U.A.E.'S TRADING INFRASTRUCTURE - IS IT HELPFUL?

A Dubai Trader, Majid Habib, in conversation with Ravi Mehta

Dubai City's International Trader
Majid Habib: Traditional Dress, Beautiful Mind  

U.A.E. has trade-friendly requisites 

Q. 1   What makes you switch from banking to trading, from employment to self-employment?

 We come from a family where business is a tradition for over 150 years therefore, are born traders or you can say risk takers for lucrative returns. I believe this might be one of the reasons for stepping back from banking to trading to follow my fore father’s roots. But it took me sixteen years to decide while I enjoyed experiencing banking as profession after earning a MBA degree and choosing banking as my career. Self employment is rewarding when you learn to live up  with lot of patience and hard work  enjoy risk taking and competition under freedom of decision making.

Q2: And, what makes you choose international trade for business occupation?

As said, trading has been part and parcel inherited from our fore fathers whom engaged in both national and international trade even during times when international trading meant months of journey, high risk and dream for others.

Q3: Is UA.E.'s regulatory environment trade friendly? Is there federal attempt for trade facilitation?

The UAE trade figure reflects it all with current account surplus seen doubling to $25 billion. The UAE has become a wealthy nation and a dynamic market that has long been recognized as the commercial and business hub of the Gulf. With its inviting friendly trading regulatory environment, the UAE has transformed itself into a truly international center for commerce and trade. The United Arab Emirates is one of the youngest countries founded in December 1971 that has developed into the third largest economy in the Arab world with an estimated 2005 GDP of $116 billion. The investment is growing at pace of 5 per cent to record $ 24 billion covering oil, real estate, industry, services, farming and other sectors. The UAE focused to pursue free market, pro free trade policies to diversify its economy away from its dependence on oil. Despite possessing 10 percent of the world’s proven oil reserves and the fourth largest proven gas reserves in the world, rapid growth in the non-oil foreign trade activity reduced oil’s share of GDP from 60 percent in 1980 to about 30 percent currently. Therefore, the remarkable achievement perhaps was not possible without support and backing of federal attempt for trade facilitation.   

Q4. Does U.A.E. does provide any incentives for export promotion?

 Internationally, the UAE is well recognized, as an export and re-export gate way between east and west for foreign trade and service activities. It offers various incentives for exports and re-exports for trading industries such as 100 pct duty exemptions that also promotes healthy competition, attracts new investment and develop new markets. In addition, there are a number of prestigious awards presented to companies who earn outstanding performance and excellence to their respectful fields. One of the most prestigious awards presented is by His Highness Sheikh Mohammed Bin Rashid Al-Maktoum, the Vice President & Prime Minister of the UAE and the Ruler of Emirates of Dubai under the name and patronage of Mohammad Bin Rashid Al- Maktoum award (MRM) The Mohammed Bin Rashid Al Maktoum Business Award has been specifically created to help businesses analyze their current practices, and provides an excellent opportunity for local organizations to align their management techniques with world-class practices.

Q5. Are U.A.E.'s banking services required for trading, locally available, easily accessible, affordable, and timely deliverable?

The UAE banking industry is bound to live up its high tech service standards demanded by one of the fastest growing economies of the world. The UAE’s non oil foreign trade has grown a record rise of 236 per cent in the last decade. Therefore, the UAE banks face stiff competition among its 21 national and 26 foreign banks with a total of 457 branches.   The performance of the non-oil sector demonstrates the strength of the UAE economy despite oil being a major part of it. It shows how diversified the economy is, the private sector plays a dynamic role underlining the structural strength of the economy."  Therefore, the banks in the UAE reflect to offers updated services to the trade industry that creates a decent share in the economy to meet the challenges of the highly growing trade industry of $ 54.2 billion to offer locally available, easily accessible, affordable and timely deliverable services

Q6: Is U.A.E.'s legal infrastructure easily accessible and affordable for dispute resolution?

The UAE, under Chamber of Commerce & Industry sponsors professional legal arbitration services that are easily accessible and affordable for dispute resolution to the business community. For example, the Dubai International Arbitration Centre (DIAC) offers a high caliber of arbitration services and facilities on an international scale.     First created in 1994 as the "Centre for Commercial Conciliation and Arbitration", the current DIAC is an autonomous, permanent, non-profit institution. The Centre provides the regional and international business communities with an exclusive service at affordable rates.  DIAC was created as a means to supply facilities for conducting commercial arbitration, promoting the settlement of disputes by arbitration, as well as developing a pool of arbitrators in the practice of international arbitration. As an institutional arbitration centre, its outlook is to provide efficient, flexible and impartial administration of disputes, appointing arbitrators, choosing a venue and fixing fees of arbitrators and conciliators. DIAC selects arbitrators of the highest ability and professional competence. 

Q7: Is U.A.E's transportation infrastructure adequate and efficient for trading matters?

Comparatively, the UAE transportation infrastructure is known as one of the best available in the Middle East and meet any world class standard. The transportation system either by sea, air or road all are design adequately and efficiently to meet trading traffics matters designed on modern infrastructure. The Emirates of Dubai today has grown as one of the largest, busiest and most efficient sea and airport in the world. With a current population of about 4 million, the UAE sea and air ports continually being up graded to meet growing demand and challenges of the economy where government spending are in billion of Dirham.

Q8: Is U.A.E's insurance infrastructure trade friendly?

The UAE’s insurance sector is one of the growing industries that qualifies to meet international standards with trade friendly. Total investments in UAE's insurance sector had reached Dh14 billion ($381 M) in the year 2005 or 1.4 per cent of GDP. The foreign companies made up half of the total number of the insurance companies in the local market and 53.9 per cent of these investments were in stocks and special bonds, and 36.4 had been invested in the banks deposits. Currently, 46 local insurance companies are working in the market. The foreign companies had collected a share of 75.5 per cent of the total installments of life and savings insurance in 2004 while the local companies had 24.5 per cent of this category. The UAE boasts the largest number of insurance companies in the GCC The advent of international companies following last year's government decision to open the market to foreign competition means that the sector has entered a new dynamic development phase. Therefore, the UAE offers a trade friendly infrastructure set on high standard.

Q9. Coming to the question of risk management, is U.A.E. well stocked with products and services required for managing all kinds of trade-related risks? 

As said, the UAE is recognized as an export and re-export trading hub for international markets where the non-oil GDP grew by 14.92 percent in 2005 and is estimated to reach $ 34.91 billion, up from $30.37 billion in 2004 and $25.15 billion in 2003. Therefore, UAE is well stocked with movement of products and services for managing to cover all kinds of trade-related risks. 

Q10. Do U.A.E' trading businesses have inclination and resources for using hi-tech means for accelerating business development?

The UAE has all the required inclination and recourse available for accelerating business development that is why has become the center for hi-tech where trading businesses run to boost productivity. It is the only country in the Middle East that has introduced the concept of Internet City where leading high-tech multinational organizations having  set-up their Regional Offices in the country such as Microsoft, Sun etc.

Q11: What arrangements U.A.E has for training its manpower engaged in trading? 

On the Government level there are number of efforts made to cover a large number of management, marketing and financial courses to train its manpower. But it’s not academic only the government also offers low cost loans to those nationals who are willing to enter in various manufacturing and trading fields.

Q12: You are chairman of Dubai Food Stuff Trading Group, affiliated to Dubai Chamber of Commerce. What's the Chamber's role in international trade promotion?

Like wise, the role of chambers is to be indispensable source of competitive advantage for the business community and to be recognized organization of choice to represent, promote and protect the interests of the business community in Dubai by providing value added services that create new business opportunities and competitiveness in the global market and to actively support and influence government measures to improve and enable business climate.

*To present, defend and protect the general economic interests of members.

*To be active in voicing and influencing policies of interest to the members before local, regional and international public authorities.

*To promote the investment environment in Dubai.

*To develop an infrastructure (platform) to promote business development in Dubai and to facilitate network opportunities and interaction of members with the local, regional and international community.

*To satisfy the needs of the members, offer them value added services, and provide access to increasingly relevant information that complement what is already in the market.

*To be effective and efficient in allocating the budget and high impact initiatives.

*To build the right capabilities to serve effectively the business community in Dubai

Q13. Is U.A.E.'s  international trade helpful and successful in the country's economic development?

As mentioned, the UAE’ s international trade has grown a record rise of 236 per cent in the last decade. Further non-oil GDP grew by 14.92 percent in 2005 and is estimated to reach $35 billion. The UAE focused to pursue free market, pro free trade policies to diversify its economy away from its dependence on oil. Despite possessing of large oil and gas reserves, the rapid growth in the non-oil foreign trade activity reduced oil’s share of GDP from 60 percent in 1980 to about 30 percent currently that makes international trade helpful and successful in the country’s economic development.

Q14. At the end may I ask: what is the future of international trade in U.A.E. ?    

As the world economies move up trend since past many years, the UAE has claimed its own share peaking to new heights in international trade sector, pushed by its well balanced just and liberal trade policies that makes the UAE as one of the fastest  growing economies of the world. As per  The Economist World in Figures 2004, the UAE stands as the 13^th largest current account surplus, 11th as highest GDP per head and 6^th as largest surpluses as % GDP. Like wise, I believe, the future of the international trade of the UAE is all set to see greater performing results in the history of  the country.