A long-awaited UAE bankruptcy
law may be finalised in months to help owners of small and medium-sized
enterprises weather the storm of bad debt, the UAE economy minister said on
Wednesday.
Over the past two years a
number of small business owners in the UAE have fled the country leaving unpaid
loans in their wake in fear of being jailed for defaulting on debt.
"There is a need for a
bankruptcy law as soon as possible," Sultan Al Mansouri told reporters on
the sidelines of a tour of the Etihad Airways Innovation Centre in Abu Dhabi.
"This is almost the
Ministry of Finance section because it is under their jurisdiction. What we
have from their side is that it is in process. It should be hopefully finalised
during the upcoming months."
Abdul Aziz Al Ghurair, the
chief executive of Mashreq and head of the UAE Banks Federation, said in
November that some small business owners had skipped town, leaving about Dh5
billion of unsettled loans. In May, however, Mr Al Ghurair said the potential
fallout from rising levels of SME bad debt had been contained.
Earlier this year, consultancy
firm KPMG recommended in a report on small businesses that changes should be
made in legislation for SMEs, especially implementation of a comprehensive
bankruptcy law, to make it easier for SMEs to cope.
"The lack of a bankruptcy
law – which leads to the criminalisation of default – is one reason owners may
consider fleeing the country rather than sitting with creditors to find
mutually agreeable solutions," the KPMG report said.
Mr. Al Mansouri also said he
was optimistic that the long- awaited investment law that will grant foreign
companies 100 per cent ownership of businesses outside free zones might be
approved this year too by the Federal National Council.
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