TOKYO – Japanese nonfinancial companies had around $7.5 billion, or roughly Y660 billion, in accounts receivable owed by the Dubai government and its affiliated firms as of Oct. 31, according to the Japanese government, The Nikkei reported in its Saturday morning edition.
The data, which excludes bank loans, was derived from 18 projects totaling nearly $15 billion involving such Japanese firms as general contractors, trading houses and electric machinery manufacturers. The figures include public works projects commissioned by the Dubai government, such as subway and road construction.
About $1 billion of the accounts receivable have gone unpaid past their due dates, with some more than a year overdue. In certain cases, factors such as disagreements between Japanese firms and their clients about who should shoulder cost overruns due to design modifications have contributed to the unpaid claims.
For instance, a Dubai Metro project that started out at $3.6 billion has since seen overall expenses balloon to $10 billion. Of this, Dubai’s Road & Transport Authority is said to be disputing its responsibility for $4.3 billion.
Such cases where Dubai clients have indicated they will not pay for additional work total $5.3 billion.
While the Japanese firms expect to be able to recover some of the accounts receivable depending on how negotiations proceed, Dubai’s credit concerns have grown widespread owing to financial woes at Dubai World, a corporate conglomerate affiliated with the government of Dubai. This means that some Japanese companies could end up sustaining losses because they are unable to collect.