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Dubai vs singapore as trading hubs


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Dubai vs singapore as trading hubs

  1. 1. Dubai VS Singapore: as trading HubsThe following blog will try analyzing Dubai as a trading zone and Dubai’s potential as a trading hub forsome selected items like petroleum, cotton, automobiles etc. It will also do the same for Singaporebefore comparing the two trading hubs across some selected parameters. Finally it will try giving somerecommendations for Dubai as a trading hub.Trading ZoneA trade zone is a port or an area, where imported goods could be held for a while without anycustom duty and then can be re exported. Generally doing custom formalities is an arduoustask and involves a lot of cost. Hence a trading zone or a free trading zone, (as it is usuallyreferred) helps in cost reduction. Such trading zones are also used by MNCs in establishing theirmanufacturing 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 ina 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 ZoneDubai is among the leading trading zones in the globe. The Emirate is blessed with an extensivecoastline of 400 miles and is linked to 120 destinations across the sea. The main sea port in
  2. 2. Dubai- Jebel Ali sea port is the largest man made harbor in the world. Dubai’s strength as atrading zone lies in its- strategic position, positioning as a gateway to Middle East region, stateof the art infrastructure and logistic facilities and efficient government machineries. Dubai’sexport had been hit hard recently due to global economic recession coupled with real estatecrisis. But in 2010, it was back on track, registering a total export and re export of US $ 58.4billion, against US $ 50 billion in 2009. (Emirates, 2011) In 2011, so far Dubai hadenjoyed an export of US $ 27.2 billion, a 17 percentage increase over the same time period lastyear. In May alone it had reached US $ 5.9 billion, highest in the past three years. (KhaleejTimes, 2011) According to Dubai statistics center, from 2006-10, there had been a total ofexport of US $ 169 billion. The following pie chart shows, Dubai’s percentage of export tovarious 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 Dubais export to various countries. Source of data:Dubai statistics center
  3. 3. Iran’s ongoing animosity with the Western world makes difficult for it to import from thesecountries. Hence, Dubai placed, geographically close to Iran makes it an obvious tradingpartner. The total value of trade between Iran and Dubai, from 2006-10 is valued at US $ 25.7billion witnessing a compound annual growth rate of 21 %. The second largest tradingdestination for Dubai is India. India and Dubai shares a strong trading relationship, on accountof geographical proximity as well as a huge Indian expatriate population residing in theEmirates. The total value of Dubai’s export to India in the given period had been US $ 18.5billion witnessing an exorbitant compound annual growth rate of 71 percentages in the givenperiod, 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 shipsit to various destinations. After Hong Kong and Singapore, it is the 3rd largest Re-Export centerin 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, andIndia etc. Re Export in US $ million Saudi Arabia 194 India 204 Iran 790 0 200 400 600 800
  4. 4. In the coming years trade in Dubai is expected to increase further. Dubai’s economy seems tobe 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 isvery high up on their agenda. Along with the above mentioned strengths of Dubai, one of thebiggest strength of the Emirate is financial and institutional support UAE can provide in theform of strong credit and liquidity.Data pertaining to Exports and Re Exports for the year 2010, Source: Dubai Chamber ofCommerce Annual Report, 2010Year 2009 2010 UP/ DOWNTotal 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. 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 2010Fig 2: Export and Re Export figure of Dubai in US $ billion. Source: Dubai Chamber of CommerceAnnual 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. 6. Ports in Dubai: Jebel Ali Port, world’s largest man made harbor and largest port inMiddle East had been constructed in 1970s. Spread across a total area of square 134KMs, 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 millionsquare meters of container yard and 960,000 square meters of open space. Other thanJebel Ali, another port in Dubai is port Rashid, which will be ultimately developed into acruise 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. Dubaihad a very ambitious plan of expanding the Jebel Ali port. By 2030 it is expected tohandle 55 million tons of TEUs. (, 2009)Air Cargo in Dubai: Dubai is the gateway between the East and West. Dubaiinternational airport is the 5th largest airport in the globe, in terms of cargo capacity andhas offices of 35 cargo airlines. After the new airport, Dubai World Central Al MaktoumInternational (DWC), will be operational the overall cargo volume is expected to increase by 48percentages by 2015. In 2010, with a overall capacity of 2.5 million tons, it handled acargo volume of 2.2 million tons, up from 1.9 million tons in 2009. Since the advent of itscargo operation in 1991, the cargo operations at Dubai airport had witnessed aphenomenal journey, metamorphosing itself from global, sixty one to top five. From itsvery beginning the overall throughput was neck to neck with the overall capacity, thereby influencing timely capacity expansion. (Khaleej Times, 2010) The following figureshows the capacity of the airport over the last twenty years.
  7. 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 2010Fig 3: showing air cargo volume at Dubai airport over the period of time. Source: Khaleej TimesInstitutional Support: -Dubai provides strong institutional support for export. The Jebel Ali free trade zone iseffectively tax free. Companies are not charged with any personal or corporate for the initialfifteen years. After the completion of the initial fifteen years, companies can request foranother fifteen years of tax exemption. Additionally there are no import /export taxes forcompanies operating in the Jebel Ali region. In general, the custom duties are very low at 4percentages, 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 exportcenter of some particular items:-Tea: - off late Dubai is emerging as a strong tea re export center, owing to its geographicalproximity with major tea producing nations and excellent ports with state of the artwarehousing facilities. There are dedicated ware houses with facilities for blending and
  8. 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 teatrading, in 2005 DTTC (Dubai tea trading center) had been established by DMCC (Dubai multicommodities center). DTTC managed a total trade of 10.8 million KGs of tea in 2010, up from7.5 million KGs, in 2009. India, Sri Lanka and Kenya are among the major partners of DTTC andtogether 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 2010Fig 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 inthe region. During 2009, on account of the global economic crisis, the overall trading ofautomobiles was hit hard, but in 2010 the market recovered. In 2010 the overall import and reexport of automobiles is valued at US $ 5.45 billion and US $ 2.45 billion respectively. Theemergence of Dubai as an automobile trading hub can be attributed to Dubai being a major reexport 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 exportdestination followed by Iran, Libya and Saudi Arabia. Together these countries account for
  9. 9. around 41 percentage of Dubai’s re export in the MENA region. In terms of major automobilesuppliers 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 toDubai: 6% 12% Japan 8% 44% USA Germany 13% South Korea 17% UK OthersFig: Major automobile exporting nations to Dubai, Source: Dubai Chamber of CommerceAluminum:-Aluminum is one of the most widely used metals in the various industrial sectors such asengineering, construction, electrical, automobile etc. It is widely used by both developed aswell as developing nations in the world. Dubai is evolving as a major aluminum exportingdestination, supplying aluminum products to destinations like Pakistan, India, Iran, Moroccoetc. Dubai’s total aluminum export in 2009 was valued at US $ 650 million. (Dubai Chamber ofCommerce, 2011)Jewelries:
  10. 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 totalamount of trade valued at US $ 35 billion. (Includes export, import and re export). In 2010Dubai imported a total of 90 million carats of polished diamond, worth US $ 13.3 billion andexported 73.6 million carats of polished diamond, worth US $ 14.6 billion. It also imported atotal of 50.4 million carats of unpolished diamond and exported 54.7 million carats ofunpolished diamond. The major trading partners for Dubai in diamond jewelries are India, HongKong, Belgium, Angola and Congo etc. (Israel diamond industry, 2011) Dubai is also amajor gold export and re export center. Total value of gold traded throughDubai in 2010 was US $ 41.3 billion, up by 18% from the previous year. The gold importsincreased by 1 % year on year to 707 million tones where as export were down by 8.1 % to 418tones. Around 100 countries traded in gold with Dubai in 2010, India being the top tradingpartner followed by Switzerland. (Jewelry in Asia, 2011)Singapore as an export hubEconomy of SingaporeSingapore, a small island nation with five million residents in South East Asia, is one of thebiggest success stories in Asia. After getting freedom in 1963, the tiny island state took stronginitiatives toward industrialization and opening up of economy. In contrast to Dubai where oilplayed an important role in building up the economy, Singapore’s economy is built ontechnology and labor skills. During the time of 70s Singapores focus on modern industries suchas electronics, petrochemicals and precision machineries coupled with foreign investment
  11. 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 andstrategic location helped it attract a huge amount of MNCs to have their base in Singaporealong with large amount of foreign investments. From 1963 to present Singapore has recordedan average GDP growth of 7.9 %.Today Singapore is considered as one of the most liberal states in the world enjoying high percapita income, state of the art infrastructure and a robust economy. It had successfullydiversified into services sector and is the financial and export hub of South East Asia It is alsoconsidered as one of the most innovative, liberal and business friendly nations in the worldwhere it takes only three days to start a business in, much lesser than the world average thatstands at 34 days.ExportsSingapore is one of the biggest export hubs of the world. Manufacturing coupled with exporthad played an important role in expanding Singapores economy. In 2010 Singapore had done atotal trade of US $ 661 billion, consisting of total exports of US $ 478.84 billion and imports ofUS $ 423.2 billion.(Ministry of trade, Singapore, 2011) Major export items are petroleumproducts, food and beverages, pharmaceuticals, chemicals, electronics, industrial machineriesetc. Major import items are chemicals, electronic parts, petroleum, automobiles, food andbeverages etc. Major export destinations are Indonesia, Malaysia, China, EU, USA, Hong Kong,Japan etc. The following pie chart shows the percentage wise break up Singapores export tovarious nations in 2010.
  12. 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 ofstate.Major importing destinations are EU, Malaysia, USA, China, Japan etc. The following pie chartshows the percentage wise break up of various importing destinations to Singapore, for theyear 2010. 12% EU 12% 46% Malaysia 11% USA China 11% 8% Japan Others
  13. 13. Fig 8: Percentage wise break up of major importing to Singapore in 2010, Source: US department ofStateEmergence of Singapore as a trading nationBrief introduction to economic growth since 1960During early 60s Singapore was a distribution center for simple products in the neighboringregion. During this period it was undergoing through a rapid growth of population along withhigh unemployment rate. This led the govt. taking reformatory majors for the economy andtrade such as no restriction on MNCs, relaxing labor laws and immigration laws, providingincentives to industries, which eventually resulted in transformation of Singapore into anexport oriented industrial state. Reformatory measures coupled with the arrival of MNCs andemergence of Singapore as financial hub helped successfully transforming Singapore into anexport oriented, highly industrialized state. In shaping up the growth trajectory of SingaporeMNCs had a very crucial role to play. By 1981, though MNCs accounted only 16.7 % of the totalcompanies involved manufacturing sector, they were responsible for 42.8 % of totalemployment, 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.Singapores initial focus was on labor incentive manufacturing, but eventually economy wasrestructured to pave way for high skill and technology based industries. Govt. played animportant role in economic re structuring by executing steps such as giving tax incentive forresearch 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. In1960 total amount of re exports was ten times higher than the domestic export. Over theperiod of time this trend started getting reversed and in 1974, for the 1 st time total domesticexport was more than the re export. From 1960 to 1980, the value of percentage of totalexport decreased drastically for products like wood, rubber, food, beverages, tobacco etc
  14. 14. (Even though there was a reduction in the percentage of total exports, the absolute value ofexport increased for products like, food, beverages, rubber etc.); where as it increasedexorbitantly for products like chemicals, petroleum, electrical machineries. The percentage oftotal export remained constant for paper, furniture, non electrical machineries etc. where as avery moderate increase was registered for non metallic minerals and metal products. Therehad also been a paradigm shift in export destinations of Singapore. From 1960 to 1980, thepercentage of export to developed countries increased from 4% to 45%, where as fordeveloping countries it decreased from 96% to 52 %.( a part of this can be explained from thefact that many of the neighboring economies like Malaysia, were growing fast, there bydepending 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 ithad 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, itwas an ideal export destination and a haven for foreign investors and MNCs. The paradigmshift in its economy was well reflected in its export structure also. From an export destinationof labor intensive, low value products such as palm oil, textile, leather products, it had beentransformed into an export hub of high value, high technology and capital intensive productssuch as , petrochemicals, precision machines, pharmaceuticals etc. During the 90s, lots of FTAs(Free Trade Agreements) were signed between the govt. of Singapore and various other tradepartners such as USA, Japan etc. This resulted in higher profitability in the form of fewer tariffsalong with better market access for the exporters in Singapore. Singapore VS Dubai: as trading hubsThe following part of the blog will compare Dubai and Singapore as trade hubs, across variousparameters such as strategic location, economy, ports etc, and based on this will score them ina scale of 0 to 5. Based on secondary resources, it will also try analyzing their future strength
  15. 15. and will do a separate scoring for it. The following figure compares Singapore and Dubai interms 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 2010Fig 9: Comparison of annual exports of Dubai and Singapore, Source: Dubai chamber ofcommerce and Ministry of trade and industry, Singapore, annual statisticsAt present there is a huge difference between Singapore and Dubai, with Singapore enjoyingalmost eight times the export of Dubai. But Dubai has ambitious plans to leapfrog itself from aregional 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 EnvironmentThe general economic environment is very essential for the success of a trading hub. There willbe three sub categories under this- economic growth, physical and IT infrastructure and socialinfrastructure.
  16. 16. Economic growth: A stronger economic environment ensures; liquidity for business, ease ofestablishing and doing business, investments in infrastructure etc. Both Dubai and Singaporeare economically well off, enjoying a high GDP growth and per capita income. The followingfigure 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 2009Fig 10: Comparison of real GDP growth rate of Singapore and Dubai, Source of data: Dubai statisticscenter and World BankThe given figure shows Dubai’s vigorous growth in the early phase of 2000. This was the periodwhen Dubai showed exorbitant growth, leapfrogging many of the fast growing economies inthe world. By the 2nd phase of the decade growth had been very moderate for both theeconomies, due to global economic slowdown. Dubai has also been hit hard due to real estatebubble burst in the given period.Infrastructure: - Both the cities have great infrastructure. Huge investments have been made bythe respective governments in developing physical and telecommunication infrastructure. Bothenjoy well developed transport facilities, state of the art road networks, wide range of hotelsand resorts, high internet and telecommunication penetration etc.
  17. 17. Social environment: is another area, very significant for profiling a trading hub. A vibrant socialenvironment helps in attracting a wide range MNCs and individual talent from all across theglobe, which is very essential for the success of a trading hub. Both Dubai and Singapore havevery vibrant and cosmopolitan culture, attracting a huge expatriate population and a widerange of MNCs. In order to judge them more precisely on physical infrastructure and socialenvironment, the Mercer- Quality of living worldwide will be used. Mercer’s quality of livingsurvey 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 showsthe position of Dubai and Singapore along with some other major cities of the world, in theMercer quality of living survey.Table 2: Mercer quality of living ranking for some selected citiesRank City Qol Index1 Vienna 108.610 Sydney 10716 Toronto 105.328 Singapore 103.534 Paris 102.945 Washington 100.349 New York 10075 Dubai NA96 Johannesburg NA110 Doha NA221 Baghdad 14.7Source of data: 2010 Mercer Quality of living survey, available at < >
  18. 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) andMercer’s ranking, Singapore and Dubai had been allotted a score of 4 and 3 respectively.Strategic locationBoth Dubai and Singapore enjoys great strategic locations and are located in the midst ofeconomically well off geographies; Dubai in the midst of rich gulf states and Singapore in themidst of South East Asian tigers. Now the following table will compare distance of Dubai andSingapore from some of the major nations/ geographies of the world.Table 3: Distance of Singapore and Dubai (both sea and air) from majoreconomies/geographical locations of the worldGeography/ 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. 19. India (3,500) , (5000) (1,600) , (1600)China (3,700) , (2600) (6,500) ,( 9,000)Middle East (5,800) , (6300) Virtually Zero, Virtually ZeroSouth 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 andChina, Dubai has an edge over Singapore in terms of both- aerial distance as well as distance viathe 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. 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 2010Fig 11: Comparative analysis of Singapore ports and Jebel Ali port in terms of million TEUsSingapore is slightly behind Dubai, in terms of air freight. Its Changi airport is served by 17freight carriers, connecting Singapore to 60 destinations across 30 countries. It has an annualcapacity of 3 million tones and had handled 1.8 million tons of cargo last year, against 2.2million tons handled by Dubai International Airport. Over all on account of much higherannual capacities of its port Singapore has a considerable advantage over Dubai, in logisticsand 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. 21. has very few excise and import duties. Excise duties are charged on tobacco, liquor andpetroleum products where as import duties are charged on tobacco, liquor, petroleum andautomobiles. As discussed earlier Dubai also has a very liberal trade policies in the form offree 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, gettingconstruction permits, registering properties, getting credits, paying taxes, closing businessetc) Singapore holds the 1st position. Dubai (UAE) has an overall 40 position. The followingtable 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<>
  22. 22. Based on performance of these two economies- for the parameter, govt. policies andease of doing business- a score 5 had been given to Singapore and 3 had been given toDubai. Overall Ratings The following chart compares the score of Singapore and Dubai across all theparameters. 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 strongedge 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 canalso be explained by the fact that as Singapore’s involvement with export goes much longerthan Dubai. Singapore had been an exporting nation since 1960’s and since the city statewas devoid of natural resources, the govt. paid huge attention to export and manufacturingsector. In contrast to this Dubai had been an oil rich state, with oil contributing more than50 percentage of GDP till 1980s. During the time of late 90s, in the light of depreciating oilreserves Dubai started taking strong initiatives towards economic diversification. HenceDubai’s emergence as a regional trading hub is much recent phenomenon. Though Dubai is
  23. 23. still a regional trading hub, it has ambitious plans of transforming itself into a global tradingcenter. Singapore with a much intense learning curve in this field can be a great role modelfor Dubai. The concluding part of the blog will discuss the way ahead for Dubai, as a tradingcenter. Recommendations for Dubai Dubai is seeking huge investments in transforming itself into a global export/importcenter. Not only is the Emirate taking strong steps to market itself as a global brand, butalso investing hugely in up scaling its existing capacities. The following part of the blog willbe 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 in2010, re exports at a value of US $ 40 billion accounted more than 2/3 rd of exports. Incontrast to this Singapore has a very healthy mix of export and re export. The value ofexport in 2010 was US $ 478 billion and re export was US $ 230 billion. In order to become aglobal 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 stronggovt. initiatives it developed a strong manufacturing sector, thereby boosting domestictrade. 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 mostlyrestricted to the MENA region and neighboring India. Dubai needs to diversify its currentportfolio 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 inMiddle East and neighboring India, Dubai can see a surge in oil trading. Strategically located
  24. 24. in Middle East and having extra oil storage capacity that Singapore lacks, Dubai can evensurpass Singapore in ten years time. By 2012, petroleum output is expected to increase to9.6 million barrels per day, taking export to 3.1 million barrels a day. Though this surge cansurely influence Dubai’s profile as a trading hub, much depends on Emirates capability tobring in more transparency and strong regulations and financial instruments. Oil tradersneed sophisticated hedging instruments to protect their cargos, but such instruments arealmost absent in the Middle East region. Hence Dubai need to take pro active steps in thisdirection. (Reuters, 2010) Dubai is presently undergoing through an exciting phase in its transformation from anoil rich gulf state to a diversified economy. Dubai started its economic diversification in thelate 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 timeit’s the leading trading hub of an oil rich and geo politically significant region. Becoming aglobal 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 airportexpansion, 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 willtell about this. References 1>, 2011, Dubai chamber member trade up by 15.2 %, available at
  25. 25. 2> Khaleej Times, 2011, Dubai’s Economy is robust, available at <> 3>, 2009, available at <> 4> Khaleej Times, 2010, Dubai airport, a leading global aviation hub, available at <> 5> Dubai chamber of commerce, May 2011, Challenges and prospect of UAEAluminum market, available at 6> Israel diamond industry, Dubai’s diamond trade surge to 35 billion US $, availableat <> 7> Jewelry in Asia, 2011, Dubai gold trade up by 18 %, available at<> 8> Ministry of trade and industry, Singapore; 2011, annual statistics, available at 9> Reuters, 2010, Dubai: trade hub status has potential to grow, available at <>