Gov't regulations hurting Dubai e-commerce - Aramex CEO
Aramex CEO Hussein Hachem hit out at UAE and GCC government regulations saying that they were holding back Dubai’s potential of becoming a leader in the e-commerce field.
The CEO of the Middle East’s largest courier company was speaking at the Jafza Associate Seminar 2013 held at the Ritz Carlton Hotel last night. The event focussed on Dubai’s role as an e-commerce centre of the region, and the subsequent drivers, challenges and opportunities.
"Jafza has 7100 companies, but how many e-commerce companies has Jafza managed to attract? Very few! I would like to see 100 e-commerce companies popping up; start-ups from the region coming here. I'm calling on the government to intervene here because there is an opportunity for Dubai,” said Hachem.
Hachem pointed out that some regulations were incomprehensible and archaic.
“The GCC laws don't recognise e-commerce. It is not there in the booklet. It talks about hand-carried regulations. We’ve moved from hand-carried shipments to individual shipments,” he said.
“It is pathetic that I can only send consolidated freight, B2B, on the roads. I cannot send consolidated express freight B2C on the roads. My cost from New York to Dubai is half my cost from Dubai to Saudi Arabia for my e-commerce business. It does not make sense.”
Hachem added that the solutions were not “rocket science”, but a coordinated effort was needed. He revealed his frustration at not being able to be heard by the government entities, but acknowledged that this seminar hosted by Jafza was a step in the right direction.
“We have been knocking on the doors, I have been personally knocking on the doors, for the past few years, but nothing happens,” said Hachem.
“But I'm quite happy that we are here [Jafza seminar]. Let’s work together so we don't miss the opportunity. Let's sit together around the table and talk,” he added.
“This is all not rocket science. All that I'm saying needs some structure. It needs regulation, within six months it can be put in place and you can position Dubai as an e-commerce hub for the region and beyond!”
Hachem’s five suggested changes to turn Dubai into an e-commerce hub:
- Payment gateways are a pain. There is no way any start-up can come with the current payment gateways. They need a collateral, they need a minimum of Dh300,000 and a bank guarantee. So starting up and having a payment gateway for a small company is a no-no.
- They take 2.5% or 3% from every transaction, and I don't know why? It doesn't make sense.
- Access to capital is a must if you want a sustainable society. These start-ups are young guys 18, 19, 20, 21. If he goes to a bank, they will kick him out. If you’re not connected to real estate here, or anywhere in the Arab world for that matter, they will tell you "sorry we can't give you a loan".
- Customs: We are in discussion with customs. It is a main barrier if you are in the free zone. Assume you have a shipment worth $30 going out of Jebel Ali free zone. The shipment is going to Kuwait. The $30 shipment will have administrative cost of Dh140. With a $30 shipment, plus Dh140 - you're finished, you're out of the business. And then you have to add the transport.
- Transport, well, we as Aramex, we do that leg. We fly it. The question is why do I need to fly a small package to Kuwait? It is pathetic that I can only send consolidated freight, B2B, on the roads. I cannot send consolidated express freight B2C on the roads. My cost from New York to Dubai is half my cost from Dubai to Saudi Arabia for my e-commerce business. It does not make sense.