Dubai's E-commerce Strategy to ease doing business
E-commerce has long been a cornerstone of the economy in the Middle East and North Africa, with penetration in the UAE and Dubai among the highest in the region. One of the region’s largest startup exits came out of the UAE – Souq, which was acquired by Amazon for $580M in 2017.
Moreover, the country also saw the launch of noon by Mohamed Alabbar's Emaar Properties, which has long been one of the key players in the market. In Dubai alone, e-commerce is set to contribute AED 12 billion to the local GDP by 2023.
Not surprisingly, e-commerce has been top of mind for many regional government officials and bodies. Yesterday, the Executive Council approved the Dubai E-commerce Strategy, which was prepared by Dubai Free zones Council in partnership with Dubai Chamber, Dubai Custom and Dubai Economic Department.
With this strategy in place, Dubai aims to solidify its position as a hub for global e-commerce.
Of course, e-commerce is closely dependent and responsible for many other industries as well, such as logistics, manufacturing, and others. The goods that you buy online have to be produced, for which raw materials have to be sourced, as well as shipped, which poses a logistical challenge in itself.
Hence, the new e-commerce strategy aims to cement Dubai as global logistics hub for the region through a number of stimulative initiatives.
Accordingly, the Executive Council aims to attract foreign direct investment (FDI) into the city as well, with a specific focus on the e-commerce industry. Moreover, to promote local success stories such as Souq and noon, and bolster the local e-commerce industry, the strategy looks to increase the market share of the Dubai-based firms in terms of local and regional distribution.
The aim is for this distribution to reach AED24 billion by 2022, with concrete plans to reduce business cost of e-commerce activities by 20%, which includes reviewing cost of storage, custom fees, VAT and transportation among others.
This increase in e-commerce activity, and the logistics efforts that come along with it, would have an impact on the paperwork and other bureaucratic procedures required as well.
To address this, the Executive Council also aims to reduce the number of papers and documents required for customs clearance, as well as reduce fees imposed while passing through free zone gates.
Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Dubai Crown Prince and Chairman of the Executive Council, “The UAE in general and Dubai particularly tops the list of the fastest growing electronic markets in the Middle East and North Africa region, thanks to the smart government initiatives and programmes that adopted digital transformation [...] It managed to boost investors’ confidence in the sector and offer opportunities of growth and development, where Dubai’s e-commerce work plan build on the exceptional success that Dubai has achieved in this domain.”
With all these changes expected to take place in the near future, Dubai's e-commerce sector will receive the support they need to expand further across the region, through multiple fronts.