U.S. exporters are missing opportunities presented by the apparent end of the Iran-Iraq war and the international weakness of the dollar, according to Sultan Ahmed Bin Sulayem, chairman of the Jebel Ali Free Zone Authority in Dubai.
Marine and local insurance rates have fallen with the winding down of the war, for instance, he noted. But the Japanese, Koreans and Taiwanese are more aggressive than U.S. companies in using Dubai as a trade platform, said the sultan who is in Sweden with a trade and business delegation from the Gulf Council.Japanese and German goods suffered from both rising currencies and high insurance rates, Mr. Sulayem said. There is a lot of demand for U.S. goods.
He said Far Eastern businessmen, who are about as far from Dubai as the U.S. East Coast, come to see their distributors and agents once a month, even if there is no special reason.
Sony Corp., the Japanese consumer electronics giant, recently opened a distribution center in the Jebel zone, he said.
Mr. Sulayem said he expects the number of foreign companies operating in the Jebel zone to double by the end of 1989 from the more than 100 currently represented, assuming there is no resumption of hostilities.
He said zone officials had provisionally approved 300 applications for facilities around the artificial harbor, but many companies held off setting up operations because of high insurance rates in the war-torn gulf.
We had a situation where the insurance companies would not insure an inventory on the ground here for more than 30 days, so you can see how it discouraged certain businesses, he said.
While hostilities never actually affected the zone or Dubai, the proximity of Iran and its bases at Bandar Abbas caused understandable concern, Mr. Sulayem explained.
In the postwar situation, the closeness of the only undamaged Iranian port is, once again, a major business opportunity.
The U.S.-educated sultan said there already are signs that the small emirate of Dubai will benefit from a major reconstruction boom, primarily in the war-damaged oil industries of Iran and Iraq and in the repair of port facilities.
McDermott, who have the biggest yard in Jebel Ali (with) somewhere between $100 million-$150 million invested, are now looking for 400 workers. They were nearly shut down for the last two years, Mr. Sulayem said.
But the U.S.-owned McDermott International Inc. operation will face stiff competition from the Far East, he said. The Koreans already are pre- positioning equipment in Dubai for when the oil facility repair works gets going, he said.
He stressed that the Jebel zone is equipped for state-of-the-art roll-on roll-off cargo handling.
However, an important consideration for distributors operating out of Dubai is the fleet of dhows or traditional sailing vessels that can make runs as far as West Africa, India and Pakistan.
Dhow merchants simply sail up the nearest creek or inlet and hold their market there, regardless of military conflicts, insurance rates, and the state of repair of major harbors, the sultan pointed out.