Arabia’s trade with Iran rose by 29 percent last month compared to
the same period last year, thanks to a recent decision by Riyadh to
cut customs tariff from 12 to five percent. The Saudi move has
affected Dubai’s re-export business.
Saudi Arabia has
been a major re-export market for Dubai, especially for
telecommunications and information technology products until the
Kingdom slashed its customs tariff two months ago.
A report by the
Exports Development Center, an affiliate of the Council of Saudi
Chambers of Commerce and Industry, had expected that the cut in
customs tariff would affect the position of Dubai as a major
re-exporting center to Saudi Arabia.
The Saudi move also
threatens a major project by the United Arab Emirates to expand its
Jabal Ali free port at a cost of 130 million dirhams ($35 million).
The project, to be
completed within a year, will help the port receive large container
The Jabal Ali
project comes in the wake of a trend by international shipping lines
to build a new generation of ships having double the capacity of the
On the other hand,
Saudi ports have been geared to brace an increase in imports,
following decrease of up to 60 percent in tariffs.
The Saudi Seaports
Authority has developed its ports in Jeddah and Dammam for re-exports,
making them some of the major ports in the region.
The Saudi ports on
the Red Sea will receive the European exports to Iran and then
transport the products either by road or by a new railway line (which
has been planned by the Communications Ministry) to the eastern ports.
Saudi Arabia is
studying ways to remove the obstacles facing its trade exchange with
Iran and explore ways to facilitate exports to Tehran directly without
the involvement of a third party.
Most Saudi exports
to Iran now go through Jabal Ali, and thus such deals will not appear
in the trade balance. This situation makes it difficult to get correct
information about trade between the two countries.
The main obstacle
confronting trade exchange between Saudi Arabia and Iran is the lack
of financial guarantees from the Iranian side. Absence of direct
coordination between businessmen in the two countries is another
obstacle as it affects mutual confidence.
There is no direct
shipping line between Saudi Arabia and Iran, thus hampering their
trade. Both countries do not know the products and services required
by the other. Recurrent fluctuation of Iranian riyal against
international currencies is another problem.
The Saudi Export
Development Center has conducted a study on the Iranian market through
the International Trade Center in Geneva.
study advised Saudi businessmen and industrialists to export their
products directly to Iran and have agencies and representatives in
Iran to facilitate their exports.