1. Dubai VS Singapore: as trading Hubs
The following blog will try analyzing Dubai as a trading zone and Dubai’s potential as a trading hub for
some selected items like petroleum, cotton, automobiles etc. It will also do the same for Singapore
before comparing the two trading hubs across some selected parameters. Finally it will try giving some
recommendations for Dubai as a trading hub.
Trading Zone
A trade zone is a port or an area, where imported goods could be held for a while without any
custom duty and then can be re exported. Generally doing custom formalities is an arduous
task and involves a lot of cost. Hence a trading zone or a free trading zone, (as it is usually
referred) helps in cost reduction. Such trading zones are also used by MNCs in establishing their
manufacturing units and export units so that they can leverage better production facilities,
export facilities, tax benefits etc. Some of the major free trade zones in the world are- Taiwan,
Singapore, Dubai, Jamaica, Hong Kong, Miami, Mauritius etc. Following facilities are required in
a trading zone:-
Transportation Facilities such as well equipped international sea ports and airports
Strategic geographical location
Telecommunication and IT facilities.
Financial instruments and facilities used for hedging, credit etc.
Institutional support in the form of tax benefits and narrowing down of bureaucratic
hassles.
Dubai as Trading Zone
Dubai is among the leading trading zones in the globe. The Emirate is blessed with an extensive
coastline of 400 miles and is linked to 120 destinations across the sea. The main sea port in
2. Dubai- Jebel Ali sea port is the largest man made harbor in the world. Dubai’s strength as a
trading zone lies in its- strategic position, positioning as a gateway to Middle East region, state
of the art infrastructure and logistic facilities and efficient government machineries. Dubai’s
export had been hit hard recently due to global economic recession coupled with real estate
crisis. But in 2010, it was back on track, registering a total export and re export of US $ 58.4
billion, against US $ 50 billion in 2009. (Emirates 247.com, 2011) In 2011, so far Dubai had
enjoyed an export of US $ 27.2 billion, a 17 percentage increase over the same time period last
year. In May alone it had reached US $ 5.9 billion, highest in the past three years. (Khaleej
Times, 2011) According to Dubai statistics center, from 2006-10, there had been a total of
export of US $ 169 billion. The following pie chart shows, Dubai’s percentage of export to
various countries in the last five years.
Iran
India
15%
Saudi Arabia
40%
11% Iraq
Switzerland
6% Pakistan
3% Belgium
6%
Kuwait
2% 4%
2% 2% 3% 3% Hong Kong
3%
Neitherlands
fig 1 : pie chart showing, the percentage of Dubai's export to various countries. Source of data:
Dubai statistics center
3. Iran’s ongoing animosity with the Western world makes difficult for it to import from these
countries. Hence, Dubai placed, geographically close to Iran makes it an obvious trading
partner. The total value of trade between Iran and Dubai, from 2006-10 is valued at US $ 25.7
billion witnessing a compound annual growth rate of 21 %. The second largest trading
destination for Dubai is India. India and Dubai shares a strong trading relationship, on account
of geographical proximity as well as a huge Indian expatriate population residing in the
Emirates. The total value of Dubai’s export to India in the given period had been US $ 18.5
billion witnessing an exorbitant compound annual growth rate of 71 percentages in the given
period, mainly on account of surge in export of diamond and gold jewelries to India.
Dubai is also a large Re- Export center. It imports commodities from various countries and ships
it to various destinations. After Hong Kong and Singapore, it is the 3rd largest Re-Export center
in the world.. Some of the major Re-Export items are machineries, tea, coffee beans,
automobiles, cottons, textile etc. Major Re Exporting destinations are – Iran, Saudi Arabia, and
India etc.
Re Export in US $ million
Saudi Arabia 194
India 204
Iran 790
0 200 400 600 800
4. In the coming years trade in Dubai is expected to increase further. Dubai’s economy seems to
be recovering very strongly and things are back on track. As a part of the strategic plan 2015,
the govt. of Dubai plans to diversify the economy into various alternate sectors and trade is
very high up on their agenda. Along with the above mentioned strengths of Dubai, one of the
biggest strength of the Emirate is financial and institutional support UAE can provide in the
form of strong credit and liquidity.
Data pertaining to Exports and Re Exports for the year 2010, Source: Dubai Chamber of
Commerce Annual Report, 2010
Year 2009 2010 UP/ DOWN
Total Exports US $ 50 billion US $ 58.4 billion UP, 15.2 %
Total no. of Certificates 644,809 599, 303 UP, 6.7 %
Membership Number 117,827 108,489 UP, 9.0 %
5. Export & Re Export in US $ billion
70 60.3 58.4
60 50
45.5
50
40
30
20
10
0
2007 2008 2009 2010
Fig 2: Export and Re Export figure of Dubai in US $ billion. Source: Dubai Chamber of Commerce
Annual Reports.
Advantages of Dubai
Strategic Location: Dubai’s biggest strength lies in its strategic location- globally,
regionally and locally. Globally Dubai is placed between the cross roads of North and
South and East and West. Some 3.5 billion populations reside within eight hours of
journey from Dubai. Regionally Dubai is considered as the trading hub of the Middle
East region along with other adjacent regions such as Mediterranean, Central Asian and
African. Dubai has strong trading links with the 1.5 Billion people living in the region.
Dubai is a distribution hub for a large amount things such as textiles, packaged food
items, automobiles, machine parts etc for the whole Middle East region. Locally Dubai is
placed in the midst of , one of the richest regions in the world- the GCC (gulf cooperative
council), as result of which it is endowed with abundant supply of energy and capital at
an economical cost.
6. Ports in Dubai: Jebel Ali Port, world’s largest man made harbor and largest port in
Middle East had been constructed in 1970s. Spread across a total area of square 134
KMs, it is the 7th largest port in the world. It is associated with Jebel Ali free trade zone,
home to more than 5000 companies from 120 countries. It offers more than one million
square meters of container yard and 960,000 square meters of open space. Other than
Jebel Ali, another port in Dubai is port Rashid, which will be ultimately developed into a
cruise terminal. In 2007 along with port Rashid, the total capacity of Jebel Ali port was-
total cargo volume of 130 million tons and container traffic of 10.6 million TEUs. Dubai
had a very ambitious plan of expanding the Jebel Ali port. By 2030 it is expected to
handle 55 million tons of TEUs. (Container-transportation.com, 2009)
Air Cargo in Dubai: Dubai is the gateway between the East and West. Dubai
international airport is the 5th largest airport in the globe, in terms of cargo capacity and
has offices of 35 cargo airlines. After the new airport, Dubai World Central Al Maktoum
International (DWC), will be operational the overall cargo volume is expected to increase by 48
percentages by 2015. In 2010, with a overall capacity of 2.5 million tons, it handled a
cargo volume of 2.2 million tons, up from 1.9 million tons in 2009. Since the advent of its
cargo operation in 1991, the cargo operations at Dubai airport had witnessed a
phenomenal journey, metamorphosing itself from global, sixty one to top five. From its
very beginning the overall throughput was neck to neck with the overall capacity, there
by influencing timely capacity expansion. (Khaleej Times, 2010) The following figure
shows the capacity of the airport over the last twenty years.
7. Annual Cargo Volume in million tons
2.5 2.2
1.92
2 1.81
1.5
1
1
0.5
0.5 0.25
0
1996 1998 2005 2008 2009 2010
Fig 3: showing air cargo volume at Dubai airport over the period of time. Source: Khaleej Times
Institutional Support: -
Dubai provides strong institutional support for export. The Jebel Ali free trade zone is
effectively tax free. Companies are not charged with any personal or corporate for the initial
fifteen years. After the completion of the initial fifteen years, companies can request for
another fifteen years of tax exemption. Additionally there are no import /export taxes for
companies operating in the Jebel Ali region. In general, the custom duties are very low at 4
percentages, and there is virtually no, trade barriers or quotas, restrictions on currencies,
enabling Dubai to become a favorable export destination.
The following part of the blog will put some light on Dubai’s strength as an export/ re export
center of some particular items:-
Tea: - off late Dubai is emerging as a strong tea re export center, owing to its geographical
proximity with major tea producing nations and excellent ports with state of the art
warehousing facilities. There are dedicated ware houses with facilities for blending and
8. packaging of tea. Dubai accounts for around one fourth of global tea imports re export,
primarily to neighboring Middle Eastern and Central Asian regions. In order to facilitate tea
trading, in 2005 DTTC (Dubai tea trading center) had been established by DMCC (Dubai multi
commodities center). DTTC managed a total trade of 10.8 million KGs of tea in 2010, up from
7.5 million KGs, in 2009. India, Sri Lanka and Kenya are among the major partners of DTTC and
together they account for around 65 percentages of tea trading done through it.
160 5.9
5.2
140
10.8
120 7.5
4.3
100
DTTC
80 144.6 148.6
116.5 Total Trade
60 105.5 112.3
40
20
0
2006 2007 2008 2009 2010
Fig 6: showing the annual trade of tea for DTTC and Dubai as whole in KG millions. (Source:
Middle East business intelligence, SME adviser, Khaleej Times)
Automobile: - Dubai is the major trading hub of automobiles and other transport equipments in
the region. During 2009, on account of the global economic crisis, the overall trading of
automobiles was hit hard, but in 2010 the market recovered. In 2010 the overall import and re
export of automobiles is valued at US $ 5.45 billion and US $ 2.45 billion respectively. The
emergence of Dubai as an automobile trading hub can be attributed to Dubai being a major re
export center of automobiles to the MENA region. During the six year period from 2005-10,
Dubai’s total import of automobiles is valued at US $ 33.75 billion. Iraq is the biggest re export
destination followed by Iran, Libya and Saudi Arabia. Together these countries account for
9. around 41 percentage of Dubai’s re export in the MENA region. In terms of major automobile
suppliers to Dubai, Japan contributing 44% of the supplies leads the list, followed by USA,
Germany, South Korea and UK. Together these countries constitute 88 % of the total import.
(SME advisor, 2011) The following pie chart shows the major automobile exporting countries to
Dubai:
6% 12%
Japan
8% 44%
USA
Germany
13%
South Korea
17% UK
Others
Fig: Major automobile exporting nations to Dubai, Source: Dubai Chamber of Commerce
Aluminum:-
Aluminum is one of the most widely used metals in the various industrial sectors such as
engineering, construction, electrical, automobile etc. It is widely used by both developed as
well as developing nations in the world. Dubai is evolving as a major aluminum exporting
destination, supplying aluminum products to destinations like Pakistan, India, Iran, Morocco
etc. Dubai’s total aluminum export in 2009 was valued at US $ 650 million. (Dubai Chamber of
Commerce, 2011)
Jewelries:
10. Dubai is one of the biggest jewelry trading centers in the world, dealing in all kinds of jewelries-
gold, diamond and silver. Dubai is presently world’s 4th largest diamond trading hub with total
amount of trade valued at US $ 35 billion. (Includes export, import and re export). In 2010
Dubai imported a total of 90 million carats of polished diamond, worth US $ 13.3 billion and
exported 73.6 million carats of polished diamond, worth US $ 14.6 billion. It also imported a
total of 50.4 million carats of unpolished diamond and exported 54.7 million carats of
unpolished diamond. The major trading partners for Dubai in diamond jewelries are India, Hong
Kong, Belgium, Angola and Congo etc. (Israel diamond industry, 2011) Dubai is also a
major gold export and re export center. Total value of gold traded through
Dubai in 2010 was US $ 41.3 billion, up by 18% from the previous year. The gold imports
increased by 1 % year on year to 707 million tones where as export were down by 8.1 % to 418
tones. Around 100 countries traded in gold with Dubai in 2010, India being the top trading
partner followed by Switzerland. (Jewelry in Asia, 2011)
Singapore as an export hub
Economy of Singapore
Singapore, a small island nation with five million residents in South East Asia, is one of the
biggest success stories in Asia. After getting freedom in 1963, the tiny island state took strong
initiatives toward industrialization and opening up of economy. In contrast to Dubai where oil
played an important role in building up the economy, Singapore’s economy is built on
technology and labor skills. During the time of 70's Singapore's focus on modern industries such
as electronics, petrochemicals and precision machineries coupled with foreign investment
11. helped the tiny state to transform itself into an industrial nation. Its liberal economic policies,
industrious and highly skilled workforce and other natural advantage such as vast seaports and
strategic location helped it attract a huge amount of MNCs to have their base in Singapore
along with large amount of foreign investments. From 1963 to present Singapore has recorded
an average GDP growth of 7.9 %.
Today Singapore is considered as one of the most liberal states in the world enjoying high per
capita income, state of the art infrastructure and a robust economy. It had successfully
diversified into services sector and is the financial and export hub of South East Asia It is also
considered as one of the most innovative, liberal and business friendly nations in the world
where it takes only three days to start a business in, much lesser than the world average that
stands at 34 days.
Exports
Singapore is one of the biggest export hubs of the world. Manufacturing coupled with export
had played an important role in expanding Singapore's economy. In 2010 Singapore had done a
total trade of US $ 661 billion, consisting of total exports of US $ 478.84 billion and imports of
US $ 423.2 billion.(Ministry of trade, Singapore, 2011) Major export items are petroleum
products, food and beverages, pharmaceuticals, chemicals, electronics, industrial machineries
etc. Major import items are chemicals, electronic parts, petroleum, automobiles, food and
beverages etc. Major export destinations are Indonesia, Malaysia, China, EU, USA, Hong Kong,
Japan etc. The following pie chart shows the percentage wise break up Singapore's export to
various nations in 2010.
12. Malaysia
12%
36% 9% Indonesia
Hong Kong
12%
EU
China
10%
6% 10% USA
Japan
5%
Others
Fig 7: Percentage wise break up of major export destinations in 2010, Source: US department of
state.
Major importing destinations are EU, Malaysia, USA, China, Japan etc. The following pie chart
shows the percentage wise break up of various importing destinations to Singapore, for the
year 2010.
12%
EU
12%
46%
Malaysia
11% USA
China
11%
8% Japan
Others
13. Fig 8: Percentage wise break up of major importing to Singapore in 2010, Source: US department of
State
Emergence of Singapore as a trading nation
Brief introduction to economic growth since 1960
During early 60's Singapore was a distribution center for simple products in the neighboring
region. During this period it was undergoing through a rapid growth of population along with
high unemployment rate. This led the govt. taking reformatory majors for the economy and
trade such as no restriction on MNCs, relaxing labor laws and immigration laws, providing
incentives to industries, which eventually resulted in transformation of Singapore into an
export oriented industrial state. Reformatory measures coupled with the arrival of MNCs and
emergence of Singapore as financial hub helped successfully transforming Singapore into an
export oriented, highly industrialized state. In shaping up the growth trajectory of Singapore
MNCs had a very crucial role to play. By 1981, though MNCs accounted only 16.7 % of the total
companies involved manufacturing sector, they were responsible for 42.8 % of total
employment, 55.9 % of the total output and 67 % of export. Direct export to total sales was 73
% for foreign firms while 26.5 % for local firms.
Singapore's initial focus was on labor incentive manufacturing, but eventually economy was
restructured to pave way for high skill and technology based industries. Govt. played an
important role in economic re structuring by executing steps such as giving tax incentive for
research and development, providing capital assistance for loans etc.
Growth of Exports (1960-80)
During 1960, trade in Singapore consisted of re export of primary commodities like rubber,
palm oil, coconut etc and distribution of manufactured goods to the neighboring states. In
1960 total amount of re exports was ten times higher than the domestic export. Over the
period of time this trend started getting reversed and in 1974, for the 1 st time total domestic
export was more than the re export. From 1960 to 1980, the value of percentage of total
export decreased drastically for products like wood, rubber, food, beverages, tobacco etc
14. (Even though there was a reduction in the percentage of total exports, the absolute value of
export increased for products like, food, beverages, rubber etc.); where as it increased
exorbitantly for products like chemicals, petroleum, electrical machineries. The percentage of
total export remained constant for paper, furniture, non electrical machineries etc. where as a
very moderate increase was registered for non metallic minerals and metal products. There
had also been a paradigm shift in export destinations of Singapore. From 1960 to 1980, the
percentage of export to developed countries increased from 4% to 45%, where as for
developing countries it decreased from 96% to 52 %.( a part of this can be explained from the
fact that many of the neighboring economies like Malaysia, were growing fast, there by
depending less on Singapore for their import requirements.)
Growth of Exports (1990- present)
By 1990, Singapore was among the most vibrant economies of the world. As an economy it
had successfully transformed itself from a low skill, labor intensive economy to a, high skill,
high technology and high value based economy. Blessed with a burgeoning financial sector, it
was an ideal export destination and a haven for foreign investors and MNCs. The paradigm
shift in its economy was well reflected in its export structure also. From an export destination
of labor intensive, low value products such as palm oil, textile, leather products, it had been
transformed into an export hub of high value, high technology and capital intensive products
such as , petrochemicals, precision machines, pharmaceuticals etc. During the 90's, lots of FTAs
(Free Trade Agreements) were signed between the govt. of Singapore and various other trade
partners such as USA, Japan etc. This resulted in higher profitability in the form of fewer tariffs
along with better market access for the exporters in Singapore.
Singapore VS Dubai: as trading hubs
The following part of the blog will compare Dubai and Singapore as trade hubs, across various
parameters such as strategic location, economy, ports etc, and based on this will score them in
a scale of 0 to 5. Based on secondary resources, it will also try analyzing their future strength
15. and will do a separate scoring for it. The following figure compares Singapore and Dubai in
terms of their exports.
600
500 478 476 478
391
400
300 Singapore
Dubai
200
100 60.3 50 58.4
45.5
0
2007 2008 2009 2010
Fig 9: Comparison of annual exports of Dubai and Singapore, Source: Dubai chamber of
commerce and Ministry of trade and industry, Singapore, annual statistics
At present there is a huge difference between Singapore and Dubai, with Singapore enjoying
almost eight times the export of Dubai. But Dubai has ambitious plans to leapfrog itself from a
regional trading hub to a global one and Singapore can be the source of some great insights,
helping Dubai in its endeavor.
General Economic and Social Environment
The general economic environment is very essential for the success of a trading hub. There will
be three sub categories under this- economic growth, physical and IT infrastructure and social
infrastructure.
16. Economic growth: A stronger economic environment ensures; liquidity for business, ease of
establishing and doing business, investments in infrastructure etc. Both Dubai and Singapore
are economically well off, enjoying a high GDP growth and per capita income. The following
figure does a comparative analysis of GDP growth of Dubai and Singapore.
25
21.5
20
20
15 13.3
Singapore
10
10 8.5 Dubai
6.8
5 4.2 3.5 3.2
1.8 2.4
1.3
0
2002 2003 2005 2007 2008 2009
Fig 10: Comparison of real GDP growth rate of Singapore and Dubai, Source of data: Dubai statistics
center and World Bank
The given figure shows Dubai’s vigorous growth in the early phase of 2000. This was the period
when Dubai showed exorbitant growth, leapfrogging many of the fast growing economies in
the world. By the 2nd phase of the decade growth had been very moderate for both the
economies, due to global economic slowdown. Dubai has also been hit hard due to real estate
bubble burst in the given period.
Infrastructure: - Both the cities have great infrastructure. Huge investments have been made by
the respective governments in developing physical and telecommunication infrastructure. Both
enjoy well developed transport facilities, state of the art road networks, wide range of hotels
and resorts, high internet and telecommunication penetration etc.
17. Social environment: is another area, very significant for profiling a trading hub. A vibrant social
environment helps in attracting a wide range MNCs and individual talent from all across the
globe, which is very essential for the success of a trading hub. Both Dubai and Singapore have
very vibrant and cosmopolitan culture, attracting a huge expatriate population and a wide
range of MNCs. In order to judge them more precisely on physical infrastructure and social
environment, the Mercer- Quality of living worldwide will be used. Mercer’s quality of living
survey is released annually comparing 221 cities across 39 criteria- safety, education, hygiene,
health care, culture environment, recreation, socio-political stability, public transportation etc.
Cities are scored with respect to New York which has a score of 100. The following table shows
the position of Dubai and Singapore along with some other major cities of the world, in the
Mercer quality of living survey.
Table 2: Mercer quality of living ranking for some selected cities
Rank City Qol Index
1 Vienna 108.6
10 Sydney 107
16 Toronto 105.3
28 Singapore 103.5
34 Paris 102.9
45 Washington 100.3
49 New York 100
75 Dubai NA
96 Johannesburg NA
110 Doha NA
221 Baghdad 14.7
Source of data: 2010 Mercer Quality of living survey, available at <
http://www.mercer.com/press-releases/quality-of-living-report-2010 >
18. Based on Mercer’s ranking Singapore ranked 28 definitely has a considerable edge over Dubai,
ranked 75.
On the Basis on the GDP growth rate (where both the cities are fairly at same level) and
Mercer’s ranking, Singapore and Dubai had been allotted a score of 4 and 3 respectively.
Strategic location
Both Dubai and Singapore enjoys great strategic locations and are located in the midst of
economically well off geographies; Dubai in the midst of rich gulf states and Singapore in the
midst of South East Asian tigers. Now the following table will compare distance of Dubai and
Singapore from some of the major nations/ geographies of the world.
Table 3: Distance of Singapore and Dubai (both sea and air) from major
economies/geographical locations of the world
Geography/ Nation Distance from Singapore (Sea and Distance from Dubai (Sea and Air)
Air, )
USA (16,000) , (19,000) (10,000), (15,000)
Russia (8,400) , (18,000) (3,100) , (14,000)
Germany (10,200) , (15,700) (4,500) , (11,000)
France (10,700), (12000) (5200) , (8,000)
United Kingdom (10,800), (12,700) (5,200) , (10,500)
19. India (3,500) , (5000) (1,600) , (1600)
China (3,700) , (2600) (6,500) ,( 9,000)
Middle East (5,800) , (6300) Virtually Zero, Virtually Zero
South East Asia Virtually Zero , Virtually Zero (5,800) , ( 6,300)
North Africa (8,300), (9100) (2,500), (5100)
South Africa (9,000), (10,300) (7,600) ,( 8,700)
It could be seen from the table that other than some of the South East Asian locations and
China, Dubai has an edge over Singapore in terms of both- aerial distance as well as distance via
the sea. Hence Dubai gets a score of 5, whereas Singapore gets a score of 4.
Logistics
Another important parameter deciding the strength of a trading hub is its logistic system and
the volume of cargo, which it can handle. Though both Singapore and Dubai have strong air
and sea logistic facilities, Singapore seems to have an edge on Dubai in terms of resources
and the volume of cargo it handles annually. Singapore port, a term used for the collective
ports and terminals situated in Singapore, is one of the busiest ports in the world. In terms of
TEUs it is the world’s busiest port handling 28.4 million TEUs in 2010. (According to a latest
report published by Shanghais Municipal Corporation, Shanghais has surpassed Singapore as
the busiest port, handling 29.05 million TEUs, annually) On the other hand the Jebel Ali Port,
the main port based in Dubai, has a strong regional significance, but at a present capacity of
11.6 million TEUs in 2010, it is far behind the ports of Singapore and China. The following
figure will do a comparative analysis of Jebel Ali port and Singapore port, over the past few
years.
20. 35
30
30 28.4
25
25 23
21.5
20 18.5
Singapore
15
11.1 11.6 Jebel Ali
10 8.9
7.62 7.7
6.4
5
0
2004 2005 2006 2007 2009 2010
Fig 11: Comparative analysis of Singapore ports and Jebel Ali port in terms of million TEUs
Singapore is slightly behind Dubai, in terms of air freight. Its Changi airport is served by 17
freight carriers, connecting Singapore to 60 destinations across 30 countries. It has an annual
capacity of 3 million tones and had handled 1.8 million tons of cargo last year, against 2.2
million tons handled by Dubai International Airport. Over all on account of much higher
annual capacities of its port Singapore has a considerable advantage over Dubai, in logistics
and hence a score of 5 had been given to Singapore and a score of 4 had been given to Dubai.
Govt. Policies and Ease of doing business
An area of great significance can be the govt. policies of a place. Govt. policies in the form
of custom duties, tax benefits, and tariffs should be liberal enough to facilitate trade in a
geographical location. Singapore is one of the most liberal and open economies in the
world. The tariffs are almost negligible, while it has signed a plethora of FTAs with
countries- USA, Japan, Jordan, European countries such as Norway, Switzerland, China, GCC
countries etc. Though it does not have zero percent income tax as Dubai, but has a very
competitive tax regime. The corporate tax is capped at 17% and personal income tax at
20%, with no tax on the 1st US $ 16, 350 of income. Dividends are not separately taxed. It
21. has very few excise and import duties. Excise duties are charged on tobacco, liquor and
petroleum products where as import duties are charged on tobacco, liquor, petroleum and
automobiles. As discussed earlier Dubai also has a very liberal trade policies in the form of
free tax regime, low custom duty of 4% and almost no tariffs.
As much over all ease of doing business is concern Singapore is much ahead of Dubai.
According to the survey “Ease of doing business” (an initiative taken by World Bank group,
that ranks various economies on various parameters- ease of starting a business, getting
construction permits, registering properties, getting credits, paying taxes, closing business
etc) Singapore holds the 1st position. Dubai (UAE) has an overall 40 position. The following
table gives rank of some of the prominent economies in the survey:
Table 4: Ease of doing business ranking of some selected economies
Countries Rank
Singapore 1
Hong Kong 2
USA 5
Saudi Arabia 11
Thailand 19
France 26
Israel 29
South Africa 34
Dubai (UAE) 40
China 79
Egypt 94
Source of data: Ranking of economies-Doing Business- World Bank Group. Available at
< http://www.doingbusiness.org/rankings>
22. Based on performance of these two economies- for the parameter, govt. policies and
ease of doing business- a score 5 had been given to Singapore and 3 had been given to
Dubai.
Overall Ratings
The following chart compares the score of Singapore and Dubai across all the
parameters.
3
Govt. Pol & ease of Bus
5
4
Logistics
5
Dubai
5 Singapore
Strategic Location
4
3
Gen Eco & Soc Env
4
0 1 2 3 4 5 6
Fig 12 : Comparative analysis of Singapore and Dubai across the given four parameters.
From the chart it is evident that other than strategic location, Singapore has a strong
edge over Dubai across all the parameters- General economical and social environment,
logistics and govt. policies and ease of doing business. Singapore’s strength over Dubai can
also be explained by the fact that as Singapore’s involvement with export goes much longer
than Dubai. Singapore had been an exporting nation since 1960’s and since the city state
was devoid of natural resources, the govt. paid huge attention to export and manufacturing
sector. In contrast to this Dubai had been an oil rich state, with oil contributing more than
50 percentage of GDP till 1980s. During the time of late 90s, in the light of depreciating oil
reserves Dubai started taking strong initiatives towards economic diversification. Hence
Dubai’s emergence as a regional trading hub is much recent phenomenon. Though Dubai is
23. still a regional trading hub, it has ambitious plans of transforming itself into a global trading
center. Singapore with a much intense learning curve in this field can be a great role model
for Dubai. The concluding part of the blog will discuss the way ahead for Dubai, as a trading
center.
Recommendations for Dubai
Dubai is seeking huge investments in transforming itself into a global export/import
center. Not only is the Emirate taking strong steps to market itself as a global brand, but
also investing hugely in up scaling its existing capacities. The following part of the blog will
be discussing few areas, where Dubai can take strong steps to escalate its status
Boosting of domestic export
Dubai is still, more of a re export center. Out of the total export of US $ 58 billion in
2010, re exports at a value of US $ 40 billion accounted more than 2/3 rd of exports. In
contrast to this Singapore has a very healthy mix of export and re export. The value of
export in 2010 was US $ 478 billion and re export was US $ 230 billion. In order to become a
global trading center Dubai needs to add on upon its existing manufacturing capabilities.
Even during 60s Singapore itself was a re export center, but sooner with the help of strong
govt. initiatives it developed a strong manufacturing sector, thereby boosting domestic
trade. Dubai needs to undergo same sort of transition.
Signing more FTAs
In contrast to Singapore that has a wide range of trade partners ranging from Australia,
USA, EU to neighboring nations such as Indonesia, Malaysia etc, Dubai’s trade is mostly
restricted to the MENA region and neighboring India. Dubai needs to diversify its current
portfolio of trading partners by signing more FTAs with nations all around the globe.
Dubai can become the next Oil trade Hub
According to an analysis done by Reuters, in the midst of new oil refineries coming in
Middle East and neighboring India, Dubai can see a surge in oil trading. Strategically located
24. in Middle East and having extra oil storage capacity that Singapore lacks, Dubai can even
surpass Singapore in ten years time. By 2012, petroleum output is expected to increase to
9.6 million barrels per day, taking export to 3.1 million barrels a day. Though this surge can
surely influence Dubai’s profile as a trading hub, much depends on Emirates capability to
bring in more transparency and strong regulations and financial instruments. Oil traders
need sophisticated hedging instruments to protect their cargos, but such instruments are
almost absent in the Middle East region. Hence Dubai need to take pro active steps in this
direction. (Reuters, 2010)
Dubai is presently undergoing through an exciting phase in its transformation from an
oil rich gulf state to a diversified economy. Dubai started its economic diversification in the
late 90s and so far its efforts have paid off well. It had made remarkable success in tourism,
trading, real estate etc. But there are still scopes for lot of changes. So far in a decade time
it’s the leading trading hub of an oil rich and geo politically significant region. Becoming a
global player requires an all new set of games and Dubai seems ready for the challenge.
Dubai’s maneuver in the form strong investments in its branding, port and airport
expansion, economic diversification and industrialization signals about its great ambitions.
Much depends on how things will take turn in the coming time. The next two decades will
tell about this.
References
1> Emirates247.com, 2011, Dubai chamber member trade up by 15.2 %, available at
http://www.emirates247.com/business/economy-finance/dubai-chamber-members-trade-
up-15-2-in-2010-2011-01-08-1.339369
25. 2> Khaleej Times, 2011, Dubai’s Economy is robust, available at <
http://www.khaleejtimes.com/DisplayArticleNew.asp?col=§ion=business&xfile=data/b
usiness/2011/June/business_June400.xml>
3> Container-transportation.com, 2009, available at < http://www.container-
transportation.com/largest-container-ports.html>
4> Khaleej Times, 2010, Dubai airport, a leading global aviation hub, available at <
http://www.khaleejtimes.com/DisplayArticle09.asp?xfile=data/business/2010/September/b
usiness_September412.xml§ion=business>
5> Dubai chamber of commerce, May 2011, Challenges and prospect of UAE
Aluminum market, available at
http://web.dcci.ae/LibNewsLetter/EN/EN_May11/EBmay11.pdf
6> Israel diamond industry, Dubai’s diamond trade surge to 35 billion US $, available
at < http://www.israelidiamond.co.il/english/news.aspx?boneid=918&objId=9231>
7> Jewelry in Asia, 2011, Dubai gold trade up by 18 %, available at
<http://www.jewellerynewsasia.com/en/News/details.html?id=236>
8> Ministry of trade and industry, Singapore; 2011, annual statistics, available at
http://app.mti.gov.sg/default.asp?id=725
9> Reuters, 2010, Dubai: trade hub status has potential to grow, available at <
http://in.reuters.com/article/2010/09/27/us-emirates-products-trade-analysis-
idUSTRE68Q2ZU20100927>
