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Internet Set to Transform Mideast Trade

by Sami Aboudi


DUBAI , November 11, 1999, (Reuters) - Electronic commerce is slowly changing the Middle East's traditional face-to-face bargaining as businessmen and shoppers learn to scan cyberspace.

Experts at Gitex 99, the Middle East's largest information technology show in Dubai, said growing demand for personal computers, increased Internet awareness and the expansion in credit card usage was fuelling electronic commerce in a cash-rich region with a long trading tradition.

``Everything is in place. We now have a sufficient population of Internet users, we have a large number of credit card holders and we have payment services just about becoming available in several countries,'' said Ayman Abouseif, manager of marketing and technology solutions at Oracle Corp (Nasdaq:ORCL - news).

``People are already experiencing electronic commerce...So it is happening,'' he added.

While business-to-consumer trading in the Middle East currently represents only a fraction of that in more developed Western markets, Abouseif and other experts say the potential, especially in wealthy Gulf countries, is enormous.

Robert Eckelmann, Intel Corp (Nasdaq:INTC - news) general manager for Europe, the Middle East and Africa said the value of electronic commerce in the Middle East was set to grow to over $1 billion in 2002 from around $100 million expected to be spent in 1999.

``Even that figure is a very low estimate and it could be substantially more,'' Eckelmann said.

Humble Beginnings

Experts say some Middle East retailers are already offering products on the Internet. Cyberspace storefronts in the United Arab Emirates and Bahrain feature a range of goods from expensive jewelry to brand-name perfumes. Tourists flocking to Dubai can now book a golf match on any of the emirate's 18-hole courses on the Internet.

``Software is very popular, electronics, health and beauty items and jewelry are becoming popular,'' said Anup Antony, webmaster at the Abu Dhabi-based Blue Horse and Group, which rents out shop fronts for UAE businessmen on its site.

He said there was a long queue of businesses lined up to rent space on his company's site, which he said was fetching more than 16,000 hits per week. ''When we started, we hoped we would grab the imagination of the public. But the response was much more than expected,'' Antony said.

The Dubai-based Magrudy bookshop was another success story.

With some 30,000 titles on offer, many of them on local-interest subjects, a company spokesman said sales had increased by 10 percent with overseas customers showing considerable interest.

Electronic commerce in Bahrain was officially launched in September. The Bahrain Telecommunications company says its site provides applications for various kinds of electronic trading, including business-to-business and business-to-consumer.

In Saudi Arabia, where the Internet was introduced only at the beginning of the year, the kingdom has appointed a body to prepare regulations for launching electronic commerce.

Impediments To Electronic Commerce

But traders say that the road to full utilization of the Internet was still thorny.

Omran Hamdan, IT manager in charge of development and e-commerce technology at the Dubai-based Al-Yousuf Universal said apart from the small number of Internet users in the Middle East, many are still wary of using credit cards over the Internet for business transactions.

``Most Internet users were logging on through Internet cafes rather their own connections,'' Hamdan said. ``As far as we in the Arab world are concerned, we are still sleeping,'' he added.

Hamdan said banks need to expand credit card issuing, local telephone companies and Internet Service Providers must lower the costs of Internet connections and customers must show less reluctance to use their credit cards.

Promising Future

But many experts were optimistic, pointing to increased government support for computer education in Egypt, Jordan, Syria and the UAE and growing demand for personal computers, expected to top 400,000 in 1999.

Plans to launch an Internet city in Dubai were expected to have a far reaching impact on the entire region, experts say.

Dubai Crown Prince Sheikh Mohammad bin Rashid al-Maktoum said the project would include setting a free-trade zone for business done on the Internet and a university offering courses in Internet business, finance, marketing, multimedia and web site design.

``After Sheikh Mohammed made his announcement, we have begun to see more interest in electronic commerce,'' said Hamdan.