Why You Should be Exporting to the United Arab Emirates
The United Arab Emirates is a wealthy economy that is largely dependent on its exports of crude oil and natural gas. It relies heavily on imported goods and services and so has significant potential as an export market. The UAE is Australia’s largest trade partner in the Middle East & North Africa (MENA) region and Australia’s exports to the UAE total $2.6 billion. However Australia is only the UAE’s twenty-second largest source of imports, making up only 1% of total imports. Aside from the strength of the economy and the varied market entry options in the UAE, there are two important reasons why Australian companies should be looking to export to the UAE: familiarity and safety.
The familiarity of the UAE markets
The first advantage of the UAE markets is their ease and familiarity for many exporters. The UAE has many Australian and other Western companies that export to it. It is familiar with Australian companies and how they function and many Australian companies have successfully exported to the UAE. Essentially, it is a well-trodden path and this should be comforting to Australian companies: if other companies can do it successfully, then so can you.
The UAE’s growing economy and population has expanded the opportunities for Australian exports. The biggest opportunities for Australian companies are in construction and nuclear power. Following the announcement in April 2014 that Australian would begin exporting uranium to the UAE, there is potential for Australian companies to win contracts for the construction of the nuclear power plants, along with the other construction contracts throughout the UAE. Furthermore, the export of uranium export will enhance the bilateral relationship between Australia and the UAE and entrench existing trade channels between the two countries.
The accessibility and familiarity of the UAE makes it an easy entry point to the MENA region. This is critical because once you are established as an exporter to the region, it is much easier to be successful in establishing other trade relationships in the UAE and with other Arab states.
Legal protections and the safety of the UAE markets
The lesser-known advantages of exporting to the UAE are the regulations surrounding export. Unlike some other countries in the region, the UAE has a sophisticated and transparent legal system. The UAE has a number of ‘free zones’- there are 38 in Dubai alone- within which foreign investment is strongly encouraged. The free zones offer numerous benefits including 100% foreign-ownership of companies, 100% repatriation of capital and profits, no personal income tax, 50 years tax-free foreign investment and laws and regulations written in English. These free zones make exporting from Australia to the UAE profitable and much easier to understand and establish.
One of the UAE’s most well-known free zones is the Dubai International Financial Centre (DIFC). DIFC is a small area of approximately 100 acres, within which its own courts operate independently from the rest of the country. This is important for Australian exporters because the laws for these courts in the DIFC are written in English and default to English Common Law (the foundation of Australian Law). This makes navigating the nuances of export to the MENA region much simpler and makes any investment in the UAE much safer, as Australians will generally understand the laws that are written as well as the legal principles that underpin them.
In sum, exporting to the United Arab Emirates offers Australian companies a well-established and well-known path to trade in the MENA region. Its legal structure as well as the familiarity of its market to Australian companies and the strong governmental trade ties between Australia and the UAE make it an ideal platform to launch export to the region. It is a relatively easy market to export to with high demand for goods and services across a range of industries and with a high regard for Australian companies. If you are looking for an entry point to the lucrative and growing markets of the MENA region, look no further than the UAE.
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Author: Hugh Dixson
Hugh is a student at the Australian National University majoring in International Relations and Arabic, specialising in international trade. He has a particular interest in Australia’s trade with the Middle East and Asia, focusing on trade and government relations in those regions. Hugh hopes to eventually work in international economic institutions, commodity and trade finance or international trade groups.