Common market will boost transport firms

(KHAMEIS AL HEFAITY)   

Transport and logistics companies in the UAE have said they are in favour of the Gulf Common Market (GCM) – with many considering it a positive step to achieving fast and sustainable growth.

Industry players are confident the 30 per cent average growth rate registered by many transport and logistic companies in the country over the past two years will grow even higher once the unified market for GCC countries is fully operational.

“It is the wish of anyone in this kind of industry to see the removal of borders,” said Hussein Hachem, Aramex CEO for the Gulf.

“A common market will definitely increase fast and efficient movement of goods and services between countries and this will obviously positively impact growth.”

The six-member GCC states, with a combined economy of more than $700 billion (Dh2.5 trillion) took what they considered a progressive step and launched the GCM on January 1, 2008, at the 28th summit of the GCC states held in Qatar. Since then, the GCM has entered its implementation phase in preparation for the practical launching of initiatives under the common market system.

The members of the council have also announced their intentions to achieve a currency union by 2010.

The GCM aims to create one market across the six states and will move beyond the free movement of goods and services that was agreed upon in the Gulf Customs Union formed in January 2003 to include labour and capital flows as well.

“The transport and logistics sector is poised to reap big from such a huge pool of resources. Apart from benefiting, the sector will also facilitate trade and economic growth in all member countries,” noted Hachem.

The common market offers equal opportunities for all GCC citizens including the right to work in all government and private institutions in member states, buy and sell real estate and make other investments, move freely between the countries, and receive education and health benefits.

Industry players believe a fully operational unified market will help in overcoming obstacles in the GCC transport and logistics service sectors such as delays in dispute resolution and solving of business related conflicts as well as better legal interpretations.

According to David Christmas, managing director, DHL Exel Supply Chain, Middle East, a common market would be a positive step for the region in terms of standardisation of practices, improving health and safety and reducing border delays. 

“This would increase our ability to serve clients faster, which all helps raise quality standards in the industry,” said Christmas.

However, he noted transport and logistic companies might face challenges in the future while trying to adapt to new regulations.

Maher Kheder, business development director for Banaja International Group, which owns Pharma World – a new pharmaceutical logistics company, said a common market would widen the business scope for logistic operators.

By allowing free movement of labour, land and capital, logistic operators will be provided with immense investment opportunities across the GCC, unlike currently where a large section of operators are concentrated in the UAE, he said.

Kheder said having a unified set of standards would help in ensuring goods, especially pharmaceuticals, are easily re-exported across member states. “The GCM will increase flexibility in dealing with the different member states in the release of shipment, legal issues and in terms of documentation.”

Operators believe companies based in the GCC will also be able to easily co-ordinate activities with sister companies in other member countries. However, they said operators from non-GCC countries might have difficulty penetrating the GCC with their shipments as a unified system is likely to tighten border controls.