8 October 2005

DUBAI — The largest e-commerce exchange in the Middle East and the largest oil and gas portal in the world with over 6,000 members, is setting up two e-commerce exchanges in Dubai.

According to the CEO of Oman-based EOS Technologies, Alan Livingston, an e-commerce portal for the construction sector is being built and should be live by the end of this year. The company is in negotiations with the three or four companies to take part in the exchange.

Plans are also afoot to build an e-procurement exchange for the tourism sector and talks are underway with hotel chains to participate in the project. However, the large number of small operators supplying to the sector makes building an exchange more difficult than for the construction industry, where there are fewer and larger suppliers, said Livingston. "Vendors must be able to react quickly so an exchange must replicate this," he said. A tourism exchange portal is also expected to be ready by the end of the first quarter of 2006.

Livingston believes the demand for e-commerce exchanges in Dubai is so strong that it makes sense for EOS to develop the exchanges on its own while looking for potential partners. EOS is in on-going discussions with interested parties. Annual spend through document exchange during 2005 is anticipated to be over $10 billion worldwide.

But the most active build project is in Qatar where a local oil and gas portal should be operating by the end of November. Another is in Kuwait and discussions are also underway with potential partners to develop exchanges in most other MENA countries.

EOS has been highly successful in building an e-commerce exchange in Oman where it has 4,000 members in the oil and gas industries. Members come from both the public and private sectors and membership is by invitation only, from either a customer or a major supplier. The Oman government is supportive of the exchange.

To expand more rapidly around the region, Zubair Corporation of Oman has acquired a 40 per cent stake in EOS. The deal is expected to assist EOS in completing the Middle East regional network by its target of 2006. By that date it is expected to have 50,000 organisations connected to the network throughout the region.

The original idea for the e-procurement exchange came about when Livingston realised that Electronic Data Interchange (EDI) - the transfer of data between different companies using networks such as the internet - was not suitable for the Middle East because the volume of transactions did not make it cost-effective, particularly for SMEs who often carry out small one-off transactions. A better way was to set up exchanges at a local level, thereby facilitating document movement within the industry, so that vendors could efficiently source suppliers and then link these exchanges at a global level — a concept akin to local and global telephone exchanges.

The pricing structure is also similar to that of a telephone, in that the sender pays to send the documentation and it is free to receive it. Pricing is according to the volume of transactions.

The average cost for a transaction is Dh2.50. By participating in the e-procurement exchange companies, SMEs in particular, can cut costs by reducing the time spent procuring supplies, sourcing from the most cost-effective supplier and having available a very clear document trail. And as for the adoption of e-enablement technologies throughout the region goes, Livingston said: "E-enablement is happening more quickly in the Middle East than elsewhere. Because they are not wedded to a certain infrastructure they are more flexible."