Given our assumption that Dubai market is collapsing, so what will be the best approach that Dubai (or business people in Dubai) should do?

1. Stop the denial; accept the fact that the music has stopped; liquidity has suddenly dried; the market price is going to take a tumble. For most players in Dubai, the experience of the boom is for the first time, and the experience of a crash (of this nature and magnitude) is also for the first time. So many people are just stunned and in state of shock and disbelieve. And for that matter as in any crashes, many believe that they are “safe” and will not be “as affected”. The fact that scares me is that the wave that is currently ongoing is the first wave of the storm. There will be more subsequent waves coming, and the latter one can be even bigger, and for sure, more fatal. Those who move ahead of the curve of these subsequent waves will have better survival chance.

2. What can be done? Take the bull by the horn. Restructure, reorganize, reset the plan now based on new reality and use a forecast that is gloomier than you can imagine as the base line. Rescale the projects based on much scaled down version; if it means half or even one third of the original size, be it. Get all the stakeholders on the table now and discuss strategies of how to hold hands; don’t try to save yourself only, if you take that approach, you will create a killing fields, as opposing parties will try to save himself at the expense of killing the other party. At the end, all parties will bleed to death. Be ready to take a loss, perform a cut loss strategy; because liquidity is what’s driving the survival. Those who are illiquid will have little chance of moving anywhere at all. By the time the storm is over, either you will be left dead, or left incapacitated. Doesn’t matter what size of assets that you have because cash becomes the king; and those with cash dictate the market.

3. The laws are untested. Therefore, it may take too long of a time to reach resolution through the court process. Those who think that they might protect themselves and get a resolution through a court room decisions are on the wrong track. Since the laws are not tested, nobody is sure what you will get at the end. So it is better off to have private treaty settlements. That will be the faster way to go and a clear way out in a much quicker, safer, and surer way. But this can only work if the parties are willing to compromise on a same table; in manner that are reasonable, and with a willingness to take haircuts. Most people must realize that it will be a something is better than nothing scenario. Hoping and wishing are for those who do not have enough experience and courage. For markets like Dubai, when things were rosy and honky dory, everything is possible. But when the heydays are over, it is better that you take what you can, salvage what you have and moved on. No need to keep on dreaming.

I would like to quote what then vice-chairman of Siemens told me during the fall of 1997 when the crisis was unfolding in Malaysia, when I told him that Malaysia is strong enough to shoulder and avoid the crisis.

My young friend, we Siemens exist in more than 80 countries throughout the world; we started the company right out of the ashes of the World War II from nothing. We have seen the market, and we have grown with it. Our turnover is bigger than the GDP of many countries in the world. And we always say that we are smaller than the market. We always follow the market, and act according to the market. We never believe that we can dictate the market; but the market dictates us. So, don’t ever think that Malaysia as a country can overcome the market forces; it is stronger than what you might think. My advice is, reorganize yourself, take the new reality into the picture and plan yourself to move together with the market. No one is bigger than the market, as what we in Siemens believe.”

He was right, Malaysia cannot overcome the market; we have to succumb to it, and finally only the drastic measures of capital control stop the bleed, even though it was rather late after all the haemorrhaging almost put us on the death bed.

4. Dubai is no bigger than market; it stands under the market forces; no matter how much assets it have; the forces of the market will finally dictates what’s going to happen. It is not that some companies are too big to fail; the opposite is true: the big ones will fail first. As it fails, it will carry along many other players with them. Nobody can save Dubai except the market; and if the market dictates that it is beyond reach and repair, then that will be it. False hope is futile; and those with empty hopes will die standing.

5. As I have said before, despite all of that life must go on. People must continue to live, eat, sleep and work. The basic necessities (as the market dictates) will remain to be needed. Therefore, understand the market; see what are still required by the people, and work within that framework. That will be the most rational and reasonable thing to do. What it meant is that Dubai does not need 40 golf courses to be built; 100 more skyscrapers to reach the stratosphere; a city within city twice the size of Hong Kong; biggest shopping mall in the middle of the dessert; etc..etc. Let’s go back to basic and hopefully that the market will calm down to these common reasoning.

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