t listen. They want new expensive cars. Their wives want to travel abroad to show off to their friends, so my son’s takes out loans so they can travel. I’m worried about them. Now they are all in debt and burdened by their loans.”
While Mr Al Halyan acknowledged that debt is a problem worldwide, he said the issue in the UAE was that the debt-to-salary ratio is much higher. It is not uncommon to see someone take a loan where the loan payment is equal to 70 per cent of his salary. The acceptable ratio is 35 per cent.
“There are different kinds of debts around the world,” he said. “Abroad, it’s mortgaging loans but that is an investment. What we have is that per capita the amount of debt per person is higher for consumption purposes only ”
Total debt should not be more than 35 per cent of your income.
“Most people have around Dh20,000 salary but they will go out and buy a Dh400,000 car. So they end up paying Dh12,000 every month for the loan. If they have a credit card then there is another obligation.”
This sort of debt is unsustainable, he said.
salnuwais@thenational.ae
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About this special report:
A study by McKinsey & Company in 2011 showed that 70 per cent of UAE nationals younger than 35 are in debt. Car loans are the most popular with Emiratis and unregulated banks do nothing to improve the situation by encouraging locals to take out unsecured loans up to four times their annual salaries. Non-payment of loans has led to countless arrest warrants and jail time. Last year, 3,638 Emiratis had cases filed against them in Abu Dhabi judicial courts for bounced cheques. As a result, the Emirates Foundation and the Ministry of Education have teamed up to educate young people, and tackle the problem of financial illiteracy that plagues the country.
Read more:
■ UAE debt problem to be tackled at school level
■ Case Study: Wife divorces huband over mountains of debt
■ Case Study: Despite loan relief, Emirati man still has huge debt
■ Case Study: Emirati couple believes bank tricked them into unbearable debt
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The specs
Engine: 2.0-litre four-cylinder turbo hybrid
Power: 680hp
Torque: 1,020Nm
Transmission: 9-speed auto
Fuel consumption: 7.5L/100km
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Price: From Dh530,000 (estimate)
COMPANY PROFILE
Company name: Revibe
Started: 2022
Founders: Hamza Iraqui and Abdessamad Ben Zakour
Based: UAE
Industry: Refurbished electronics
Funds raised so far: $10m
Investors: Flat6Labs, Resonance and various others
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EMIRATES'S REVISED A350 DEPLOYMENT SCHEDULE
Edinburgh: November 4 (unchanged)
Bahrain: November 15 (from September 15); second daily service from January 1
Kuwait: November 15 (from September 16)
Mumbai: January 1 (from October 27)
Ahmedabad: January 1 (from October 27)
Colombo: January 2 (from January 1)
Muscat: March 1 (from December 1)
Lyon: March 1 (from December 1)
Bologna: March 1 (from December 1)
Source: Emirates
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Dominic Rubin, Oxford
RESULTS
Catchweight 82kg
Piotr Kuberski (POL) beat Ahmed Saeb (IRQ) by decision.
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Corinne Laframboise (CAN) beat Cornelia Holm (SWE) by unanimous decision.
Welterweight
Omar Hussein (PAL) beat Vitalii Stoian (UKR) by unanimous decision.
Welterweight
Josh Togo (LEB) beat Ali Dyusenov (UZB) by unanimous decision.
Flyweight
Isaac Pimentel (BRA) beat Delfin Nawen (PHI) TKO round-3.
Catchweight 80kg
Seb Eubank (GBR) beat Emad Hanbali (SYR) KO round 1.
Lightweight
Mohammad Yahya (UAE) beat Ramadan Noaman (EGY) TKO round 2.
Lightweight
Alan Omer (GER) beat Reydon Romero (PHI) submission 1.
Welterweight
Juho Valamaa (FIN) beat Ahmed Labban (LEB) by unanimous decision.
Featherweight
Elias Boudegzdame (ALG) beat Austin Arnett (USA) by unanimous decision.
Super heavyweight
Maciej Sosnowski (POL) beat Ibrahim El Sawi (EGY) by submission round 1.
The specs
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Power: 666hp at 6,000rpm
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Transmission: 8-speed auto
On sale: Q1 2023
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Gender equality in the workplace still 200 years away
It will take centuries to achieve gender parity in workplaces around the globe, according to a December report from the World Economic Forum.
The WEF study said there had been some improvements in wage equality in 2018 compared to 2017, when the global gender gap widened for the first time in a decade.
But it warned that these were offset by declining representation of women in politics, coupled with greater inequality in their access to health and education.
At current rates, the global gender gap across a range of areas will not close for another 108 years, while it is expected to take 202 years to close the workplace gap, WEF found.
The Geneva-based organisation's annual report tracked disparities between the sexes in 149 countries across four areas: education, health, economic opportunity and political empowerment.
After years of advances in education, health and political representation, women registered setbacks in all three areas this year, WEF said.
Only in the area of economic opportunity did the gender gap narrow somewhat, although there is not much to celebrate, with the global wage gap narrowing to nearly 51 per cent.
And the number of women in leadership roles has risen to 34 per cent globally, WEF said.
At the same time, the report showed there are now proportionately fewer women than men participating in the workforce, suggesting that automation is having a disproportionate impact on jobs traditionally performed by women.
And women are significantly under-represented in growing areas of employment that require science, technology, engineering and mathematics skills, WEF said.
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Kill
Director: Nikhil Nagesh Bhat
Starring: Lakshya, Tanya Maniktala, Ashish Vidyarthi, Harsh Chhaya, Raghav Juyal
Rating: 4.5/5
Name: Colm McLoughlin
Country: Galway, Ireland
Job: Executive vice chairman and chief executive of Dubai Duty Free
Favourite golf course: Dubai Creek Golf and Yacht Club
Favourite part of Dubai: Palm Jumeirah
How to come clean about financial infidelity
- Be honest and transparent: It is always better to own up than be found out. Tell your partner everything they want to know. Show remorse. Inform them of the extent of the situation so they know what they are dealing with.
- Work on yourself: Be honest with yourself and your partner and figure out why you did it. Don’t be ashamed to ask for professional help.
- Give it time: Like any breach of trust, it requires time to rebuild. So be consistent, communicate often and be patient with your partner and yourself.
- Discuss your financial situation regularly: Ensure your spouse is involved in financial matters and decisions. Your ability to consistently follow through with what you say you are going to do when it comes to money can make all the difference in your partner’s willingness to trust you again.
- Work on a plan to resolve the problem together: If there is a lot of debt, for example, create a budget and financial plan together and ensure your partner is fully informed, involved and supported.
Carol Glynn, founder of Conscious Finance Coaching
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Top 10 most competitive economies
1. Singapore
2. Switzerland
3. Denmark
4. Ireland
5. Hong Kong
6. Sweden
7. UAE
8. Taiwan
9. Netherlands
10. Norway