In the year , the world saw the opening of the Dubai Internet City. This invited global clients from all arenas and helped Dubai's businesses to leverage. The InfoTech hub was completely tax free and attracted lots of investors.
The boom led many foreign investors to notice the emirates and then plan to invest there. The best part about the property rules at that was that property owners could only own their respective properties for a period of ninety-nine years and hence there was nothing called freehold rule.
During the credit crisis situation most of its real time big investors lost a lot of money and left their incomplete projects. Property prices started falling down significantly and thousands of local people started losing their jobs.
If this was not enough, the press came under the scanner of the Dubai Government and their clash led to a bad name. Curious to know how Dubai gained all its wealth? Well, just keep reading to know about the same. Back in the s until the late s, the primary source of income in the Trucial Coast of what is now the UAE was a pearl industry. Pearl diving was thought to be a humble beginning in trade for the residents of the Persian Gulf, but it set the foundation for something much larger later on.
You might also like: Dubai Heritage and diving village. This also paved the way for the construction of several other infrastructure projects, which made them realize that infrastructure is a long-term strategy and gave hope to their economy.
This led to a boost in tourism , and whatever little oil they discovered, was used in building the Dubai city we now see. Dubai has grown to become one of the top tourist destinations in the world, thanks to its state of the art infrastructure. The infrastructure also helped boom the trade industry. Dubai established its first free zone in ; Jafza, which was the largest free zone in the world. This also led to 30 more free zones that offer tax breaks, custom duty benefits and exemptions for foreigners.
This resulted in attracting more global businesses. Dubai continued to become a dynamic and diversified economy with revenue generated through different streams. Only one of these, Abu Dhabi, possesses substantial oil reserves, and as such it has dominated most areas of federal politics - including foreign affairs and defence - since the UAE was formed following Britain's withdrawal from the Persian Gulf in Dubai, however, has always maintained an air of autonomy within the federation as a result of its long history as a successful free port.
When the UAE constitution was drafted this relative independence was taken into account as each emirate was allowed to retain control over its own natural resources and economic development path. Gradually Dubai did allow itself to integrate more fully into the UAE, finally handing over its militia - the Dubai Defence Force - in But this move was interpreted at the time as a means of transferring costly services to the federal government so as to allow Dubai to pursue its economic ambitions.
With little oil, Dubai's only hope of maintaining a distinct identity from Abu Dhabi was to diversify at a fast pace, building up various non-oil sectors such as luxury tourism and real estate. But with the onset of the credit crunch much of this success began to come undone as foreign direct investment and appetite for these activities faded.
Dubai had also badly overextended itself with most of its mega projects - including giant manmade islands - being financed by large debts.
With most of these needing to be refinanced in the near future, the emirate's government spent most of trying to attract international creditors but was largely unsuccessful. With Abu Dhabi providing some limited financial assistance, both in February and earlier this week, Dubai managed to keep afloat. But with Abu Dhabi's clear unwillingness to completely bail out Dubai, much attention has been placed on the relationship between the two emirates, especially since the recent default.
Although the ruler of Dubai, Sheikh Mohammed bin Rashid Al Maktoum, recently told journalists to "shut up" and stop referring to Dubai and Abu Dhabi as being separate, and although the Al Maktoum family is of the same tribe as Abu Dhabi's ruling Al Nahyan family - the Bani Yas - the two dynasties nonetheless have a long history of rivalry. More recently, there has been intense competition, including each establishing its own 'national airline' despite obvious overlaps. Beyond the government and the ruling family there will also be a broader impact of the crisis in Dubai.
Thousands of migrant workers, mostly from South Asia, are already stranded in the emirate, and there are likely to be more over the coming weeks as more companies cease their operations or face cutbacks. Similarly many other expatriates, some of them Westerners, will also lose their jobs, and the many foreigners who invested in the emirate's much vaunted real estate sector may see substantial losses on the properties they purchased as investments, retirement homes, or holiday villas.
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