Free economic zones in the Middle East, especially the UAE, have come a long way in past few decades, becoming freer in terms of incentives and attracting diverse industries.
Their increased popularity is a sign of foreign investors finding a fertile zone for scaling up, reducing costs and finding a place in the global supply chain. These fenced-in and duty-free areas have become hubs of international trade facilitating transhipment, re-export and international trade.
Of nearly 2,300 free zones across the world, 160 are located in the Middle East, and 47 of them are in the UAE. And the attractiveness of free zones for the private sector can be seen from the fact that these were home to more than 20,000 companies as of 2015, employing nearly 200,000 people and also helping increase the share of the non-oil trade of the UAE, according to a report by the World Free Zones Organisation (WFZO).
Read: The future of Free Zones & its economic contribution
The biggest advantage for private companies to invest in this business havens is liberalized rights of establishment and access to competitive infrastructure, transport and logistics facilities and services, according to an OECD report.
Free zones in the UAE are popular since they offer 100% foreign ownership. It is also valued for local job creation and boosting exports.
Today, free zones in the Middle East are hubs for financial services, trade, logistics, and industrial activity, the biggest ones being Jebel Ali Free Zone, Dubai International Airport & Dubai World Central. In the UAE, these zones help companies re-export their products (without being processed) and enjoy a bigger global market share, in Europe, Asia and Africa.
Read: These 20 Countries Will Dominate Global Growth in 2024
Within the UAE, most free zones are concentrated in Dubai— at 28 as of 2017 and eight in Abu Dhabi.
Some of the biggest sops that continue to attract private sector to these free zones which in turn nurtures the entire business ecosystem, are 100 per cent foreign national ownership of a firm with no requirement of local sponsor or local service agent waiver of corporate taxes, personal taxes and import and export taxes and complete repatriation of revenue and profit.
There is hardly any red tape and the workforce rules are easy, which pulls in more FDI.
Now, two proposed measures in Dubai, with the biggest density of free zones, are expected to make these free zones more attractive to investors: a “one free zone passport” scheme, which will give a single licence for multiple free zones, and letting free zone entities to raise rental contracts to 50 years.
Read: 5 reasons to set up your company in Umm Al Quwain Free Trade Zone
Give these new measures and the continued setting of new and more technologically equipped free zones, investor interest is only expected to go up in these zones.
Read BusinessLive Middle East’s Free Trade Zones & Special Economic Zones Special Report 2019-20
INTRODUCTION: Free-trade Zones & Special Economic Zones
CHAPTER 1: Booming Business of Free Zones
CHAPTER 2: Finding Value in Free Trade Zones
CHAPTER 3: Future of Free Zones
CHAPTER 4: Challenges Faced by Investors in Free Trade Zones
CHAPTER 5: Special Feature – Ras Al Khaimah Economic Zone at a Glance
