It’s summer, it’s hot and who wants to wade through an 800 word article? So I’ll base this article on the infamous segment “A Few Minutes with Andy Rooney” from the hit show 60 Minutes, and I’ll simply give a series of light vignettes to whet the appetite and stimulate thought, without overwhelming the senses.
The UAE’s Telecommunications Regulatory Authority frequently bans voice and video over IP (VoIP), a cheap way to communicate with the world. This is significantly beneficial to the oligopoly of Etisalat and du. Yet a regulator is supposed to be protecting the consumers. Banning VoIP because it competes with regular phones is like banning email because it competes with faxes, telegrams and letters. Dear TRA, that was a plea to allow VoIP, not an excuse to ban email. It was also a polite reminder that the consumer is your client, not the telecom companies.
Medicines are part of the agency programme whereby a UAE national gets a monopoly on importing the medicines. I have personally experienced medicines not being available because of, according to the pharmacies, a low return on equity (ROE) making the agent invest in importing other medicines with a higher ROE. Why do we even have agencies for medicine? If we are going to have them, why not regulate these? I salute the agent’s capitalism but what kind of greed and lack of compassion make an agent of a medicine neither import the medicine nor relinquish his monopoly? Maybe he needs a course in corporate social responsibility? It might be time to review obsolete business laws.
The UAE Banks Federation’s so-called “mini-bankruptcy law” gives struggling SMEs 90 days to restructure. Nobody can restructure in 90 days. Could these 90 days just be a way to allow all the banks to sit together at the same time to feast on the carcass of their prey? You know, just like it’s rude to begin eating a meal until everyone is seated at the table? And with 50 banks, it takes some time for all of them to position themselves for maximum advantage in the feeding frenzy.
Why is it that booking a hotel room in the UAE is so much more expensive than booking it from outside the UAE? We are discriminating against our own citizens and residents. The idea that hotels reward tourists but harm citizens and residents who invest in and build the country is not a long-term, economically supportive strategy. Besides, once the discrimination begins, it usually has a fast way of spreading. Then again, maybe I’m the only one being discriminated against and everyone else is getting the same discounted price the tourists are getting.
Speaking of hotels, they could consider augmenting their free market capitalistic approach when it comes to Friday brunches. The current formula often has a three-price structure depending on what you wish to eat and drink. This could be extended to also pricing in whether, and where, you wish to regurgitate said tasty fare. They could have a futures market for those who are sure that refunding their victuals is in their immediate future – a steal for those pre-gaming the brunch – as well as an options market for those who are not quite sure where the artfully prepared cuisine will be returned. Insurance companies, are you listening? Maybe the 50 banks can spare some time in their overworked schedule of mediocre service to only 9 million people and look into this scheme.
How does Saudi Arabia allow 100% foreign ownership of businesses but we don’t? Free zones don’t count, because you can’t actually do business in federal areas, at least not legally. Which brings me to another point. According to Wikipedia there are 37 operating free zones in the UAE, with another nine under construction. Is it me, or is that a symptom of inefficiency? Wouldn’t the cost of building all these free zones be better served in promoting business in the normal markets? Or maybe the free zone founders are competing with the banks and want to grow to 50?
ATMs that give out Dh1,000 bills should be banned. Or at least we need to be given the client the choice of maximum bill size. Let’s not blame the 50 banks. With so many of them there might not be enough lower denomination notes to go around.
The price to earnings ratio is a measure of how cheap or expensive a stock’s price is relative to earnings, with a ratio of 8 to 12 considered normal. The equivalent in property is the cap rate, which equals the actual market price of the house or flat, divided by annual income (rent minus maintenance and other costs). The normal is between 8 and 10. I have rented three homes in the UAE and looked at dozens more (this is all federal land). I always ask for rent and sale price. The cap rate has always been about 20. Either prices are too high or, hold on to your seats ladies and gentlemen, rents are too low. Whatever the dislocation in the property market, buyers either have negative equity or are overpaying on their mortgage relative to their rental income. I blame the 50 banks. I don’t know how, I don’t know why, but I will not rest in peace until I uncover the banks’ involvement in the high property cap rates.
This article is dedicated to the 50 – soon to be 49 – banks.
This article was originally published in The National.