Should funeral business rest in privatisation?

There is a stirring in the coffin business that is throwing the lid open on challenges facing the funerary industry. High rent to the government, increasing material costs and reduced number of repatriated labourers have contributed to the 92percent hike in coffin prices recently, according to the company that sells them exclusively in Dubai.A public outcry rose when Al Shindagha Trading raised coffin prices to Dh 2300 from Dh1200 in January. The Dubai Health Authority (DHA) has reduced the lease on the company’s office space at Al Qusais Embalming Center to Dh 900,000, the company manager told Gulf News. This allowed them to reduce coffin prices to Dh1500 while earning a 15 to 20 percent profit margin, he added. Now, members of the funerary services industry are calling for the break up of this monopoly on coffins and privatizing the entire funerary industry, where most of the complex process is currently handled by the government.Free trade will promote healthy competition, reduce prices, give customers a wider choice, grow the local coffin making business and allow the government to establish much needed standards for funerary services, they argue. The DHA invites bids for funeral operators to rent office space in their premises and sell the coffins used for the repatriation of bodies. The company paying the highest rent to the DHA wins the bid Al Shindagha Trading has won another three-year contract. “Five years ago, rent was Dh 120,000, then it was Dh 450,000 and now its Dh 900,000. So when rents rise this affects price, no way it will remain the same,” said the manager, who asked not to be named. The company has also seen the cost of raw materials for making coffins rise in the past few years, he said. Plywood used to make the coffins has gone up from Dh 35 to Dh 72 apiece and steel has more than doubled from Dh 20 to Dh 32, he said. Since the financial crisis, many companies either shut down or fired labourers, thereby reducing the company’s sales. “Most of our coffins were for labourers. Before we sold 150 units, now we’re down to about 90. When you spread costs over fewer products, it goes up,” he said. Coffin sales went down by 40 percent in 2010 and 2011 as contract companies in Dubai downsized their labour, he noted. The company has made a loss of 10 percent with rising costs and reduced sales at the peak of the crisis in 2008-2009, according to him. Other funeral operators say that while material costs have increased, they do not justify the price hike of the simple wooden repatriation boxes. “Prices of materials have gone up but not sufficiently to wind the price increase in coffins,” said Vivian Albertyn, founder of the Middle East Funeral Service, which had also participated in the tendering process. “Prices to go up, but to sell a basic coffin for Dh 1200 still yields high enough profit.” The monopoly on the repatriation coffins means people are being overcharged for the boxes and the growth of the industry is limited, funerary operators say. “The tender is too big, it’s greedy and it doesn’t help people at all,” said Albertyn. Privatisation Rather than tender the process, funerary operators are calling for an open market in coffin-making and privatizing funerary services. “They should have free trade and healthy competition in the market. We don’t mind competition, it grows the industry and the authorities must just embrace it and not give the tender to the person that gives them the most money,” said Albertyn. “Consumers will be affected. They are paying more for an inferior product at that price.” The local coffin manufacturing industry has big potential for growth and business could liven up in future if the monopoly was broken, funerary directors say. “The market for coffins will flourish only if the UAE government gives us permission to have land and funeral homes where we can maintain a cemetery, landscape it and attract the expat community to bury their loved ones here rather than taking them back to their country,” said John Korah, managing director of Gulf Global Repatriations and Air Ambulance (GRAFCO). Locally made coffins are about a fifth of the cost of imported ones, said Albertyn. “In Dubai I don’t see much growth until the DOHMS creates an environment where there will be fair trade for coffins.” To do this successfully, the government needs to develop standards and rules for making repatriation coffins, embalming, hearses and other aspects of the funerary business. “The state has one way to do it and one place and it charges its own fee. If you privatize it, it comes more professional and there’s more customized options for different nationalities and religions,” Albertyn said. Privatization could potentially cut down on the complex process after death, Korah said. “Paying the government a certain fee to have funeral homes, there would be a one-stop shop, not running around after documents, spending time at the immigration and police, it would be user-friendly. Now it’s a big nightmare to get things done.” Funerary directors have been in discussions with the government for privatization plans, they say. “They want the cake and they want to eat it all,” said Korah. “they would have to cut down on staff maybe that’s the reason, and then of course the revenue coming in.”