Dubai versus Singapore: Trading across Borders
The benefits of free trade are well known in economic literature. Still many businesses face numerous hurdles to exporting or importing goods. Such obstacles to trade increase the cost of goods and sometimes prevent trading altogether. Countries that have efficient customs, good transport networks and fewer document requirements, which render compliance with export and import procedures faster and cheaper, are more competitive in the world markets. This leads to more trade and trade is associated with faster growth and more jobs creation. On the other hand, the need to file many export/import documents is associated with inefficiency of customs. Faced with long delays many traders avoid customs altogether and they are sometimes forced to smuggle goods across the borders.
This article compares Dubai with the world best practice in trade, which is Singapore, in terms of the number of export/imports documents, time duration and financial cost. The article is based on data from Doing Business 2008 of the World Bank Group . This article is one of a series of articles that will tackle different areas of easing doing business in Dubai.
Doing Business compiles procedural requirements for trading a standard shipment of goods by ocean transport. Every official procedure (and the associated documents, time and cost) for importing and exporting the goods is recorded, starting with the contractual agreement between the two parties and ending with delivery of the goods. For importing the goods, the procedures measured range from the vessel’s arrival at the port of entry to the shipment’s delivery at the factory warehouse. For exporting goods, the procedures measured range from the packing of the goods at the factory to their departure from the port of exit.
Documents recorded include port filing documents, customs declaration and clearance documents, and official documents exchanged between the concerned parties. Time is recorded in calendar days, from start to finish of each procedure. Cost measures the fees levied on a 20-foot container in US dollars. All the fees associated with completing the procedures to export or import the goods are included, such as costs for documents, administrative fees for customs clearance and technical control, terminal handling charges and inland transport. The cost measure does not include tariffs or trade taxes.
According to Doing Business 2008, Singapore ranks No. 1 and Dubai ranks No. 24 out of 178 economies worldwide. Singapore outperforms Dubai in all trade indicators; refer to tables 1 through 4. Dubai tracks North Africa and Middle East region average on the number of both export and import documents, but performs better than the region average on both the time duration and the cost of export and import.
Tables 1 and 2 show that the time for export and import in Singapore are 5 and 3 days respectively, but they are 13 days each in Dubai. The cost to export and import per standard container is US$ 416 and US$ 367 respectively in Singapore, but they are US$ 462 each in Dubai. This is compared to North Africa and Middle East region average for export and import time of 24.8 and 28.7 days respectively and the cost to export and import per container of US$ 992.2 and US$ 1,128.9 respectively. Tables 3 and 4 show that the number of documents for export and import in Singapore are 4 each, but they are 7 and 8 respectively in Dubai. This is compared to the region average for number of export and import documents of 7.1 and 8 respectively.
Table 1: Nature of Export Procedures, Time and Cost
Time (days) Cost US$
Sing Dubai Sing Dubai
Documents preparation 1 5 105 75
Customs clearance & technical control 1 1 31 100
Ports and terminal handling 1 3 180 137
Inland transportation and handling 2 4 100 150
Totals 5 13 416 462
Source: Doing business 2008
Table 2: Nature of Import Procedures, Time and Cost
Time (days) Cost US$
Sing Dubai Sing Dubai
Documents preparation 1 6 56 75
Customs clearance and technical control 1 1 31 100
Ports and terminal handling 1 4 180 137
Inland transportation and handling 0 2 100 150
Totals 3 13 367 462
Source: Doing business 2008
Table 3: Export Documents
Singapore Dubai
Bill of lading Bill of lading
Commercial invoice Cargo release order
Customs export declaration Certificate of origin
Packing list Commercial invoice
Customs export declaration
Packing list
Terminal handling receipts
Source: Doing business 2008
Table 4: Import Documents
Singapore Dubai
Bill of lading Bill of lading
Commercial invoice Cargo release order
Customs import declaration Certificate of origin
Packing list Commercial invoice
Customs import declaration
Inspection report
Packing list
Terminal handling receipts
Source: Doing business 2008
The areas of potential reform in Dubai become obvious when we compare tables 1 through 4. The time duration of export and import procedures needs to be reduced significantly in order to make a big difference. It is proposed to be reduced from 13 to 5 days each, i.e. a reduction of 62 per cent. More specifically, to reduce the export and import documents preparation time from 5 and 6 days respectively to 2 days each; to reduce ports and terminal handling time for export and import from 3 and 4 days respectively to 1 day each; and to reduce inland transportation and handling of export and import from 4 and 2 days respectively to 1 day each. The difference between Dubai and Singapore in the cost of exporting and importing a standard container is not that significant. The cost difference is US$ 46 for export and US$ 95 for import in favour of Singapore. Therefore, the emphasis of the reforms in Dubai is not on the financial cost but on the number of procedures and the time duration those procedures take. In theory, those reforms may not have any financial cost. On the contrary, they may bring more customs revenue if those reforms help expand trade. Therefore, these reforms may create a win-win situation for all parties involved. Dubai Chamber is currently coordinating with the experts and the concerned authorities to come up with the best reforms in this area of easing doing business in Dubai.
