Legitimate businesses in the UAE lose about Dh2.5 billion a year on account of trade in counterfeit goods, a report by KPMG said.
The motor parts sector was the worst hit, with losses reaching Dh1,750 million in 2006. This amounted to 68 per cent of the total value of fake goods and 12.5 per cent of the overall spare parts market.
However, the UAE has a lower level of counterfeiting than other countries. The study was commissioned by the Brand Owners Protection Group (BPG), which is based in Dubai and covered the Gulf Co-operation Council countries. It examined four categories – car parts, fast moving consumer goods (such as tobacco, food and beverages and household products), cosmetics and pharmaceuticals.
The impact of counterfeiting on these industries lies mainly in reduced sales and profits as a result of the loss of market share.
The impact on the economy is a loss of trade revenues, a loss of custom duties because of smuggling and a reduction in non-oil gross domestic product and employment levels.
The report said if more efforts had been taken to curb the counterfeiters in the selected sectors from 1996 to 2005, the UAE’s non-oil gross domestic product would have risen by Dh6.2 billion, tax collection by Dh400m and employment by 31,000.
“This report shows where we stand in our fight against counterfeit products,” said BPG Chairman Omar Shteiwi. “Our fight continues but we need the support of all organisations,” he said.
Fake goods take their toll