Efforts by Gulf States to root out "gray" markets have failed indicating that more measures and stronger enforcement is needed.
The biggest violation is in the car sales market. A high number of cars are imported from neighboring countries or from Asia, usually during low sales season when prices are low. Legal dealerships estimate that 20 percent of the car sales market goes to the "gray" market. For some markets, that's a large chuck.
In Dubai, the government intervened and prevented the registration of any new car that was not imported through an official local agent.
Customs on cars imported from Asia are much lower than customs paid on cars coming from the country of origin. Saudi Arabia puts a maximum 20 percent tax on cars imported from the area in the United Arab Emirates the tax is four percent.
Though there are no accurate statistics on the number of cars imported without the knowledge of the official dealer, some assessments say it is no less than 1000 cars per month. Not only is this a threat to the dealerships, it poses a safety and economic threat to the consumer. Some of the imported cars may be stolen vehicles or vehicles that have major safety dysfunctions.
Government officials say there are three laws that deal with "gray" market activity. But these laws can, in some cases be manipulated. For example, the law that considers cheating a crime can be evaded, if the product one is selling is not marketed as the original product but an imitation of the original then that person will not be committing a crime. Label protection laws are designed to protect the label holder and not the consumer who is tricked into buy a product that is not the product of the label company it carries. The third law, the agency protection law severs the interest of both the agent and the consumer.
A senior Emirates economist, speaking on condition of anonymity said the laws have proved effective in the UAE and that government would continue to its fight to rid the UAE from the phenomena. – (Albawaba-MEBG)
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