City to City Competition: Dubai vs Singapore

The entrepreneurial streak characterizing leading business destinations reveal the long-standing objective of strengthening along business attraction edges as countries aim to shield their economies from shock as traditional economic pillar experience slumps. The global city centers host the homes to two thirds of the global population living in the urban areas. It arises from the commitment demonstrated to transform them into fertile grounds for innovation, science and technology in collective support to attract the business community. For this reason, looking ahead of the development cycle of trade zones across the globe, yields endless competition between cities initiated through government support to foster their economies. As the old industrial cities experience treats of economic stagnation and declining attraction, establishing free zones as engines of economic growth yields a competitive landscape for Singapore and Dubai on elements of seamless connectivity, entrepreneurial creativity and innovative support for the enterprise.

As most European cities confront their declining attraction through industrial de-localization and economic transformation, Asian cities of Singapore and Dubai has turned to the investor community through free trade zones. The trend to transform them into an international business hub has generated endless investment in broadband connection, transport infrastructure and investor support. The fundamental idea for the development of business hubs converges to generate a high-quality support platform, convenient and environmentally friendly centers to attract potential investors while sustaining the distinct ease for the existing enterprises. To the contrary, the West is predominantly incorporating cultural and social platforms to the soul of attracting investors and experienced business organizations. This demonstrates in the success of utilizing the reputable art scenes in New York, Paris and Vienna to maintain their competitiveness (Kern, 2014).

Free Trade Zones

The flourishing periods of economic growth demonstrate the commitment by the political elites in revamping the infrastructure and liberalization of geographically-limited free centers. However, globalization has brought such efforts closer by providing a strategic end-run through free zones identified by creating islands of economic prosperity both to the investors and the host country. The realization by various nations that accomplishing economic prosperity involves reaching simple administrative decisions and implementing them with integrity, builds internal pressure to initiate and develop the islands of prosperity around the world (Strong & Himber, 2009). It manifests in the emergence of cities in competition of attracting the business community, demonstrated in this paper with a focus on Dubai and Singapore cities.

The emphasis of accomplishing success in attracting investors in the free zones stimulates a broader economic liberalization and development of salient features that implements the freedom beyond the administrative construction. This explains why some free zones remain ineffective for reasons of poor marketing, inadequate infrastructure and administrative hurdles. In particular, excessive red tape, bureaucratic approval process, missing actual autonomy, unexpected changes in laws, and conflict overlaps in procedures, translates to disruptive environments. These obstacles erode the effective economic freedom within the zones, resolved in turning Jebel Ali Free Zone into the most effective amongst the Arab zones (Strong & Himber, 2009).

The diversity in describing different entities as free zones, special economic zone or export processing zone share in the features of geographically-limited set of regulatory policies and restricted tax that differs from the surrounding jurisdiction. As such characterize both Dubai and Singapore free zones. Equally, unlike those free zones where government cronies seek to obtain tax breaks, Dubai and Singapore, provides fundamentally superior free zone environments to attract commercial activity (BBC, 2014).

External Factor Evaluation

Dubai

The political environment of Dubai demonstrates the stable governance of UAE national structure and emirate leadership existing in a dynastic nature. While the entire country operates in a loose confederation of emirates, Dubai occupies the vice-presidency post in the national structure. The emirate of Dubai has veto power to the legislature influence matters of national interest.

The emirate operates through well-defined legal framework with sound business regulation and ownership rules. For example, it permits foreigners to own 49% of ownership rights in limited liability entities incorporated within the Dubai Emirate and 100% for branches, free zone professional entities, and representative officers for global companies. The government commits to consistent pro-business and defined policies of economic liberalization such as protecting intellectual property rights and patents (Nagraj, 2014).

The economic environment of Dubai reveals shared dominance with revenue stemming from tourism, financial services and the blossoming real estate and construction, alongside the petroleum and natural gas. For instance, construction activities and real estate contribute 22.6% outperforming oil industry that injects 6% of the entire revenue. Additionally, companies experience no direct taxes on their corporate profits and personal income with an exclusion of oil entities and branches of foreign banks that incur 55% and 20% flat rates respectively on net income derived within Dubai. The authorities impose low custom duties at 4% blend with many exemptions and 100% repatriation of profits and gain in capital. There exist a fair trading environment with no trade barrier, foreign exchange controls and competitive import duties (Cross Border Business Consultants , 2013).

The social setting of Dubai demonstrates an integrated context with the expatriate population constituting the majority with an eighty percent stake. This has gradually changed the cultural imprint from an ethnically homogeneous community to a cosmopolitan setting. However, male residents are estimated to rise above the seventy percent mark of the Dubai population. Although the Dubai reflects an Arab-based context, an integrated cultural and religious setting arises, thus permitting polygamy (Dervic, et al., 2012).

The Islamic background of Dubai translates to a crime rate approaching zero, further strengthened by the civic law enforced at the emirate level. While the rest of UAE culture entails a combined Islam, customary Arab and Bedouin it exhibits a highly cosmopolitan city though retaining Islamic and Arab prominence in a compromise of Friday-Saturday weekend. Although a federal framework is in place to unify the local structures, the influx of tourists influences the social platform of the monarchial country. This manifest in the absence of no dress code, thus permitting the residents to embrace emerging fashions to compliment the traditional Khandura, gutra and agal for men and black abaya women wear (Government of Dubai, 2010).

Similar to the integrated social platform, Dubai technological environment shares in the global advancements. The city features a supportive technological and infrastructural development phase evident in establishing seven interconnected industrial areas, a business park and three specialized free zones of international distinction. Besides, it is served by two seaports of world class reputation matching the international airport standards. Moreover, the city opens to the mainland and other sub-centers through a network of modern highway and high-tech telecommunication channels. The ultra-modern technologies to avail adequate power and support utilities deliver increased flexibility and reliability building upon the efficiency in the cargo village. Finally, it city links to the rest of the world through over 85airlines and 120 shipping lines, thus leaving it accessible for other global destinations (Nagraj, 2014).

Singapore

The political platform of the Asian country reflects a multi-party state though the People’s Action Party (PAP) remains the dominant force in the arena since independence. This is demonstrated by regular victories averaging over sixty percent of the cast vote. Although governed through the electoral system, PAP is criticized for cementing power by targeting investments of opponents. This dominance reflects in the increased government-led initiatives to empower the Singaporeans to relieve the country from foreign dominance. For example, a stricter political grip influences the social systems such as public-housing plans, unified solutions to antisocial acts and birth-rate enhancement policies. Equally, its capital punishment derived from the restraining legal-political environment has declined cases of crime syndicates (BBC, 2014).

Singapore demonstrates a semi-authoritarian regime through its unitary multi-party platform reflecting a parliamentary republic with a Westminster system. The dominance of the independence party PAP reflects in the declined levels of press freedom and continual suppressing of civil liberties. However, this has not prevented its rise to a middle power level with a stake in influencing global affairs ( Thomas White, 2014).

Singapore city reflects the economic powerhouse of the larger country as a prospering Asian destination driven by financial services and electronics manufacturing. Its sound economic framework affected in the regional crises such as 2009 World Bank crisis and the 1997 slump in the Asian markets has stimulated the government to offer incentives to revive the small and medium-sized enterprises. The wealthy city-state yields one of the promising places to gel with glittering skyscrapers and thriving port (BBC, 2014). Singapore city has emerged to one of the world commercial hubs hosting the fourth-largest financial centre and busiest port.

Although manufacturing activities contribute over twenty-five percent of the national GDP, the economy remains globalized and diversified along trade activities. Singapore city benefits from the high purchasing power parity with the country commanding the third rank with a high per capital income. However, it retains a pole position of countries with the highest income inequalities. The increasing household debt presents a disastrous trap that most Singaporeans have embraced owing to the low interest rates. Its status as flourished trading post is gradually challenged by city-ports built by Malaysia ( Thomas White, 2014). This attracts its traditional customers with heavily discounted rates. Nevertheless, the city retains an enviable shape financially given the rapid welling of its current-account coffers and healthier foreign-exchange reserves constituting twenty percent of its GDP ( Thomas White, 2014). This emerges from the existence of economic pillars that propelled its rise including disciplined workforce, ease of conducting business, intact rule of law and a highly educated population.

Singapore city provides a diverse social environment with the ethnic Asians dominating its streets. This leaves heterogeneity and diversity defining the Singapore society. Its population is majorly dominated by the Chinese with 80% and other significant minorities being the Indians, Eurasians, and Malays. The PAP-led government promotes multiculturalism in the Singapore city, demonstrated by four official languages, including Malay, Mandarin, Tamil and English. Although globalization reflects its stake in Singapore city, wisps of the past are evident through architecture and arts, including Parliament House, Raffles Hotel and Sri Mariamman temple reveal the colors of colonialism and religion (BBC, 2014).

The rapid modernization of its technology and industrialization landscapes supports its quest for sustaining a free-market economy. The technological advancements weigh down in the economic progress reflected in the Singapore model that boast world’s highest per-capita GDP in global competitiveness. The emphasis on developing a modernized services and industry platform drives the country re-export activities demonstrated by the forty-seven percent composition of its exports ( Thomas White, 2014). While its manufacturing sector has benefited from mass foreign investments, the government has leveraged the capital inflow to improve the know-how that has duly improved its productivity.

Today, the Singapore environment has graduated its manufacturing industry from textile focus and foreign tie-ups to contribute 30% of its GDP through biotechnology solutions, consumer electronics and semiconductor exports. The demand to offer value-added services has grown in tandem with its construction industry buoyed by the government initiatives to foster the city’s infrastructure. This leaves the city-state a hot-spot for financial center and tourist attractions nurturing the services sector to account seventy percent of its GDP ( Thomas White, 2014). The city-state has gradually moved from the traditional mantra of attracting multinational through tax incentives. The Singapore city demonstrates a new spin by prioritizing research and development through improved education. This attracts the deep-pocketed global firms to initiate niche sectors in the country including pharmaceuticals and biotechnology.

SWOT Analysis and Comparison

Singapore and Dubai demonstrate superficial similarities beyond the tall, gleaming buildings characterizing their landscapes. They share in features such as a fancy airport, world class sea port, broad network of highway, warm and humid climate. The parallels sink deeper as both are founded on trade as its population is filled with residents interested in commerce rather than the traditional industries. For instance, the Singapore city demonstrates an import pattern of importing almost all its industrial components rather than bother to manufacture them within the city-state.

In a similar platform as Dubai, Singapore city has long established itself as the home to expatriates and immigrant workers. This illustrates in the determined pitch for the two cities to stimulate a can-do-spirit by relinquishing cumbersome regulations. The determined pitch erected by both cities becomes evident by attracting endless scores of financial community that brings them closer to the world’s leading commercial hubs (Yeoh & Lin, 2012).

The Singapore economy is overly run by expatriates at all fundamental aspects. However, the cost of living in Singapore is expensive to a point that those turning its wheels do not actually live in its environments. This explains why a majority of individuals working in Singapore remain accommodated in Malaysia where rent bills average a third of its charge. It is this consideration that a well-developed transport network links the city to its neighbor. Any individual aware of the Dubai status will quickly recognize its similarities with Singapore. In particular, its primary institutions such as financial institutions, hotels and retail outlets would stall were it not for the expatriates who keep the city going.

The two cities differ in their successful history exhibited by their emergence to overtake Calcutta city. The emergence of Singapore from a sleepy backwater zone to its present international financial hub, exhibits a greater distinction shared by Singaporeans. To the contrast, Dubai generates a reference point to most urban centres in an incredible projection than Singapore. Dubai has accomplished the global status to the front surpassing Bahrain and Beirut to become a genuine international city (Nagraj, 2014).

While Singapore population demonstrates a foreign born majority of Indians, Chinese, and Malay, it generates a multi-ethnic character in the city. Contrariwise, Singapore represent a Chinese city ruled by the Chinese people who constitute an eighty percent of its population. Their composition dominates the culture and language of the city in the process deleting the Instant Asia slogan embraced in the city. Dubai reveals a genuine multiethnic element of a global city. Although the Emiratis occupy the governance of the city, its ethos replicates an entirely cosmopolitan scope unequaled by no international city (Yeoh & Lin, 2012). The predominant Chinese element in Singapore works in its favor illustrated by the distinct sense of Singapore ethos that traces from the Chinese culture. For example, despite boasting fancier restaurants than Dubai, the best meals peg to the Chinese culture (Savage, 2013). This differs from Dubai that despite being within the Arab culture, no one claims the Arab cuisine overlooks the cosmopolitan experience.

Strategic Unit Structure

Dubai

The structure of the city offers a differentiated setting categorized into the mainland zones and free zones. Initially, the free zones in Dubai entails portions of clearly defined and isolated lands where businesses located in them attract special tax, export and import trade regime, as well as an extra territorial custom duties. The primary idea behind the establishment of free zones in the United Arab Emirates yielding central business hubs targeting companies that desire to conduct business beyond the emirates. For this reason, the free zone entities are licensed with intention to undertake worldwide operations and within the corresponding area. This structure allowed companies licensed to operate within these zones engage only in the import and re-export operations. However, a large majority of them serve their clients in the mainland and GCC by engaging their domestic distributors (Cross Border Business Consultants , 2013). The Dubai free zones translate to attractive elements that resemble incentives to promote the entrepreneurial culture. Initially, it allows investors to start fully-owned enterprises while attracting zero taxes for their personal and capital gain. Secondly, no duties are imposed on imports and exports thus generating a seamless conduct of businesses. The enterprises have unrestrained repatriation of the earned profit and capital. Besides the installation of modern and efficient communication, Dubai free zones have liberal labor regulations to eliminate recruitment hurdles (Cross Border Business Consultants , 2013). Abolishing currency restrictions yields an attractive business environment with auxiliary support centres.

The free zones offer unique facilities to streamline running of new enterprise operations meeting the international standards. a prearranges land on lease are availed by the authorities to foster investor development. Additionally, the presence of pre-built warehouses, executive office suites accommodates new businesses without incurring construction costs. The creation of sustainable city has provides the free zone companies with reliable and inexpensive source of energy. Although each free zone mandates campiness to comply with its set of laws, investors can operate either as Free Zone Establishment or Free Zone Company (Cross Border Business Consultants , 2013). While free zone establishment have a single shareholder, a free zone company involves a limited liability company whose shareholding involves two or more shareholders.

The defined structure of Dubai free zone offers a sector-oriented facilities guided by their unique rules and regulations. The Jebel Ali and Dubai Airport free zones offers specialized activities that target enterprises in import, export, re-export manufacture, assembly, packaging, consolidation, logistics and distribution operations. On the other hand, Dubai Healthcare city caters for healthcare-related businesses different from the Dubai Media city that serves the broadcasting, public relation and advertisement segments. Also, the establishment of the Dubai Internet City offers web-based solutions, information technology support and development of software products (Cross Border Business Consultants , 2013). The authorities have restrained free zone companies from conducting business with their UAE counterpart, unless through the authorized local entities registered in the mainland which attracts custom duties. Although each zone offers unique guidelines and minimum capital requirements, most average a minimum investment of $41 000 (Cross Border Business Consultants , 2013).

The identification of the desirable free zone obligates the potential investor to evaluate each zone on locational factors, infrastructure and support facilities, and licensing procedures for the proposed operations. Likewise, the investor is advised to scrutinize the hidden charges, cost of setting up the enterprise, and the prestige attributed to the identified free zone. Considering that each free zone embraces continuous review of its procedures and regulations, each offers a team of experienced consultants to advise on the appropriate choices while undertaking incorporation and registration.The diversity of free zones in the city yields compromising settings with varied cost schedules, manpower allocated alongside the size and nature of the business operations (Cross Border Business Consultants , 2013).

Singapore

The structure of the Singapore city yields three free trade zones where investors benefit from the suspension of taxes for goods arriving in the designated areas. This implies that neither duties nor taxes are imposed on the products stored in the free trade zones. However, the regulation mandates payment of duties and taxes when moving the goods from these zones and as they enter the customs territory including the local consumption. The benefits target traders involved in re-exporting and transshipping operations. To the contrary of the Dubai environment, Singapore free trade zones have less paperwork owing to simplified customs procedures. For example, no customs are imposed for transshipping non-controlled products.

Secondly, suspension of duties implemented in these zones translates into huge gains for traders handling dutiable goods including petroleum products, motor vehicles and intoxicating liquors. In the same way, suspension of goods and services tax yields income gains for importers as Singapore imposes taxes on all imports. However, all traders despite domestic or foreign benefit from the free trade zones. However the latter must work with domestic freight forwarders to attain the necessary permits.

The depositing of goods within the free trade zones targets non-dutiable goods with the storage limited to transshipping and re-exporting. However, the storage of storing dutiable goods excludes intoxicating liquors and tobacco components as limited to the licensed warehouses. Furthermore, though repacking, sorting and re-condition remains allowed, investors must seek permission from the Singapore Customs. It targets traders with specialized processes of consolidation of goods from varying shipments to constitute them into shipment bound for a different destination (Enterprise One, 2010).

Conclusion

The emergence of Dubai as a leading global travel hub is dramatically funnelling the competitiveness of the emirate city. This arises as the visitors break their international flights thus yielding one of the leading markets in air connectivity. This sets Dubai along an expansion path to double its international connectivity in the Asian region. The creation of a sustainable platform for the city draws optimism of Dubai to surpass other leading cities including New York through international visitors. This dwarfs Singapore city to embrace catch-up strategies as it seeks to spin its development through locals and shift away from the dependence on expatriates in the fundamental areas. Singapore possesses swelling current account coffers and healthier foreign exchange that presents the economic fundamentals to propel it further to a meteoric rise. The identified strengthens in the comparison between the two cities reveal a varied setting yielding an attractive element. Nevertheless, the liberalized approach in Dubai translates to competitive advantages over Singapore as it strengthens its status to the leading global travel hub.

References

  • Thomas White. (2014). Singapore: Serviced by Industry and Finance. Chicago, Illinois: Thomas White International.
  • BBC. (2014, May 22). Singapore profile. Retrieved October 08, 2014, from http://www.bbc.com/news/world-asia-15961759
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  • Savage, V. R. (2013). The Idea of Singapore. Commentary, 22, 2-127.
  • Strong, M., & Himber, R. (2009). Islam and the Free Market Economy: the Legal Autonomy of Dubai International Financial Centre. Journal Compilation of Economic Affairs, 36-41.
  • Yeoh, B., & Lin, W. (2012, April 03). Rapid Growth in Singapore’s Immigrant Population Brings Policy Challenges. Retrieved October 08, 2014, from http://www.migrationpolicy.org/article/rapid-growth-singapores-immigrant-population-brings-policy-challenges
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