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UAE emerges as a major free trade player

Setting up business in UAE's free zones is a hassle-free experience for most investors with minimum paperwork involved and swift clearance

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With 45 free trade zones (FTZs) in operation, the UAE has among the highest number of free zones in a single nation around the globe. Indeed, the World Free Zones Organisation (World FZO), a global not-for-profit organisation representing the international FTZ segment, was launched in Dubai in 2014 by the 14 founding members.

It was set up under the auspices of His Highness Sheikh Mohammed bin Rashid Al Maktoum, the Vice-President and Prime Minister of the UAE and the Ruler of Dubai. Registered in Geneva and headquartered in Dubai, it provides a forum for free zone around the globe.

The International Labour Organisation (ILO) estimates that the number of FTZs has increased from less than 80 in 25 countries in 1975 to over 3,500 in 130 nations today. Shannon Free Zone in Ireland, set up in 1959, is claimed to be the world's first free trade zone.

But the UAE has in recent years emerged as a major FTZ player, with several bustling zones busy with activity. According to the UAE government, Abu Dhabi has four authorities and entities regulating free zone activities. Dubai has more than two-dozen FTZs; the most important being the Jebel Ali Free Zone established back in the 1980s.

Sharjah has three FTZs, and the remaining emirates account for the remaining zones.
"The UAE today has 45 free zones, among the highest of any country in the world," says Saud Salim Al Mazrouei, Director, Sharjah Airport International Free Zone Authority and Hamriyah Free Zone Authority.
"The value of exports from these free zones amounted to $62 billion last year, which was nearly 20 per cent of the UAE's total exports. There are about 350,000 SMEs registered in the UAE at present, contributing 60 per cent of the GDP and employing 86 per cent of the workforce."

Setting up business in free zones is a hassle-free experience for most investors. There is minimum paperwork involved and the applications are cleared swiftly. Leading free trade zones such as Jebel Ali and others in Dubai and Abu Dhabi have drawn in virtually all the top corporates from around the globe. All the top Global Fortune 500 companies have a presence in the FTZs in the UAE.

When the Jebel Ali Free Zone Authority was set up in 1985, it had just 19 companies. Today, it is a dynamic hub, with more than 7,000 companies being operational. In 2017, JAFZA recorded more than $83 billion in trade, accounting for 23 per cent of Dubai's total trade value. JAFZA's top markets were the Middle East (accounting for 40 per cent of trade), Asia (31 per cent) and Europe (13 per cent).

JAFZA was also named the world's Best Free Zone for 2017 in key categories of the FDi magazine's awards for free zones. Increasingly, FTZs are also getting specialised, focusing on specific businesses. In Dubai, for instance, there are FTZs such as the Dubai Multi Commodities Centre, which is the world's fastest-growing free zone. DMCC aims to promote Dubai as a thriving and diverse economy and the global gateway to the Middle East for trade in a wide range of commodities.

The Khalifa Industrial Zone (KIZAD) in Abu Dhabi offers world-class infrastructure with the road network providing direct access to and from Khalifa Port and connecting to the main highway. Its infrastructure is designed and built to facilitate future rail connectivity through dedicated rail corridors, integrating rail freight facilities into a company's operating plans.

The Abu Dhabi Airports Free Zone, a wholly-owned subsidiary of Abu Dhabi Airports, operates a logistics park, business parks and centres and one-stop shop services. These underpin Abu Dhabi's plans to establish itself as a dynamic business centre in support of the Abu Dhabi 2030 Economic Vision.

One of the major factors that have made the UAE a favourite for international companies seeking a presence in the Middle East and the Gulf is its strategic location between Asia and Europe.
Abu Dhabi may be a major oil producing emirate, but Dubai has over the decades emerged as a vibrant trading hub, offering a range of products and services to countries in the Middle East, Africa, Central Asia, Europe, South Asia, South East Asia and other parts of the globe.

Importantly, the free trade zones offer attractive tax and other incentives for the companies. There is 100 per cent foreign ownership, full repatriation of capital and profits, virtually no minimum capital investment, no currency repatriation restrictions, readymade factories and warehouses, abundant and relatively low-priced energy, excellent infrastructure in terms of roads, airports, electricity and water supply, and on top of it minimal paper work for getting clearances.

Not surprising then that the UAE continues to attract numerous companies across various product and service categories every year, as they look for opportunities to expand their business in this part of the globe.

- nithin@khaleejtimes.com

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