Power Letters 2021: Dr. Habib Al Mulla, executive chairman, Baker & McKenzie Habib Al Mulla

The outbreak of Covid-19 dawned upon us, causing a major disruption to our health system as well as causing a severe impact on our economy. Every aspect of one’s life came to a standstill and suddenly the play button of our lives was put on pause and then an abrupt STOP.

It was not like any other crisis that we had experienced before. As a result of it, most of my acquaintances and friends had a pessimistic approach towards life in general and the recovery of the economy. The vast majority of the commentators either drew a U-shaped recovery scenario with some even drawing a W-shaped road map to recovery. This was ‘the plan’ and no one forecasted an immediate recovery in any field, industry or any aspect during the current year.

One needs to review the situation today and assess to what extent were those observers and commentators correct. I will not venture to review the global economy as this may have different parameters and different geopolitical factors that influence its outcome. However, I will present my expectations based on my personal observations on the economy of the UAE.

The UAE, similar to any other economy, was hit by the pandemic. The impact was felt more during the lockdown where businesses came to a complete halt. Dubai in particular, because of its heavy reliance on tourism, experienced the severe impact of the coronavirus crisis. Both the UAE federal government and the Dubai government announced several measures to try and rescue the businesses which were hit by the pandemic and thereby rescue the economy. Among them was the Dhs100bn stimulus package which was rolled out to banks in order to pass it to their customers. Many fees were either reduced or deferred in order to support the businesses and in particular, SMEs.

However, the government did not stop there. To the surprise of many observers, the UAE government embarked on a courageous legislative journey that dealt with many of the difficult issues that were pending for many years. For example, the longstanding difficult issue of bounced cheques was finally dealt with – issuing a bounced cheque will not be a criminal offence as of 2022.

This long grace period was necessary to deal with the existing cheques that are floating in the market. The laws dealing with personal life were relaxed and many acts which were criminal offences in the past are not so any longer. Nevertheless, the most interesting and forward-thinking legislation was the abolishment of the rule that required any business outside the freezones to have a local ownership of at least 51 per cent. No one expected this rule to be changed, and definitely not so soon.

So the question now is whether these measures influenced the recovery of the economy. While it may be too early to measure the impact of these actions, one needs to only look around to see that the UAE economy is indeed in a recovery mode. For example, the price of real estate in certain areas like the Palm has significantly increased from the date since the pandemic outbreak began. I know of some investors who made an almost 50 per cent return on their investment in a period of four months.

The hotels, particularly the beach hotels, are operating at almost 100 per cent occupancy and at rates which are higher than this month last year. Oil prices have also recovered and this will definitely have an impact on the government budget and expenditure. The pandemic did not deter the UAE from  forging forward and joining forces with various organisations to maintain a positive attitude and think of ways to recover from this pandemic and bring the economy back to some normalcy.

So my expectation for the UAE’s economy is that it’s going to see a V-shaped recovery. I am fully optimistic for 2021.