8,000 Jafza firms cast vote of trust in Dubai
None of the 8,000 companies based at the Jebel Ali Free Zone (Jafza), a subsidiary of DP World, has left because of the pandemic crisis, chairman of the global ports operator said on Sunday, underscoring the widespread optimism among the business community about the post-Covid-19 resilience of the highly diversified UAE economy.
The UAE economy is expected to begin recovery in the second half of 2020 after a sharp downturn in the second quarter, thanks to the Targeted Economic Support Scheme and the economic stimulus packages announced by both local and federal governments, according to the Central Bank of UAE.
Sultan Ahmed bin Sulayem, chairman of DP World, however, said in an interview given to AFP that predictions of a U or V-shaped recovery, with a slump followed by a pick-up, are too optimistic. He warned that the world faced an L-shaped scenario - a drop followed by a slump - unless stimulus measures were adopted.
Sulayem pointed out that trade handled by DP World through its 82 ports, terminals and logistics centres worldwide dropped by only 4.0 per cent in the first quarter.
However, despite the headwinds, DP World has not announced any layoffs over the crisis. Sulayem ruled out cutting salaries unlike other major companies in the Gulf.
"From now on until the next four months, that's the key issue...what's going to happen - we need to watch but we are preparing for the worst," the DP World chief said.
Sulayem said DP World, which contributed 23 per cent of Dubai's gross domestic product last year, looks at investments that are ready to generate revenue. "We are a company that has become a source of revenue for the government. At the end of the day, we have to make money immediately."
"Even during this crisis, if I find something that is bankable and we believe it is an investment that will enhance our revenue and make profit, the company will act," tweeted the chairman of the Dubai-based conglomerate which has been on an acquisition spree over the past couple of years.
The world's leading end-to-end logistics provider, one of profit-generating Dubai government-owned entities, not only operates container ports across the globe but also a network of economic zones, industrial parks and inland transportation.
DP World, which reported a 4.6 per cent surge in net profit to $1.33 billion in 2019, said in February that it would return to full state ownership and delist from the Nasdaq Dubai stock exchange, saying that market demands for short-term return were not compatible with its longer-term strategy.
Sulayem said the pandemic has taken a heavy toll on trade, eclipsing the 2007-2008 global financial crisis.
"Today, factories are intact, but nobody can work. The streets are clear and safe, and nobody goes out. Shops are full with all kinds of cargo but nobody buys," he said.
DP World, which operates a global network of 123 business units run by a 56,500-strong workforce, in 2019 handled 71.2 million TEU (twenty-foot equivalent units), putting it among the top five operators in the world. The homeport of Jebel Ali handled 14.1 million TEUs, a 5.6 per cent decline, but still leaving it among the top 10 globally.
In recent years, DP World has made a series of acquisitions as part of its strategy to become the world's leading end-to-end logistics provider.
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