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Survival of the Fittest: UAE opens up to GCC investment
With the UAE making it easy for GCC businesses to enter the country, how is the additional competition going to impact local businesses?
February 6, 2012 4:48 by Reuters
Good news for GCC businesses: the UAE is now allowing them to open branches of their company across the six-nation bloc and enjoy the same rights as their local counterparts—no extra fees or increased cost of expansion.
The move was decided on Sunday as part of the GCC’s wider strategy of region-wide economic integration, according to an article in Khaleej Times.
And with this, comes the need for standardization of requirements that will ensure all the products coming in from across the GCC are, basically, up to scratch.
Sounds all good news right? Well, it would be interesting to see how Jamal Al Ghurair, managing director of Dubai’s Al Khaleej Sugar Refinery, will handle this news. He’s been talking to Gulf News about the need for the UAE government to “cut costs and fees for local manufacturers to prevent them from losing out to competitors elsewhere in the Gulf.”
Al Ghurair claims that the “biggest challenge” for locally-based investors in the UAE is the cost of production, citing the UAE as having higher costs then its neighbouring countries—particularly for manufacturing.
“I think all other members in the GCC are better off than the UAE at the moment. For private sector companies [manufacturing], the UAE should not be the first choice. Historically we used to have a good advantage and we have lost it now,” Al Ghurair tells Gulf News. Strong words for any businessman in the UAE.
On top of these national levies, Al Ghurair talks about European import taxes that are forcing manufacturers to lower their margins—thankfully not at a point where jobs will be lost, but a revenue loss nonetheless.
And now that this GCC summit move opens the UAE market to even more competition, albeit from fellow GCC nationals, we can only imagine that things are not looking any prettier for the existing local companies. But there’s always a silver lining, to end-customers at least. For consumers, this can only mean better products, competitive prices and more variety. Well at least that’s the idea.
Just don’t tell Al Ghurair.