Skip to content Skip to Search
Skip navigation

Saudi imports from UAE drop 23% in a year

Creative Commons
As megaports are developed across the GCC, some are questioning the continued relevance of special free zone incentives
  • UAE imports down nearly a quarter but Oman imports up 111% 
  • GCC free zones goods now subject to customs duty in Saudi

Saudi imports from the UAE fell by 23 percent year-on-year in April, with analysts citing last year’s changes to the customs rules as the main reason for the drop.

Imports into the kingdom from the six GCC countries, which also includes Oman, Bahrain, Kuwait and Qatar, rose seven percent year-on-year to 6.55 billion riyals ($1.75 billion) in April, according to a report by Saudi financial news platform Argaam, based on data from the Saudi General Authority for Statistics (GASTAT).

While imports from the UAE were down nearly a quarter, imports from Oman soared 111 percent to 1.371 billion riyals, imports from Bahrain increased 83 percent to 1.182 billion riyals and Kuwait contributed 30 percent more goods, reaching 316 million riyals.

While the UAE accounts for 54 percent of total Saudi imports, the yearly decline coincides with new rules introduced by the kingdom in July 2021, changing the tariff agreements on goods coming from other GCC countries.

Under the rules issued by the Saudi Arabian Minister of Finance, goods manufactured in GCC free zones are considered foreign goods and consequently subject to customs duty.

Dubai-based Sowmya Ramaswami, consulting practice manager – global trade and exports solutions, at global research firm Euromonitor International, said this new policy had a big impact on goods from the UAE, as it explicitly targeted products made in free zones. 

“We know that a large part of the UAE’s exports are facilitated via free trade zones,” she said.

The new rules also stated that, as from July 2, 2021, goods should be accompanied by a valid Certificate of Origin, the manufacturing or processing of the goods must represent at least 40 percent of the value of the imported item and at least 25 percent of the workforce where the product was produced must be GCC nationals.

“We expect that these assessments will lead to cases where the RoO [Rules of Origin] may not be met, and consequently the goods shipped to KSA may be subject to customs duty (up to 25 percent for certain products),” professional advisory firm PwC said in an online commentary in July 2021.

“In view of this, businesses need to evaluate potential changes in their activities to accommodate the new rules and continue to access KSA on a duty free basis,” it added.

Freddie Neve, Middle East associate at the London-based Asia House think tank, agreed the new customs rules had a major impact.

“The UAE has the highest number of free zones in the GCC and a large proportion of its exports originate from them, so it makes sense that the UAE would be more impacted than other Gulf states by this policy change,” Neve said.

“Asia House research has previously tracked the growing economic competition between the GCC states.

“Often this competition has pushed GCC states to further liberalise certain sectors and enhance the incentives on offer for foreign businesses looking to invest in the GCC.

“On occasion, this has coincided with the implementation of trade barriers,” he added.

Latest articles

Despite optimism from hedge funds and traders, oil prices remain relatively stable

Analysts optimistic on oil but the price stays steady

Global hedge funds and money managers have become increasingly optimistic about the short term outlook for oil prices in recent months, despite the oil price remaining flat at around $80 a barrel. The net length held by hedge funds and other money managers in WTI (West Texas Intermediate) futures and options has risen to its […]

Nadhim Zahawi, formerly chancellor of the UK, is thought to be leading a consortium of investors for a £600m bid

UAE’s RedBird IMI hopes for speedy sale of The Telegraph

Nadhim Zahawi, the former chancellor of the UK, is fronting one of seven bids to buy the Daily Telegraph newspaper and The Spectator magazine, which is owned by RedBird IMI, a US investment group backed by Abu Dhabi’s International Media Investments. The deadline for the first round of bidding was completed on Friday, although more offers […]

Egypt external debt

Egypt external debt makes record drop

Egypt’s external debt decreased by over $14 billion between December 2023 and May 2024, the steepest drop on record according to its Central Bank (CBE). External debt fell from a record high of $168 billion at the end of December to $154 billion at the end of May, a decrease of 8.4 percent. The drop […]

UAE trade minister Thani bin Ahmed Al Zeyoudi at the WTO ministerial meeting in Abu Dhabi in February. He said 'We are getting the support from many of the EU members'

UAE to revive EU trade talks before year-end

The UAE plans to restart trade talks with the European Union by the end of the year despite a broader agreement with GCC remaining on hold, according to a news report. The UAE has initiated the discussion both through the GCC and bilaterally, Reuters reported, quoting trade minister Dr Thani bin Ahmed Al Zeyoudi. “We are […]