JEDDAH, 2 May 2005 — Gulf companies face 20 obstacles in exporting their products to countries of the Gulf Cooperation Council, other Arab countries and foreign countries, according to a recent survey study conducted by the general secretariat of the GCC chambers’ union. The reasons behind the obstacles are related to the economic structure of the GCC in being similar in their production infrastructure and reliance on oil as the main source of income and development. It was also observed that there was a difference in the level of difficulty where it was the least in exporting to Gulf countries but the highest in exporting to other Arab countries which explains the low rate of export with Arab countries.
The main obstacle to Gulf companies’ exports is the high fee of transportation and shipping especially to Gulf countries and other Arab countries. This obstacle came in third place when exporting to foreign countries. The four other obstacles identified when exporting to Gulf countries are, respectively, customs inspections and regulations, lack of information on market needs of the company’s products, restrictions on company representatives, and problems in customs clearance. As for exporting to other Arab countries, following transportation fees the other four obstacles are, respectively, the high customs duties at the importing country, high taxes on the company’s products, customs inspections and regulations, and problems in customs clearance. When exporting to foreign countries, the main obstacle the Gulf companies face is the high
customs duties at the importing country. This is followed by lack of information on the market needs of the company’s products, high transportation and shipping fees, high taxes on the company’s products, and lack of proper shipping methods. The study found that the highest percentage of the Gulf companies’ exports went to foreign countries at 16.5 percent followed by exports to the Gulf countries at 9.5 percent.
Other obstacles identified by the study include lack of financing where most of these companies relied on their own resources or commercial bank loans, which indicates the inadequate role played by specialized finance and loan institutes. The companies also pointed out that they do not receive enough direct and indirect support from their governments to encourage them to export. There is also an absence of specialized marketing companies to market the companies’ products especially in foreign countries, but even among Gulf countries the companies were unsatisfied by the level of commercial trade cooperation although they are optimistic about the implementation of the new customs union agreement, which will reduce the other obstacles related to customs such as the official and unofficial fees for obtaining export and clearance licenses and the complicated procedures involved in obtaining the licenses. The other obstacles are related to insurance, product specifications, difficulty in finding business partners, product restrictions, monopolization, and restrictions on distribution.
The study concludes by making recommendations on the need to develop a strategy for diversifying Gulf companies’ products, which are mainly oil related, and adopting financial, monetary, investment and commercial policies that gives the local and foreign private sector a greater role in production and export. In addition, the study recommends offering incentives to exporters to compensate for their high expenses and improve their competitive ability. Also, transportation and insurance issues must be addressed as well as establishing commercial financing institutes, which requires changes in the banking policies and procedures that will help the companies receive loans, insurance and information.
There is also the need to improve production quality and packaging. And finally, the study also recommends getting into free trade zone agreements with Arab and foreign countries and for the Gulf countries to solve their border problems that affect exporters.