By NNN-Bernama,
Kualum Lumpur : The Chairman of the World Islamic Economic Forum (WIEF) Foundation, Musa Hitam, says Dubai’s debt crisis should be a lesson for investors to be more careful and not adopt a herd mentality.
The crisis gas happened because the people involved became too excited over business prospects to the point of forgetting the principle of supply and demand, the former Malaysian deputy prime minister adds.
“I foresaw something like this happening two or three years ago. The bubble has grown too fast, it has to burst … they forgot the principle of supply and demand. When (there is) oversupply, somehow it will reach breaking point,” he told reporters who asked for his views on the debt crisis of the Gulf emirate.
Musa, however, said he was not sure if any Malaysian company would be seriously affected by the crisis.
Dubai World, a government-owned development conglomerate recently sought a six-month reprieve from paying creditors billions of dollars, triggering concerns of a possible failure of the company which is involved in projects worldwide and sending shock waves to an already weakened global financial sector.
“The fact that Dubai World, the umbrella institution is the one that has to take and handle the crisis surely will have spillover effects and all those who have invested in Dubai will feel Dubai’s ripples. It is already starting to be felt,” Musa said.
Musa added that the Abu Dhabi government should somehow rescue Dubai World. “But so far they have not take any action … I suspect they are trying to let things go down first and when things are down, they might be able to salvage it in a cheaper way,” he said.