UAE: Re-exports can fast-track Emirates' economic ambitions

On March 28 this year, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, announced that the Cabinet had approved the National Agenda for Re-Export Development 2030. The policy seeks to double re-exports from the UAE over the next seven years – and deliver a 50 per cent increase in the added value of the UAE economy. This will, Sheikh Mhammed added, be achieved through 24 new initiatives and programmes that are designed to strengthen and deepen re-export markets, expand product categories for re-export and streamline processes to attract more re-exports to the UAE.

The benefits to the national economy as a result of the policy will be significant, exponentially increasing both direct and indirect contributions to GDP and consolidating the UAE’s status as a supply-chain nerve center and global trade hub. Expanding re-exports is key to delivering on the leadership’s mission to accelerate economic diversification and unlock new areas of competitive advantage. In short, re-exports can help rewrite the UAE’s future.

In an exclusive interview with Khaleej Times, Dr Thani Al Zeyoudi, Minister of State for Foreign Trade, outlines the UAE’s plans to double the country’s re-exports – and the impact this will have on the national economy.

Why are re-exports so important to a country like the UAE?

Re-exports make an essential contribution to both the UAE economy and our status as a global gateway, and this is why our leadership is committed to increasing both the volume of re-exports and the value we are able add to re-exported products.

Re-exports have always been an important element of global trade. The cities or countries that specialise in re-exports, which are known as entrepôts, are key hubs in today’s supply chains, leveraging their knowledge and networks to facilitate cross-border exchange as well as offering intermodal transportation solutions, advanced warehousing, financing and insurance services, and a host of value-added processing capabilities. The more a nation re-exports, the more these sectors flourish and expand – and the more they are sought after by the global trading community.

In 2022, the total value of the UAE’s foreign trade reached a record Dh2.23 trillion, with re-exports accounting for 27.5 per cent of the total – or Dh614.6 billion. The UAE is among the top five re-export hubs globally, with 2.4 per cent of all ocean container trade transiting through one of our state-of-the-art ports – and container port throughput exceeding 20 million TEUs (twenty-foot equivalent units) in 2020.

What are the products that the UAE typically re-exports – and from where?

The single largest sector for re-exports in 2022 was mobile phones and related hardware, which accounted for 18.3 per cent, followed by diamonds, mass transit vehicles and jewellery. Perhaps more significantly, the UAE is the world’s leading re-exporter of rice, the third largest re-exporter of diamonds, and the fifth largest re-exporter of coffee. The UAE is also a leading re-exporter of tea, trading with 154 countries for a combined value of Dh1.89 billion.

In terms of markets, Saudi Arabia, Iraq, India, Oman, Kuwait, China, the US, Hong Kong and Belgium are the leading sources for re-exports, with Iraq and the US experiencing the fastest growth in 2022.

What is the direct impact of re-exports to the UAE economy?

The latest studies show that re-exports contribute 6.6 per cent of the UAE’s GDP. Across the whole country, re-exports support around 1.3 million jobs, not just in logistics and associated trade services but in the banking and finance, insurance, communication, hospitality, transport, healthcare and recreation sectors.

Taken together, we know that for every dollar of re-exports that come through the UAE, 3.4 cents are added to UAE GDP. That equates to a total direct and indirect economic impact of almost Dh48 billion.

What will be the impact if the UAE achieves its target of doubling its re-exports in the next seven years?

Doubling our re-exports will have a significant economic impact. This will come through the boost to service sectors such as insurance and trade finance, the increase in government fees collected, and the general multiplying effect that more companies with bigger workforces will have on sectors such as construction, retail and healthcare.

Economic models indicate that, if we are successful, the number of jobs generated by the re-export sector will also double. So, there are real, tangible benefits that stem from expanding our role as a global trading hub.

How will the National Agenda for Re-Export Development 2030 increase the UAE’s re-exports?

The agenda has 24 individual initiatives and programmes to help us meet our target, which will be rolled out in stages over the next 12-24 months. Essentially, they will focus on three core areas: expanding the geographical reach of our re-exports, whether by deepening ties to existing markets through Comprehensive Economic Partnership Agreements (Cepas) or our network of 50 commercial representative offices around the world, or by finding new markets; finding new, untapped product sectors, particularly those with high value-add potential such as forestry products, mining, wool and agriculture; and removing bottlenecks and other process barriers, about which we are already in discussions with the private sector.

These initiatives include improving the trade finance offering for re-exporters from the UAE and, to reduce the financial burden on re-exporters, providing customs-free warehousing for certain product categories. We also plan to launch a cross-border e-commerce platform to make it easier to import and export smaller packages and consignments, and we will be enabling exporters to target new customers via international trade exhibitions, particularly in untapped markets.

How will the UAE derive greater value from the products it re-exports?

Re-exports can support the development of the local industrial sector by helping to identify high-value products that can be made in the UAE. This will enable re-export substitution by nurturing manufacturing clusters in free zones and leveraging existing commercial networks.

We also want to establish more specialised assembly facilities for the manufacture and advanced processing of raw materials that can produce exportable goods in addition to encouraging value addition through some specialised operations such as labelling, packaging, repacking, retailing, limited assembly and processing in order to maximise the added value of operations.

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