Parallel imports dramatically slide after customs union

Parallel imports into the UAE market, particularly from Oman, have recorded a sharp drop with the implementation of the uniform customs duty across the GCC markets.

The price benefits that accrued to the parallel importers in Oman have been brought down substantially during this period, according to market sources.

This has, effectively, brought product prices — in the UAE and Oman — to near par status, sources added, thus lessening the demand for "cheaper" parallel imports.

Earlier, the Omani business could bring in goods at 5 per cent, sell it in the UAE and claim a 4 per cent "writeback" from the Omani authorities.

This was enough to give the Omani trader much wriggle room as far as his own margins were concerned.

This has been done away with the common customs tariff — of 5 per cent — coming into effect.

According to market sources, the impact of lost sales has forced one major Omani distributor of electronics goods to close down his outlet in Buraimi, which was the main conduit for sending goods into the UAE.

Automobiles and electronic products were the most sought after items in the parallel market trade. Also, Dubai authorities have been particularly strict about registering vehicles brought in from Oman for use in the UAE, sources added.

"While there are lots of points that are yet to be implemented by the customs union, there have been many favourable developments that have already come out of it," a source added.