What Goes Around

Dubai’s positive business climate and phenomenal growth over the last few decades has positioned it as a top export and re-export hub. As a natural geographic gateway between East and West, and an ideal strategic location between developed and emerging markets, Dubai’s global trade opportunities continue to open up for investors. “Dubai Exports promotes re-exports from Dubai by creating an enabling environment for local exporters and establishing partnerships with trade promotion agencies across the world,” Sami Al Qamzi, Director General of the Dubai Department of Economic Development, explained to TBY. Meanwhile, superior connectivity between sea and air links, prime warehousing facilities, and a solid base for regional and international transportation and logistics organizations are three factors that add to Dubai’s role as a perfect re-export destination in several arenas.

The automotive industry has long seen Dubai as a source of strong local and regional market activity, but the re-exportation of cars and other vehicles to other countries is playing an increasingly important role. Foreign markets imported re-exported automobiles from the UAE worth AED22 billion in 2012. At the same time, Dubai’s total automotive aftermarket trade hit the $10 billon mark for first time ever in the same year, with Saudi Arabia, Afghanistan, and Oman the main destinations for re-exports of this kind.

A study released by the UAE Ministry of Foreign Trade in early 2013 revealed that the export of plastics grew by 127%, or $2.2 billion, year on year in 2012. The figure reflects a growth rate that was eight times more than what was achieved during 2011. In addition, the country’s foreign trade in terms of plastics grew 48% during the first six months of 2012, compared to the same period in 2011. The value of re-exported plastics increased from $2.9 billion to $4.4 billion, becoming a strong driver of re-export growth during 1H2012. These statistics propelled the UAE into third place worldwide in terms of the re-export of plastics, with the country exporting a value of $444 million and contributing 3% of the global total.

Of plastic goods imported from China to the UAE, 70% were re-exported to other markets in the Middle East, Africa, and Europe during 2012. Meanwhile, the value of exports headed to China still weighed in comparatively low at $7 million, out of a total of $70 billion imported by the country in 2012. This demonstrates the need for Dubai and the UAE to increase its presence in the plastics re-export industry in the Far East. Experts suggest that more efforts could be made through participation in international fairs and bilateral meetings in order to increase the UAE’s plastic exports and re-exports.

In the luxury products segment, gold and precious metals represent a significant amount of re-exports leaving Dubai’s shores. Jewelry and other ornaments accounted for AED68 billion in 2012, or 21% of the Emirate’s non-oil re-exports. However, gold manufacturers have noted that the removal of import restrictions that limit the sale of Dubai-manufactured gold jewelry in key GCC markets would undoubtedly boost the sector.

In the future, Dubai can expect to attract more re-export attention for companies seeking to circumvent economic restrictions and avoid political uncertainty in the Middle East and Africa, as well as take advantage of relaxed tax regimes. The re-export of machinery and equipment, which comprises the majority of what the UAE sells to Russia, is also an area investors should watch closely. “This is where there is still potential for growth,” as Igor Egorov, Founding Chairman of the Russian Business Council, explained.