Export credit insurance... securing UAE exports

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					                                                                                       DUBAI
 EDC BULLETIN | ISSUE 3 - QUARTER 4 - 2008
                                                                                         exports
Export credit insurance... securing
UAE exports
Companies in the UAE exporting goods           very possible that overseas buyers could       manufacturers, traders and service          businesses with access to a complete
and services to foreign markets need to        file for bankruptcy, run into cash flow          organisations against commercial and        range of export credit insurance services,
be aware of recent changes in the global       problems, or fail to make payments for         political risks. Commercial risk is         helping to minimise the risks associated
business environment as these changes          a variety of reasons. As such, when you        defined as buyer insolvency or protracted    with providing export credit for Dubai
can affect the ability of their customers to   are required to extend credit to buyers        non-payment of your invoices. These         businesses seeking to grow and expand
meet their payment obligations.                overseas, you can protect your company         problems could occur for many reasons       their businesses via overseas markets.
                                               against non-payment with an export             such as fluctuation in demand, or general    This scheme will supplement EDC’s
Payments by letters of credit and cash         credit insurance policy.                       economic conditions in the buyer’s          current activities designed to create an
in advance are norms of the past when                                                         country or, elsewhere. Political risks      enabling environment for exporters and
it comes to dealing with buyers in other       Export credit insurance is not only a          include war, currency inconvertibility,     enhance the competitiveness of Dubai as
countries. These terms of payment are no       viable means of securing payment. It           government moratorium, import license       a preferred trading partner. EDC’s current
longer considered to be competitive terms      can also be an effective sales tool to help    cancellation among other causes of non-     range of activities includes provision of
in the international marketplace. Besides,     increase order quantities by allowing          payment.                                    the Export Assistance Model that gives
the tightening of credit availability means    your customers to economically order                                                       preparation, facilitation and assistance to
reduced access to documentary credit, as       and stock more of your products. Such          Dubai Export Development Corporation        Dubai based exporters as well as to those
used to be the case in recent years.           competitive credit terms will motivate         (EDC) is currently working a new            considering exporting their goods and
                                               existing buyers to buy more, resulting to      business that will provide Dubai            services.
Companies not only in OECD markets             increase in sales.
but across the globe are now getting used
to purchasing on open account credit           In addition, export credit insurance will
terms from their other suppliers, and they     allow your company to enter new markets
often expect the same consideration from       that you previously would have perceived
suppliers in the UAE. Moreover, buyers         as too risky. It will allow you to take
across the globe may be facing scarce          advantage of opportunities to penetrate
capital or even currency restrictions, thus    and establish market share in emerging
making it very difficult or even impossible     economies as well. Export credit
for them to order their products without       insurance is also an effective financing
open credit.                                   tool as it can help your exporters obtain
                                               more favorable financing.
On the other hand, companies in the
UAE in all probability need to extend          It will help keep your company’s financial
competitive terms in order to grow             position secure in changing international
their export businesses. This will leave       market conditions, and will also help
entrepreneurs wondering what will              reduce bad debt reserves.
happen if they don’t get paid. In the
current global business environment, it is     Export    credit      insurance    protects




                                 CEOʼs Message
                               The global credit crunch           Dubai and UAE-based exporters in solving liquidity      initiative of sustaining the growth of the Emirate
                               has spread like a plague to        issues during the financial turmoil. This service will   through the Advisory Council, we are assured that our
                              the international markets           cover manufacturing, trading and service-oriented       economy will continue to become a global hub for
                             around the world and has             firms that have markets in 175 countries.                trade and investment despite the current crisis. EDC
                          reached many sectors, leaving                                                                   will work doubly hard and will keep diversifying
    the real        estate sector deeply affected. Like           We are optimistic that Dubai’s exports and re-exports   Dubai’s export potential to become the Middle East’s
    most countries, Dubai government is employing                 will remain robust and will continue to record          exporting hub.
    measures to minimise the effects of the financial              encouraging levels of growth this year. Since 2000,
    upheaval on the local economy.                                Dubai is experiencing a steady progress in overall
                                                                  exports. During the first half of the previous 2008      Engineer Saed Al Awadi
    Dubai is still maintaining its growth momentum in             financial year, the Emirate has recorded a 59 per cent   Chief Executive Officer
    terms of exports regardless of the global economic            increase in exports as compared to the same period in   Dubai Export Development Corporation
    meltdown. EDC, as the organisation charged in                 2007 to reach AED20.1 billion.
    promoting exports from the Emirate, has introduced a
    credit insurance facility giving alternative options to       Now that the Government of Dubai has taken the



                                                                                                        Quarterly Bulletin Published by Dubai Export Development Corporation       1
markets
                                                                                                 Dubai and Brazil strengthen
                                                                                                 bilateral trade
                                                                                                 Trade relations between Brazil and Dubai      efforts to increase exports for its national
     Saudi Arabia: Dubai’s largest                                                               have witnessed major developments in          manufacturing companies.
                                                                                                 the past years. In 2007, Brazil exhibited
     export market in the GCC                                                                    the highest growth of 154.3 per cent
                                                                                                 in terms of exports from the Emirate
                                                                                                                                               Based on the figures from Dubai World’s
                                                                                                                                               Statistic Department, Dubai exports
                                                                                                                                               to Brazil in the first half of 2008 have
                                                                                                 posting AED29.5 million as compared to
     Saudi Arabia remains a key market          453 per cent, posting AED105 million                                                           increased to AED655.7 million, which is
                                                                                                 AED11.6 million in 2006.
                                                                                                                                               426 per cent jump compared to the same
     for most countries not only from the       as compared to AED19 million in
                                                                                                 Base metals and products thereof are the      period last year.
     West but from the members of Gulf          2006.                                            most in demand goods Dubai is exporting
     Co-operating Council (GCC) as well.                                                                                                       Consequently, as per the Arab Brazilian
                                                                                                 to Brazil reaching a 107 per cent increase
     Saudi Arabia, one of the main trade        Meanwhile, 2007 exports of wood                                                                Chamber of Commerce’s recent studies,
                                                                                                 or AED20.5 million between 2006 and
     partners of Dubai, is currently the top    pulp, cork, cellulose materials,                                                               the UAE is the leading destination among
                                                                                                 2007 from AED9.9 million. Also during
                                                                                                                                               the Arab countries for the construction
     export destination for the Emirate.        paper and printing have reached to               last year, exports of textile products were
                                                                                                                                               materials from Brazil worth AED423.84
                                                AED22.6 million, a 237 per cent rise             valued at AED8.1 million, a huge leap
                                                                                                                                               million (US$116.12) of import products
     Based on Dubai World’s Statistics          as compared to AED6.7 million in                 from the AED 242,000 in 2006.
                                                                                                                                               in 2007. Brazil considers Dubai as an
     Department, exports of Dubai to            2006.                                            Brazil is one of the targeted markets         ideal export destination due to its strategic
     Saudi Arabia have increased to                                                              for Dubai and EDC is concentrating its        location in the region.
     11.4 per cent in 2007 resulting into       Taking such growth opportunities
     AED461.1 million as compared to            even further, EDC has and is working                   DUBAI EXPORTS TO BRAZIL BY HS CHAPTER DURING 2007
     2006’s AED413.8 million.                   hard to increase such exports to the              CHAPTER                   DESCRIPTION                      WEIGHT (Kg.)    VALUE (AED)
                                                Kingdom. In the first half of 2008,                8         EDIBLE FRUIT AND NUTS;PEEL OFCITRUS FRUIT OR                30          148.37
     This is further affirmed by EDC’s           Dubai exports to Saudi have increased
                                                                                                            MELONS

     Dubai Export Monitor Report. For           164 per cent in the first half of 2008 as          38        MISCELLANEOUS CHEMICAL PRODUCTS                         62445       177932.63

     2007, semi-precious/precious stones        compared to the same period last year             39        PLASTICS AND ARTICLES THEREOF                           12765       133953.76

     and metals and imitation jewellery are     to reach AED578.4 million, making it              49        PRINTED BOOKS.NEWS PAPER.PICTURES,                       1338        15230.44
                                                                                                            MANUSCRIPTS.TYPESCRIPTS,P
     the top exports to the Kingdom and         the most important regional exports
                                                                                                  58        SPECIAL WOVEN FABRICS; TUFTEDTEXTILE FABRICS;               20              50
     has exhibited a staggering increase of     destination for Dubai.                                      LACE; TAPESTRI
                                                                                                  61        ARTICLES OF APPAREL AND CLOTHING                          102             3550
                                                                                                            ACCESSORIES, KNITTED OR CRO
                                                                                                  62        ARTICLES OF APPAREL AND CLOTHING                    350171.34      8137490.48
                                                                                                            ACCESSORIES, NOT KNITTED OR
               DUBAI EXPORT BY HS SECTIONS - 2006 & 2007                                          70        GLASS AND CLASSWARE                                    102125       369389.81
                                                                                                  76        ALUMINIUM AND ARTICLES THEREOF                        3650818     20538925.56
                                                              EXPORTS
    HS                                                                                            85        ELECTRICAL MACHINERY AND EQUIPMENT AND                   2655        32682.09
                     DESCRIPTIONS                   2006                      2007                          PARTS THEREOF
    SEC
                                               TONS      AED (M)       TONS       AED (M)         94        FURNITURE; BEDDING, MATTRESSES, CUSHIONS;              6663.8       133850.43
                                                                                                            LAMPS & LIGHTING F
1         LIVE ANIMALS                          27,539         206      19,562          174

2         VEGETABLE PRODUCTS                   174,643         196     121,203          162

3         ANIMAL/VEGETABLE FATS/OILS           118,878         311     101,401          300

4         PREPARED FOODSTUFFS              1,267,544         2,481 1,589,283          2,809

5         MINERAL PRODUCTS                     434,336         978     612,573        1,782

6         CHEMICAL OR ALLIED                   160,451         845     161,130          972
          INDUSTRIES
7         PLASTICS AND RUBBER                  144,352         745     176,605        1,028
          PRODUCTS
8         RAW HIDDS, SKINS, FURS, &              4,855          23       6,939            29
          LEATHERS
9         WOOD, CORK, STRAW &                    3,695          22       3,733            17
          BASKETWARE
10                  ,
          WOOD PULP CORK, CELLULOSE            230,422         438     290,356          667
          MATERIALS
11        TEXTILES                              72,520         928      91,176        1,105

12        FOOTWARE, HEADGEAR,                    4,362          31       3,100            31
          UMBRELLAS, & FLOWERS
13        STONE, CEMENT, CERAMIC, &            633,671       1,041     849,692        1,373
          GLASS PRODUCTS
14        SEMI-PRECIOUS/PRECIOUS                   72        5,085          139      11,381
          STONES & METALS
15        BASE METALS AND PRODUCTS         1,201,509         4,126 1,385,993          4,356
          THEREOF
16        MACHINERY, ELECTRICAL AND             25,886         275      27,275          326
          ELECTRONICS EQPT.
17        VEHICLES, AIRCRAFT, &                 16,766         140      11,022          144
          TRANSPORT EQUIPMENT
18        OPTICAL, MEDICAL,                       329           14          365           15
          MEASURING, MUSICAL INST.
19        ARMS AND MUNITIONS                      106            2          212            7

20        FURNITURE, TOYS, SPORTS               47,851         366      66,209          391
          REQUISITES
21        WORKS OF ART                             40            3           21            0

                     TOTAL                 4,569,825       18,258 5,517,990          27,071

                % VARIANCE                                            (+20.7)      (+48.3))

                                                   SOURCE: STATISTICS DEPARTMENT - DUBAI WORLD



2         Quarterly Bulletin Published by Dubai Export Development Corporation
                                                                                                                                                                made in
                                                                                                                                                                 dubai

                                                             DEDC Manufacturing Sub-sector scan finds
                                                             good opportunity for further development of
  Dubai’s plastics industry is thriving
  and in a good position to continue
                                                             Dubai’s plastics industry
  expanding to meet local and regional
  demands according to EDC’s recently
  released Manufacturing Sub-sector
  Scan – ‘Dubai Plastic Industry                       5 categories were plates, sheets, film       the years 2004-2007 being 10%. Re-           Dubai and the UAE. Dubai’s plastics
  Capabilities’.                                       and foil; packaging materials; polymers     exports reflect the characteristics of the    industry integrates well with the
                                                       of ethylene; polyacetals and tubes,         export market with the only difference       industry across the UAE as a whole
  The comprehensive study shows that                   pipes, hoses and fittings. This tightness    being the placement of tableware             and Dubai also benefits from industries
  plastics is one of the leading sectors in the        of range indicates an opportunity for       and kitchenware as the top re-export         from other emirates using Dubai as an
  Emirate with around 90 manufacturers                 further expansion of the sector.            category showing 85,998,725 kilograms        export point.
  producing a broad range of products                                                              being re-exported in 2007 with a market
  for the food, cosmetics, household,                  The key export markets for packaging        value of AED 536,581,090.                    The strong growth of export, re-export
  construction        and     pharmaceutical           materials made from plastic are                                                          and import of plastics to and from
  industries.                                          Sudan, Yemen, Pakistan, Ghana and           The range of plastic product categories      Dubai influenced by factors such as
                                                       South Africa – with the proximity of        imported is also tight with the top 5        low transportation costs, raw material
  The report estimates the value of plastic            these neighbouring markets making           categories representing 53% of overall       availability, industry interlinkage and
  annual production in Dubai at AED 1.3                for economical transportation costs.        plastic imports in 2007. It is interesting   strong local demand provide the ideal
  billion with positive market growth for              Interestingly, the European markets of      to note that tableware and kitchenware       environment for the further exploration
  export quantities averaging 13% for the              Italy and Germany feature in the top        representing around AED 1 billion            and development of the plastics
  years 2004 – 2007. However, a challenge              five markets for sheets, films and foils      appeared on the import and re-export         manufacturing sector.
  exists for renewed investment and                    manufactured in Dubai –largely a result     lists from 2007 but not on the export
  development of the industry, indicated               of Europe’s strong flexible packaging        list                                         The Sub-sector scan is appended with a
  by the large and growing quantity of                 market and the relatively economical                                                     comprehensive directory of businesses
  imports which averaged 18% growth                    cost of transporting plastic sheets.        The report findings show a growing            involved in Dubai’s plastics industry.
  for the years 2004-2007.                                                                         export market with significant                The directory aims to facilitate business
                                                       Re-exports from the Emirate are also        opportunities for Dubai manufacturers        matchmaking       and       development
  Exports of plastics from Dubai in 2007               strong, representing AED 1.3 billion in     on the importance of the plastics            opportunities for the Dubai plastics
  reached around AED 1 billion. The top                2007 with average annual growth for         industry to the economies of both            industry.




      PROFILE OF PLASTIC SECTOR VERSUS MANUFACTURING
                       SECTOR IN DUBAI
                             PLASTIC SECTOR IN              DUBAI               PLASTICS/
                                   DUBAI                MANUFACTURING        MANUFACTURING
                                                           SECTOR                   %
NUMBER OF                                         38                 2,765          1
ESTABLISHMENTS
NUMBER OF EMPLOYEES                         2,780                   73,895          4
VALUE OF PRODUCTION                      812,892                34,704,535          2
1000 AED
INPUTS 1000 AED                          368,077                15,286,773          2
GROSS VALUE ADDED                        444,815                19,417,762          2
1000 AED
NET VALUE ADDED 1000 AED                 410,513                18,003,077          2
                                                                              SOURCE: EDC REPORT




                                                                                                             Quarterly Bulletin Published by Dubai Export Development Corporation           3
events
                                                                                                                                                               EDC and Dubai
    EDC and IBPC strengthen trade                                                                                                                              Internet City promote
    relationship to boost exports                                                                                                                              exports of Dubai’s ICT
    EDC hosted a seminar for the members      markets. During the seminar, IBPC                    Malek Al Malek, Executive Director of Dubai Internet City
                                                                                                                                                               community
    of the Indian Business and Professional   Dubai members were able to learn about
                                                                                                   and Engr. Saed Al Awadi


    Council (IBPC) in Dubai to enhance        the EDC Exporter Assistance Model                    EDC and Dubai Internet City (DIC) sealed a five-year Memorandum of Understanding
    the trade relationship and boost          helps exporters in three main areas. The             to enhance and provide export support services to Knowledge-based businesses at
    global exports of Dubai-based Indian      main areas are Export Preparation that               DIC. The MoU was signed by EDC CEO Engr. Saed Al Awadi and DIC Executive
    businesses.                               provides potential and new exporters                 Director Malek Sultan Al Malek.
                                              with information to assist in beginning
                                                                                                   The joint agreement allows DIC companies access to EDC’s domestic and international
    Attended by more than 100 Indian-run,     to export; the Export Facilitation that
                                                                                                   market research intelligence, which will assist them in business planning. Additionally,
    Dubai-based businesses, the forum was     assists existing exporters to increase
                                                                                                   EDC will provide consultancy services and export guides tailored specifically to the
    aimed to facilitate Indian exporters      export volumes and broaden markets;
                                                                                                   needs of the market segments of DIC’s members. EDC and DIC will come up with
    achieve greater successes in their        and the International Assistance the
                                                                                                   new export strategies and identify new export markets for DIC partners.
    manufacturing, trade and exporting        provides support on the ground to
    activities from Dubai to India. During    exporters operating in international
    the seminar, EDC highlighted the
    corporation’s    export     promotion
                                              markets.                                           EDC and DMCC’s
    and development services to IBPC          IBPC Dubai was established in 2003,                joint agreement
    members, including its advocacy role      following the unification of the Indian
                                                                                                 EDC and Dubai Multi Commodities Centre
    as Dubai’s export support organisation.   Business Council (IBC), Overseas
                                                                                                 (DMCC) forged an alliance to develop a
                                              Indians Economic Forum (OIEF)
                                                                                                 successful relationship and enhance the
    Indian businesses comprise a significant   and Business & Professional Club
                                                                                                 Emirate’s export capabilities outside the
    share of exporters from Dubai and both    (BPC). IBPC Dubai is the recognised
                                                                                                 UAE.
    organisations are working together to     representative organisation of the Indian
    support Indian exporters explore other    business community in the Emirate.
                                                                                                 The three-year Agreement extends EDC’s
                                                                                                                                                                 Ahmed Bin Sulayem, Executive Chairman, DMCC and
                                                                                                                                                                 Engr. Saed Al Awadi
                                                                                                 export services to DMCC’s vast member
                                                                                                 portfolio and to capitalise on the increasing                   to DMCC business partners will include
                                                                                                 demand on exports of various commodities,                       access to domestic and international market
                                                                                                 as well as sustain Dubai’s growing economy.                     research intelligence to assist in business
Dubai Trade and                                                                                  EDC services that will be made available                        planning.
EDC join hands
                                                                                                    EDC signs MoU
In an effort to streamline service delivery
to businesses and industry in the UAE and                                                           with DAFZA
Dubai, EDC and Dubai Trade signed a                                                                EDC and Dubai Airport Free Zone (DAFZA)
Memorandum of Understanding (MoU).                                                                 signed a collaborative partnership to promote
                                                                                                   the industrial and trade development of
Signed by Engineer Saed Al Awadi,                                                                  Dubai through diverse trade promotional and
EDC CEO and Mahmood Al Bastaki,                Mahmood Al Bastaki, Director of Dubai Trade and     developmental initiatives.                                        Nasser Al Madani, Assistant Director General, DAFZA
Director of Dubai Trade, the MoU hopes         Engr. Saed Al Awadi                                                                                                   and Engr. Saed Al Awadi

to fuel Dubai’s growth engine through         to plan export promotion and development             The MoU allows EDC to provide export
exchanging of information, mutual             strategies for the Emirate’s exporters.              services to DAFZA businesses allowing them to enter and expand operations in
promotion and joint representations to        Meanwhile, EDC will make available                   international markets. Among the EDC services made available to DAFZA are the
industries and businesses. As per the         to Dubai Trade the analysis of Dubai’s               Export Preparation which provides potential and new exporters with information to
agreement, Dubai Trade will provide           trade and export performances for future             assist in beginning to export; the Export Facilitation that assists existing exporters to
EDC with Dubai’s trade data allowing it       strategic planning.                                  increase export volumes and broaden markets; and the International Assistance that
                                                                                                   provides support to exporters operating in international markets.


international                                     EDC explores export opportunities in Saudi Arabia
events                                            and India during Big 5 Exhibition 2008
                                                    Dubai Export Development Corporation (EDC) is very                              “There are significant opportunities in many external
                                                    optimistic in enhancing Dubai’s building and construction                       markets for Dubai and UAE-based businesses and with
                                                    sector by seeking to do business in international markets                       so many potential buyers who visited Dubai for the Big
                                                    particularly in Saudi Arabia and India.                                         5 exhibition. We are looking forward to being able to
                                                                                                                                    assist these businesses to meet potential new international
                                                    Along the sidelines of the Big 5 Exhibition 2008, Middle                        customers,” said Engineer Saed Al Awadi, EDC CEO.
                                                    East’s largest building and construction exhibition, EDC
                                                    organised a business matchmaking forum attended by more                         “The EDC Pavilion at the exhibition enabled us to showcase
                                                    than 70 leading local and international construction-related                    ‘Made in Dubai’ as a mark of quality and the business
                                                    companies at the Raffles Dubai Hotel. In this forum, Dubai                       matching event was timely for Dubai businesses to expand
                                                    exporters were able to network with the invited key buyer                       their horizon with the export opportunities. The Big 5 event
                                                    delegates from Saudi Arabia and India.                                          is considered as one of the best exhibitions in the Middle
                                                                                                                                    East and has attracted the right people from the relevant
                                                    At the business matching seminar, trade experts from EDC                        industrial markets,” Al Awadi added.
                                                    have presented business opportunities in various markets
                                                    worldwide. The seminar was designed to increase trade                           The Big 5 Exhibition is a unique event combining major
                                                    opportunities for Dubai and UAE and key buyer delegates                         exhibitions under one roof for contractors, buyers, engineers
                                                    from Saudi Arabia and India were presented with different                       and architects and even the UAE authorities have offered
                                                    opportunities on the capabilities that are present within                       solid support to the building and construction industry.
                                                    Dubai’s building and construction sector.




4       Quarterly Bulletin Published by Dubai Export Development Corporation