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

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.

15%

11%

6%

6%4%

4%3%3%3%2%2%2%

40%

IranIndiaSaudi ArabiaIraqSwitzerlandPakistanBelgiumKuwaitHong KongNeitherlandsUSAQatarOthers

 fig 1 : pie chart showing, the percentage of Dubai's export to various countries. Source of data:

Dubai statistics center   

 

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 3 rd 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.

Iran

India

Saudi Arabia

0 100 200 300 400 500 600 700 800

790

204

194

Re Export in US $ million

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 %

2007 2008 2009 20100

10

20

30

40

50

60

70

45.5

60.3

50

58.4

Export & Re Export in US $ billion

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.

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.

1996 1998 2005 2008 2009 20100

0.5

1

1.5

2

2.5

0.250.5

1

1.811.92

2.2

Annual Cargo Volume in million tons

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

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.

2006 2007 2008 2009 20100

20

40

60

80

100

120

140

160

105.5

144.6 148.6

112.3 116.5

4.3

5.2 5.9

7.510.8

DTTCTotal Trade

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

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:

44%

17%13%

8%

6% 12%

JapanUSAGermanySouth KoreaUKOthers

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:

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

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% 9%

12%

10%10%6%5%

36%

MalaysiaIndonesiaHong KongEUChinaUSAJapanOthers

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%12%

11%

11%8%

46% EUMalaysiaUSAChinaJapanOthers

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

(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

and will do a separate scoring for it. The following figure compares Singapore and Dubai in

terms of their exports.

2007 2008 2009 20100

100

200

300

400

500

600

478 476

391

478

45.5 60.3 50 58.4

SingaporeDubai

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.

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.

2002 2003 2005 2007 2008 20090

5

10

15

20

25

4.2 3.5

13.3

8.5

1.8 1.3

21.520

6.8

10

3.2 2.4

SingaporeDubai

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.

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 >

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 Air, )

Distance from Dubai (Sea and 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)

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.

2004 2005 2006 2007 2009 20100

5

10

15

20

25

30

35

18.5

21.523

25

3028.4

6.47.62 7.7

8.911.1 11.6

SingaporeJebel Ali

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

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>

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.

Gen Eco & Soc Env

Strategic Location

Logistics

Govt. Pol & ease of Bus

0 1 2 3 4 5 6

4

4

5

5

3

5

4

3

DubaiSingapore

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

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

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

2> Khaleej Times, 2011, Dubai’s Economy is robust, available at <

http://www.khaleejtimes.com/DisplayArticleNew.asp?col=&section=business&xfile=data/

business/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/

business_September412.xml&section=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>