E-Commerce Arrives

Article excerpt

The internet revolution is about to dramatically alter the way individuals and companies in the Middle East do business. The arrival of `e-commerce' -- already well-known in the West through such popular websites as Amazon.com and E-Bay- presents both opportunities and risks for the Arab world.

In late October 1999, Dubai's crown prince, Sheikh Mohammed bin Rashid Al Maktoum, wearing traditional black robes bordered in gold, announced that the emirate was going to create `Dubai Internet City', the world's first free trade zone dedicated to servicing e-commerce related enterprises (see TME January 2000).

While Dubai Internet City, expected to be operational later this year, is an obvious complement to the emirate's enormously successful Jebel Ali free trade zone, it is also an indicator of how rapidly e-commerce is developing world-wide.

According to Arthur Sculley, former head of the Middle East department of JP Morgan, the investment bank, e-commerce will dominate global business by the end of this decade. Electronic transactions will be the norm, both for business-to-business (B2B) and business-to-consumer (B2C) transactions. The growth rates are astonishing: last year, global e-commerce transactions totalled $100 billion. By 2004, according to industry analysts in the US and UK, global e-commerce will exceed $7 trillion -- a 7,000 per cent increase.

"It is going to dramatically change the way businesses do business," says Sculley, co-author of B2B Exchanges: The Killer Application in the Business-to-Business Internet Revolution, a book which examines the impact of the rise of e-commerce. "Most companies are going to have to reinvent themselves over the next five years."

For the Arab world, the rapid development of e-commerce presents unique opportunities as well as enormous potential risks. The opportunities are found in the fact that it is now possible for some Arab economies to join the most advanced countries of the West, exploiting their heavy investments in infrastructure and education. "E-commerce companies here can see what's happened in the US and profit from that experience," says one Arab businessman.

Sheikh Mohammed left no doubt that Dubai will be an active participant. "Tomorrow's world will be driven by the internet," he said. "It will be driven by innovative ideas, and Dubai will be a significant global player"

The government of Dubai expects to capitalise on its strong trading economy, state-of-the-art communications infrastructure, and computer-literate workforce, to successfully compete for its share of global e-commerce."

It is not alone in the Arab world. In countries as diverse as Bahrain, Morocco, Saudi Arabia and Tunisia, governments have already made it a matter of state education policy to see that all schools are computerised, offering internet access as well as a range of computer-related training programmes.

In Dubai, the e-commerce free trade zone will also be home to the world's first internet university, which will offer courses on various aspects of e-commerce, e-finance, e-marketing and e-design.

Tunisia has already capitalised on its well-educated population to market itself to the European Community as a site for companies to base many back-office, data processing tasks. Similar efforts to offer e-commerce support services are being developed in Cyprus, Egypt, Israel, Jordan, Lebanon and Morocco.

Although e-commerce requires relatively little infrastructure development -- most Arab countries have upgraded phone systems capable of handling digital communications -- it does require computers. In order to participate in the e-commerce global economy, Arab countries face making major investments in computer and software purchases.

Virtually all countries in the region still lag far behind the West in numbers of computers in use. For example, according to United Nations figures, while the US has 362 personal computers per 1,000 people, Saudi Arabia only has 37 per 1,000. …