EXPORT OPPORTUNITY PROFILE (EOP)
DESERT COOLERS
Export Consultancy Unit (ECU)
Marketing Consultancy Division (MCD)
Safar, 1433 (January, 2012)
Export Opportunity Profile
Desert Coolers
Purpose
The purpose of this Export Opportunity Profile (EOP) is a cursory investigation into the
potential for exporting the range of Desert Cooler products from the KSA to various
international market sectors.
It is hoped that this EOP will provide local manufacturers with direction indicators to
potential export markets. The prospective opportunities identified in this EOP should
be used by the local producers to spot suitable export markets for their respective
products. However, it is highly recommended that once the local companies have
identified their respective export opportunities, they should undertake more detailed
primary and secondary market research and any other suitable investigations to
evaluate the specific potential, in an appropriate manner, in each/any of the overseas
territories selected.
Product & Application
Typically, residential and industrial evaporative coolers use direct evaporation and can
be described as an enclosed metal or plastic box with vented sides containing a
centrifugal fan or blower, electric motor with pulleys, and a water pump to wet the
evaporative cooling pads. The units can be mounted on the roof (down draft, or down
flow), or exterior walls or windows of the buildings. To cool, the fan draws ambient air
through vents on the unit’s sides and through the damp pads. Heat in the air evaporates
water from the pads which are constantly re-damped to continue the cooling process,
thus cooled; moist air is then delivered to the building via a vent in the roof or wall.
Desert cooling is a common means of cooling buildings for thermal comfort since it is
relatively cheap and requires less energy than other forms of cooling. However, Desert
(evaporative) cooling requires an abundant water source and is only efficient when the
relative humidity is low, restricting its effective use to dry climates. Evaporative cooling
also raises the internal humidity level significantly, which can cause problems such as
lumpy salt, swelling of wood panelling, doors and trim, pianos going out of tune or
suffering internal rusting, etc.
Local Manufacturing Activities
In respect to the above type of Desert Coolers products, there are currently 12 active
manufacturers in the KSA who produce a wide range of Desert Coolers products which
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are identified in this EOP. The installed capacity of the plants allows a very wide range
of Desert Coolers to be produced - just by changing the Design and size of the
products. From the estimated total installed capacity for all the Desert Coolers
products, the potential capacity available for exports, from the producers, appears to
be in the region of 44%.The following table provides estimates of installed capacity,
together with local and export sales of Desert Cooler (Units) for 2010:Total
Active
Factories
Tot. Inst.
Cap.
Est. Local
Sales 2010
Est. Export
Sales 2009
Est. Total
Available Est.
Capacity (Surplus
for Export)
Avail Cap - %
of Installed
Capacity
12
217,000
120,620
120,620
96,380
Average weight of Desert Cooler is around 32 KG but weights differs based on the size and capacity.
44%
From the table it can be seen that there is some level of local installed capacity
available for potential export. The KSA producers’ range of Desert Coolers products
could utilise any idle capacity to export to countries where a demand exists for these
products.
HS Codes
Primarily, the customs/tariff codes used for the import and export of the Desert
Coolers by local producers is covered by the following 6-digit HS Code:HS CODE
COMTRADE DESCRIPTION
847960
Evaporative Air Cooler/Desert Cooler
Source: Comtrade
In respect to this EOP, it should be noted that the above HS Code has been used to
identify export opportunities for the KSA’s Desert Coolers products. In terms of
import/export statistics, it should be noted that the UN Comtrade data is available only
in 6-digits.
The last full years’ data available on Comtrade is for 2009, and so far, for 2010,
Comtrade data is not available from a small number of Countries (their percentage of
world trade is given in brackets) which include:- Vietnam (0.56%), Kuwait (0.26%),
Angola (0.19%), Libya (0.17%), Iraq (0.15%), Bangladesh (0.12%), Cuba (0.07%), Syria
(0.06%), Sudan (0.06%), Others (0.78%). In total for 2010, the trade statistical data
not received so far by Comtrade represents only 2.42% of world trade and, therefore,
2010 has been used to view the trade status on an international and regional basis.
World Market Trends – Imports & Exports
To provide a better insight to local producers of Desert Coolers products, the following
table provides some historic information on world product trends. These can be
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utilised, in a general manner, to give some indication of likely future trends for the
concerned products (US$ million), under their HS Code:HS CODE
Trade
2006
2007
2008
2009
2010
847960
Import
Export
171.78
235.12
268.14
172.10
268.59
172.46
168.63
144.80
222.66
323.01
Source: Comtrade
As will be noted, the overall world import/export trends show negative growth to 2009
but in 2010, there was positive growth trend in world trade flow in the Desert Cooler
products sector, even during the recent/current world economic crisis – which has
affected other industry sectors significantly. This growth could be due to several
factors, including:- (a) continuously growing population, and (b) product substitution (i.e.
switching due to price or quality).
Major International Importing Countries
The identification of the importing/exporting countries for Desert Coolers products
selected for this EOP has been undertaken using the 6-digit UN Comtrade statistics
available for the year 2010. Knowing the main importing countries can provide (a) an
indication of the market size in the particular target market, and (b) an indication of
the existing competition from other exporting countries (see Section on Competition –
Major & Regional Exporting Countries). The main international importers and source
countries for those imports are identified in the following table for 2010 by HS Code
847960:COUNTRY
Indonesia
Brazil
China
Malaysia
USA
Others
TOTAL
MAIN IMPORTING COUNTRIES
VALUE $
SHARE %
VOLUME Tonnes
21,792,367
16,551,293
15,546,826
14,627,778
9,016,084
145,124,793
222,659,141
9.79%
7.43%
6.98%
6.57%
4.05%
65.18%
100%
1,329
2,688
1,193
1,123
693
Source: Comtrade
MAIN EXPORTING COUNTRIES
Singapore, Japan, China, USA
China, Italy, USA, India
Japan, Germany, S. Korea
Canada, China, Italy, Germany
China, Austria, Mexico, Italy
In the context of the tables, the data from the main importing countries indicates the
size of the import market in each of the target countries together with details of the
main countries supplying the import demand. For the KSA to enter these markets a
concerted effort by local companies to export could enable them, over time, to enter
these overseas markets and establish a market share. This would be subject to their
prices being competitive and their distribution, specifications and after-sales
service/support being able to meet local (wholesale/retail) needs and requirements. As
an example, the after-sales service/support required to deal with product damages.
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However, to export Desert Coolers products, two major considerations need to be
considered: - (a) to export goods of high quality product which meets the requirements
of its intended markets and (b) to transport the product in a manner consistent with
maintaining its quality and texture over a long period of time. The key to exporting
products overseas is to ensure that appropriate transportation vehicles and logistical
programmes are in place to transport the products to the export market quickly and
without damage.
Major Importing Countries – MENA Regional & GCC
The majority of major importing countries for Desert Coolers products are outside
MENA (Middle East & North Africa) and the surrounding Region. Hence, to enter these
international markets, the KSA producer will need time and funds to:- (a) identify local
requirements, (b) investigate the market potential properly, then (c) develop an export
marketing plan that could be successfully implemented – based on the requirements of
the target markets, and finally (d) set-up suitable operations and appropriate logistical
support facilities in the selected countries.
While the exporter is developing his medium to long-terms plans to potentially enter
international markets, a short-term development that can be more easily set up, is to
expand into markets in the Arab countries and the surrounding Region as a whole.
Though the markets closer to home are relatively small in relation to other markets,
they nonetheless offer the exporter the potential to develop Regional markets for the
KSA’s Desert Coolers products, although in some markets there could be competition
from local producers as well as other imports. The following tables uses UN Comtrade
data for 2010 (HS Code 847960) to identified:- (a) the size of the import market in
several countries in the Middle East/North African (MENA) and surrounding Regions,
(b) other GCC Countries, and (c) any KSA recorded imports into those markets, as per
the following tables:MENA & Surrounding Region - Excluding GCC
IMPORTING
COUNTRY
IMPORTS
from
Algeria
World
KSA
KSA Market Share %
Egypt
HS:
Value $
847960
VOLUME Tonnes
5,783,396
237,512
4.10%
757
72
9.51%
World
996,306
76
Iran
World
8,734,164
753
Jordan
World
KSA
KSA Market Share %
687,928
54,994
7.99%
56
15
26.78%
Lebanon
World
586,811
85
Morocco
World
273,261
33
4
Tunisia
World
680,720
139
Turkey
World
Source: Comtrade.
4,532,357
404
HS:
Value $
847960
VOLUME Tonnes
GCC Countries
IMPORTING
COUNTRY
IMPORTS
from
Bahrain
World
267,276
28
Oman
World
866,218
107
Qatar
World
KSA
KSA Market Share %
8,747,949
82,829
0.94%
1,454
27
1.85%
UAE
World
100,574,191
18,926
Source: Comtrade.
NOTE: * Where Comtrade data is missing, GOIC data has been used as it is compatible with Comtrade
Countries in the Middle East, and North African Regions offer potential export
opportunities for the local producers, but the respective market size for the Countries
are, of course, relatively smaller when compare to major importing countries. However,
this should not deter the local producers from entering Regional markets as this can:(a) help to sort out any initial export problems that the local exporter may experience
due to implementation of their export delivery systems in the nearby market areas, and
(b) help the exporters to develop a good, working export marketing plan that can be
tried out in the Regional countries, prior to being implemented in more distant export
locations. Finally, the above indicates the opportunities that are awaiting KSA
exporters in the identified markets, provided they can supply quality products, on time
and at the right price. This will allow the KSA to develop existing markets and enter
new ones.
Competition - Major Exporting Countries
On an international basis, the analysis of the UN Comtrade’s 2010 export statistics (6digit) indicate the top countries exporting Desert Coolers products (potential
competition) in the world to be as follows for HS Code 847960:COUNTRY
Iran
China
USA
India
Italy
Others
TOTAL
MAIN EXPORTING COUNTRIES
VALUE $
SHARE %
VOLUME Tonnes
164,981,706
41,130,964
17,412,975
15,687,432
11,731,733
72,067,487
323,012,297
51.08%
12.73%
5.40%
4.85%
3.63%
22.31%
100%
53,480
2,512
1,063
958
660
Source: Comtrade
MAIN IMPORTING COUNTRIES
Iraq, Afghanistan, Sudan, Kuwait
Thailand, Philippine, Japan, USA, Iraq
Venezuela, Mexico, Canada, KSA
UAE, Iran, Iraq, KSA, Sudan, Egypt
Russia, Germany, Poland, Sapin
As KSA exports develop, they will tend to compete directly with the major producers of
Desert Cooler products as well as distributors from a range of other exporting
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countries – both near and far. As exporting countries have usually established their
distribution and sales networks in the respective markets, the local KSA companies
should evaluate and understand how these countries and their respective companies
have managed to carve a market for the respective producers and their products. This
evaluation should assist the KSA exporter to identify what actions need to be
undertaken to establish export markets for their own products. For the KSA to
compete effectively and efficiently, a concerted effort by the local companies will need
to be undertaken in a systematic way and possibly an initial start could be made by
developing an effective working export plan.
An initial market size can be estimated from the main importing countries, whose import
statistics provide a rough indication of the market size for imports within their
respective markets. In the same manner, identifying the exporters to those markets
will enable the local KSA producer to identify the countries that will be in competition
with them in their respective export markets.
Estimate of Importer’s Landed Costs
An indication of average landed cost is provided to assist the local producer to gauge
initial exporting costs to a particular country. These costs do not include any clearance
charges, duties/taxes or local distributor mark-ups. It should also be noted that many
producers make a particular product in various quality grades and this is reflected in
their final price for these products. While these producers may have a ‘base’, ‘medium’
and/or ‘high’ price and/or quality levels, these price ranges cannot be easily identified
from the trade data as the ‘product mix’ varies from country to country and, therefore,
all statistical costs are averaged out within the specific product HS Code. It should
also be noted that the variations in costs are also affected by the cost of the raw
materials used for producing the product. High quality and pure raw materials are
obviously more costly than their cheaper lower quality or synthetic counterparts and,
hence, this is also reflected in the final price of the goods.
The cost indications given in the following table, therefore, reflect only the average
landed costs of all the products covered in the HS Code 847960 category under
evaluation. In relation to the major importing countries and those in the nearby
Regions, an estimate of the average landed costs of selected countries in 2010, for the
World, MENA and GCC imports are indicated on a US$/tonne basis (where available KSA
imports are also detailed) for some representative countries:-
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TOP WORLD/MENA/GCC IMPORTING COUNTRIES – AVERAGE
LANDED COST (US$/tonne)
Region
Importing Country
World Imports
KSA Imports
World
Indonesia
16,397
Brazil
6,157
China
13,031
Malaysia
13,025
USA
13,010
MENA
Algeria
Egypt
Iran
Jordan
Lebanon
Morocco
Tunisia
Turkey
7,640
13,110
11,600
12,284
6,904
8,280
4,897
11,219
3,299
3,666
-
GCC
Bahrain
Oman
Qatar
UAE
9,546
8,096
6,016
5,314
-
It must be stressed that within the above product ranges there are considerable cost
variations which can be due to the ‘quality grade level’ (high/medium/low) of the
products, the raw materials used in the production, the type of packaging used, the
transport, logistical, distribution costs, the ‘product mix’ being imported, and the
market price acceptable in the target country – which would be based on GDP, available
disposable income and demand. As an example, a third world country is unlikely to
import large amounts of high quality products as the local GDP and income compels the
local populace to purchase lower cost/quality products. The converse would be true in
developed western countries. It is likely for these reasons that there could be
considerable landed cost differential between the countries.
This information should assist local KSA companies to ascertain, in a very general
manner, whether their respective products are likely to be competitive in the above
identified export markets or not. Landed costs, by sea shipments, are normally based
on CIF value - purely as a general guide, it is estimated that the variation between FOB
and CIF costs could be somewhere in the region of 10% to 15% of FOB.
Transportation
All road haulage within the Kingdom is usually undertaken using 20 or 40-foot trailers.
Loads up to 22 tonnes can use the road system without any special permission; however,
loads over this tonnage require a special police licence.
Road transport to surrounding countries is usually undertaken using a 22 tonne vehicle.
In many surrounding countries (Lebanon, Jordan, Syria, Turkey and Yemen) the Saudi
registered cabs pulling the trailers has to be changed at the border of the target
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country, to a locally registered cab before the goods-trailer can be delivered to the
purchaser – in Yemen, the cab changeover occurs in the city of Hodeida. As will be
appreciated, transport costs are subject to negotiation between the exporter and the
transporter and, hence, it is not possible to provide precise data on the subject.
Average sea freight costs (CIF/C&F) are more difficult to estimate but can be
generally assumed to be in the region of 10% - 15% of the FOB price of the product but
this can vary depending upon product type. Delivery charges would need to be
confirmed by the exporter at the time of delivery.
Depending upon the product, airfreight charges can also be variable – being based on
either weight or volume, whichever is greater. Again the delivery charges would need to
be confirmed by the air carrier at the time that the goods are despatched.
Insurance for Goods Being Transported by Road
Essentially, there are two types of insurance cover that is available for land
transportation, namely: Basic Insurance – cover is against loss of or damage to the goods being insured, directly caused by
fire, collision, overturning or derailment of the carrying conveyance.
 Comprehensive Insurance – cover for ‘all risks’ of loss or damage to the goods insured, subject to
certain insurance clauses.
However, the nature of goods being transported play a major role in determining which
type of insurance is required. For instance, no insurance company would insure on a
‘comprehensive’ basis if the goods are fragile or perishable such as eggs or vegetable.
The fees for both types of insurance cover are based on the value of shipment. Hence,
an exporter is required to submit a number of documents to determine the insurance
fees prior to being issued an insurance policy. These documents are as follows:



Cargo insurance proposal form.
Goods invoice (to determine the value of the goods).
Way bill.
Packaging list.
As indicated, insurance fees are determined by three main factors, namely: Value of goods shipment.
 Type of packaging.
 Reputation of carrier/transport Company.
Hence, the exporter would secure the minimum insurance fees if he could prove that the
carrier has insured his trucks and the shipment have been packaged properly. The range
of fees for basic insurance is between 0.05% and 0.20% of the shipment value. In the
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case of comprehensive insurance, the range of fees is between 0.10% and 0.50% of the
shipment value.
Export/Trade Barriers & Opportunities
There are a number of export/trade barriers and opportunities that are identified in
the following: Company Specific Barriers & Opportunities
 Lack of availability of commercial information or not having undertaken market research can be
considered to be a barrier to entry, as specific country profiles that could highlight
opportunities would not come to light.
 The internal corporate export structure and manpower resources could be an advantage for
companies. In this instance, some KSA companies are developing their export capabilities but
perhaps need to put more emphasis on this development.
 Investment in manpower development for export and good MIS (management information
systems) could pay dividends in the future.
 Many overseas companies will only purchase from those companies that have secured ISO 9000
certification and in some instances not having this certification could be a barrier.
 Market Specific Barriers & Opportunities
 Desk research should initially be carried out to determine the market viability for entry – this







can be undertaken through written data relating to the target country (e.g. reports) and also
via the internet.
Having a good and reputable local agents/distributors can be a benefit as:o The exchange of information between the two parties minimises the information
barriers and allows the exporter to have a better understanding of his target export
markets.
o Enables the exporter to have a physical representative in the target market, through
someone who is responsible for local distribution and sales.
Conversely for the exporter, not knowing what is happening in the selected target export
markets becomes a barrier.
Selecting an inactive and/or poor agent/distributor could bar the exporter from marketing
their goods properly and professionally in the target market and, thus, this could be a barrier.
Customs duties/tariffs can be a barrier for exporters - importing countries in many instances
use this mechanism as a means of protecting their local industry. However, it is a positive
aspect for the KSA producers exporting to neighbouring GCC countries.
Trade agreements between two countries can sometimes either reduce duties/tariffs or
exempt them. This means that in some instances a number of countries may have a
preferential tariff advantage over other countries.
The Arab Free Trade Market Agreement has brought down tariff barriers for KSA exporters
within the Arab countries.
The KSA’s accession into the WTO has enabled local producers to more actively compete in
export markets as the trade barriers have come down. However, conversely the trade barriers
in the Kingdom are also reducing and, thus, bringing in overseas competition.
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Distributors & Competitors in the Potential & Regional Export Markets
In the international market, it can be quite difficult for local exporter to easily
identify:- (a) their potential local competition and (b) possible local
importers/agents/distributors that they can work within the targeted markets. Any
exporter wishing to develop overseas markets will need to undertake initial primary and
secondary market research to identify the relevant information that needs to be sought
from that market. The short list below, identifies producers, importers/agents and
distributors for Desert Cooler products, is an example of the information needed to
identify potential in-country competitors in the target market and to contact overseas
importers/distributors/agents who are dealing with the exporters products in the
selected target markets. This and further information can be obtained via the website
www.kompass.com.
COUNTRY
Morocco
Lebanon
UAE
Malaysia
Turkey
STATUS
COMPANY
Producer
Stokvis Nord-Afrique
Distributor
Multitech Climatisation
s.a.r.l
Distributor
Metacs Sari
Producer
Refrigeration Equipment
Enterprises LLC
Distributor
Nice Refrigeration Devices
Trading L.L.C
Producer
Tecumseh Euro-Malaysia
Sdn Bhd
Distributor
Tepat Teknik Sdn Bhd
Producer
Termodizayn Termik
Cihazlar Sanayi ve Ticaret
Ltd.Sti
Distributor
Ekip Muhendislik Sogutma
ve Isi Sistemleri Elektrik
Sanayi Ve Ticaret A.S
PRODUCT SECTOR
Desert Cooler/Evaporative air
cooler
Desert Cooler/Evaporative air
cooler
Desert Cooler/Evaporative air
cooler
Desert Cooler/Evaporative air
cooler
Desert Cooler/Evaporative air
cooler
Desert Cooler/Evaporative air
cooler
Desert Cooler/Evaporative air
cooler
Desert Cooler/Evaporative air
cooler
Desert Cooler/Evaporative air
cooler
CONTACT DETAILS
Lot 1711,Zone Industrielle Ouled Salah
Tel: +212-5 22 65 46 00
Fax: +212-5 22 33 45 73
232, Cité Ben Choubane, 16013 Rouiba, Algeria
Tel: +212- 5 22 24 24 33
Fax: +212-5 22 24 24 31
Azar Building,227 Selim de Bustros street,Furn ElHayek sector,Beirut, Lebanon
Tel: +961 1 335929
Fax: + 961 1 200159
P.O.BOX 3943 Dubai, Near Deira Taxi Stand, Al
Maktoum Hospital Road Dubai
Tel: 971 4 2222349
Fax: 971 4 2214418
PO BOX7115 Sharjah, Industrial Area, Next to Abu
Dhabi Commercial Bank ,Sharjah
Tel: +971 6 5430018
Fax: +971 6 5430017
18,Jalan Sultan Mohamed 4 , 42000 Port Klang,
Malaysia
Tel: +60 3 31763886
Fax: +60 3 317633890
Lot 1 Jalan Halba 16/16 40000 Shah Alam, Malaysia
Tel: +60 3 55101721
Fax: +60 3 55101730
ISISO Kucuk Sanayi Sit.Hosdere Mevkii D Block
N:11-12 Bahcesehir, 34000 Itanbul, Turkey
Tel: +90 212 623 2293
Fax: +90 212 623 2296
Cumhuriyet Mah.Yakacik Yan Yol Abdi lpekci
Cad,Mermer Sock.No:2 Kartal,Istanbul,Turkey
Tel: +90 216 451 8000
Fax: +90 216 671 1371
Source: Kompass
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Tariffs/Duties & Taxes
Tariffs for Desert Coolers products vary considerably from country to country. Details
of the specific tariff/duty rates, which would be payable by KSA exporters in several
sample countries, for the HS Code under review, are outlined in the following table:COUNTRY
HS CODE 847960*
Algeria**
Egypt**
Jordan**
Lebanon**
Morocco**
Tunisia**
Sudan**
Yemen**
0%
8%
1%
Indonesia
France
Brazil
Malaysia
USA
Source:
NOTE: *
**
5%
1.7%
14%
0%
2.80%
ITC – Market Access Map.
Where a tariff range is provided, it indicates that the
tariff varies based on 8-digit, or more, HS Codes.
Preferential tariff for the League of Arab States.
Apart from the KSA exporter paying the relevant tariff/duty charges at the border of
the importing country, additional taxes are also imposed on top of the tariff/duty rates.
These general tax terms for imports are detailed, in the following table, for the
relevant HS Code under review for several sample countries who are importers of the
concerned products from the KSA:COUNTRY
Egypt
GENERAL TAX TERMS for ALL IMPORTS
(In Additional to the Nominal Tariff/Duty Rates Detailed Above)
Sales Tax: 10% of adjusted value determined by Egyptian Customs. Customs Surcharge: 2% of the value
of the consignment if the rate of duty applicable to the product is between 5% to 30%.
EU tariff rates are based on CIF + duty. Value Added Tax (VAT) is based on CIF + Duty. ‘Standard VAT
applies for most products and Exceptions are noted in ‘Reduced VAT’ rates for some of the major EU
Countries are:COUNTRY
European Union
(EU)
Jordan
STANDARD VAT%
REDUCED VAT%
20%
21%
25%
22%
19.6%
23%
18%
23%
21%
18%
19%
23%
18%
25%
20%
10%-14%
6%-12%
0%
8%-17%
2.1%-7%
6.5%- 13%
4%-8%
4.2%-12.5%
4%-10%
3%-12%
0%-6%
6%-12%
4%-8%
6%-12%
0 – 5%
Austria
Belgium
Denmark
Finland
France
Germany
Greece
Ireland
Italy
Luxembourg
Netherlands
Portugal
Spain
Sweden
United Kingdom
There is a VAT tax of 6% applied on CIF + duty.
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Lebanon
Morocco
Sudan
Tunisia
Turkey
USA
Yemen
There is a 10% VAT tax on CIF + duty.
There is a VAT that varies between 0% and 20% depending on the product, applied on CIF + duty.
There is a 10% VAT tax on CIF + duty
Value Added Tax (VAT): 18% of duty paid value + the sum of the tax. Customs Service Fee: 3% of
customs value + VAT payable.
For most goods there is an 18% VAT. For basic necessities and foodstuffs the rate is 8%. For electronics
and some luxury items the rate is 26%. Tax is applied on CIF + duty.
n/a
n/a
The Arab Free Trade Zone came into effect on January 1, 2005, marking the elimination
of Customs Duty on intra-Arab trade. However, individual states still have a ‘negative
list’ of trade items which will not qualify for exemption from Customs Duty. The Arab
Free Trade Zone comprises of the following member states:- Algeria, Bahrain, Egypt,
Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, the Palestine Authority, Qatar,
the KSA, Somalia, Sudan, Syria, Tunisia, the UAE, and Yemen. Imports from nonmember countries will continue to be subject to Customs Duty based on the individual
country's legislations.
On January 1, 2003, the Gulf Co-operation Council (GCC) countries (i.e. the KSA, Kuwait,
Oman, Bahrain, Qatar and the UAE) formed a Customs Union removing the barriers to
free-trade between member states. A flat rate of duty of 5% is now imposed on most
imported goods apart from listed exemptions at the first point of entry into the GCC.
Those goods may then move freely between GCC countries without the imposition of any
further duty.
There is no Excise Duty or Sales Tax in any of the GCC countries. The formation of the
GCC Customs Union, the Arab Free Trade Zone and various international commitments including those under the WTO agreement - all point to a probable reduction in Customs
Duty as a source of revenue for the Governments. There has been debate, at the GCC
level, regarding the possible introduction of another form of indirect taxation, such as
Value-Added Tax (VAT). The GCC Finance & Economic Co-operation Committee has
suggested a comprehensive study is undertaken by the Member States to consider this
further. While Governments in the GCC have started exploring new indirect taxes,
however, there has been no formal decision on any specific form of tax or the timeline
for introducing any such taxes. (Source: internationaltaxreview.com – Feb, 2005).
Finally, it should be stressed that governments can change duty/tariff rates whenever
they consider it appropriate. Hence, the KSA exporter is encouraged to check the
duty/tariff applicable in his target country at the time of exporting.
KSA Competitive Advantage/Disadvantage
The main criteria can be summarised into the following points:-
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 Accession to the WTO has enabled a level playing field in the KSA’s export markets of member
countries in terms of tariffs, duties, etc.
 Tariff/duty benefits with those countries which have existing trade agreements with the KSA
and/or the GCC.
 The proximity of the KSA within its Regional markets.
 Increase in Regional population creating demand for increased dwellings, construction,
infrastructure requirements, transportation and food products.
Some of the potential disadvantages/barriers are listed in the following:



Cost of transportation and goods insurance cover to destination country.
The need sometimes to change the transport truck cabs at the border or at designated city.
Customs procedures at borders can cause delays and incur additional costs.
Delays in the delivery of products, which is caused by infrequent ship movements from KSA ports
and sometimes the need to tranship through third countries.
Conclusions
In conclusion, in 2010, the KSA had an estimated surplus capacity of 96,380 Units of
Desert Cooler products. This equates to a conservative and nominal export potential of
around US$ 18.50 million (SR 69.40 million) for the mentioned types of Desert Cooler
products. The aim of this report is to identify major importing countries for the
identified Desert Coolers products, which could represent an export opportunity for
Saudi producers. The following are the main highlights of the report:
World Imports of the Concerned HS Code (2010)
o The major international importing countries for the range of specified Desert Coolers
products were, under HS Code 847960 –Indonesia, Brazil, China, Malaysia and USA.
o In the MENA and surrounding region (excluding the GCC), the following countries
imported the specified Desert Coolers products: - Algeria, Egypt, Iran, Jordan,
Lebanon, Morocco, Tunisia, and Turkey.
o In the GCC (excluding KSA), Bahrain, Oman, Qatar, and UAE are known to have
imported the Desert Cooler products.
o The total value of world imports of the specified Desert Coolers products was
US$223Million.

World Exports of the Concerned HS Code (2010)
o The major international exporting countries for the range of specified Desert Coolers
products were, under HS Code 847960:- Iran, China, USA, India and Italy.
o The total value (US$ million) of world exports (2010) of the specified Desert Coolers
products was US$ 323Million.
o The KSA exporter should further investigate these countries to ascertain how they
have developed their export markets and what are their techno-commercial and
financial parameters for exporting.

Arabian & Other Regional Countries
o
Although the surrounding market is relatively small, exporters should start to develop
their export markets in the nearby countries.
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o
More effort needs to be undertaken by the local exporters to enable the KSA to
become a major exporting Country to the surrounding Arab and non-Arab Countries in
the Middle East, and North Africa.
In summary, while some exporting is being undertaken, more effort could be directed
towards developing further export markets. It is believed that these markets offer
promise to local producers and KSA companies are encouraged to undertake evaluation
of these markets to assess their specific exporting potential.
Furthermore, the KSA producers are encouraged to contact local export insurance and
credit institutions in order to utilise the available facilities for export credit and the
available insurance programme cover for higher risk countries. Additionally, the Saudi
Export Program (SEP), operated by the Saudi Fund for Development (SFD) in Riyadh, is
in a position to assist potential KSA exporters to expand their export activities and
assist them to increase their sales volumes, by exporting to more countries, while also
trying to help them to minimise their export risks.
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