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.
mkassem@thenational.ae
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