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E-trade could be the future for Arab small businesses: World Bank The internet could boost smaller-scale enterprises but regional governments need to provide support when it comes to shipping and customs laws, says expert
Online trade has the potential to boost small enterprises across the Arab world but the onus is on the region's countries to implement sympathetic policies, says a World Bank trade expert. Using the internet effectively, he said, will give the region's smaller firms the ability to enter markets which they would otherwise be unable to tap. "Electronic trade -- eBay for example, is very suitable for small enterprises," Bernard Hoekman from the poverty reduction section of the World Bank's Trade Department told Ahram Online. In the case of Egypt, this could mean a small firm using the net to arrange imports of components from abroad, assembling them domestically, then exporting them to businesses in other countries. But Hoekman, speaking during this week's 'From Arab Spring to Economic Spring' conference in Tunisia, said that specific government policies were essential if such trade is to blossom. One major constraint are transport costs, he said, which can be very expensive for small shipments of goods. "In Peru, the government mobilised the national postal system to help reduce shipping costs for small businesses," Hoekman explained. "[That way] small packages would be aggregated through the postal system to be shipped in large containers, cutting costs significantly." Government support need not be in the form of direct subsidies, Hoekman, added, but can come in other, more efficient ways. A further obstacle comes in the form of tariffs and customs. With countries which levy charges on all imports, regardless of size, stiflying small trade, Hoekman said. "One sound policy is to remove all levies on packages with a value lower than $3,000," he said. "[By contrast] a country like Brazil levies a 60 per cent tariff on any import more expensive than $50. That's why eBay does not work there." Countries may need to examine the rationale behind their trade policies, Hoekman said, to see how effective they really are. "Some policy makers would say that tariffs are needed to protect local industry, but the cost of such protection might be very high," Hoekman said. He also suggested Arab countries should also take a careful look at which smaller local industries have international potential. "There is a new model now where you don't need large firms and economies of scale to be competitive. Small companies can add value, and export and be efficient," Hoekman added. The 'From Arab Spring to Economic Spring' conference, hosted by the International Development Research Centre, takes place in Gammarth from 29-30 October. http://english.ahram.org.eg/News/56745.aspx
