The opening of the Jebel Ali port in 1979 was a significant move for the UAE and the region. It basically signalled the beginning of the UAE’s transition to becoming a global player in maritime trade.
A key push towards creating it as an Arabian trade hub came when the Dubai government established the Jebel Ali Free Trade Zone in 1985, the first in the country and the region, modelled after free trade zones that proliferated in the US after the Second World War. Its original purpose was to support industrial growth around the port, but the concept of ease of business paired with a duty-free status was so successful that it soon became a model for similar concepts in the UAE.
“Jebel Ali Free Zone benefited from the UAE’s strategic location, bridging the East and West, supported by superior infrastructure and well-connected, efficient logistics through multi-modal connectivity,” Chief Operating Officer Talal Al Hashimi said recently. Now home to more than 6,000 companies, including branches of many multinationals, it is by some estimates responsible for close to 30 per cent of Dubai’s GDP.
The zone anticipated what became the norm for all other future UAE free zones: A tax-free climate, no customs for import and re-exports, independence from municipal laws (apart from criminal law), full foreign ownership and repatriation of capital and profits, as well as management by an independent authority that assisted in quick, red-tape-free business set-up, recruitment and additional support services.
“Free trade zones are one of the key drivers of Dubai’s economic growth,”Ahmed Al Ansari, Acting CEO of Dubai South, Dubai’s latest and largest free zone, tells GN Focus.
“Free trade zones are typically clustered ecosystems that have allowed the UAE to diversify its economy away from fossil-fuel dependency by empowering tenant companies to achieve a higher degree of industry specialisation,” Ansari adds.
He says the next level for the zones is to move beyond their role as mere administrative and real estate authorities to being a facilitator of value-added solutions, enabling tenant companies to specialise and become more competitive on a global scale.
Diverse sectors
At present, the UAE hosts close to 40 free trade zones broadly categorised as sea port, airport and mainland free zones. The sectors covered reach from manufacturing and trade to finance, education, information technology, creativity and design, media, health care, environment and green technology, textile and maritime and aeronautic services. Among the new zones under construction, even niche sectors such as flowers, carpets, building materials and auto parts are covered. Other remarkable ones include International Humanitarian City, a logistics centre for the distribution of humanitarian aid, and Dubai International Arbitration Centre — as a free zone for law firms in the Middle East.
Others, such as Ajman and Fujairah Free Zones use price point as a USP — they offer among the lowest rates with which to start a company.
Innovation has spelled success for many zones. Sharjah provided the model for airport free zones in 1995, inspiring similar initiatives elsewhere. Abu Dhabi’s Masdar Free Zone focuses on environmental technology, and hosts the headquarters of the International Renewable Energy Agency. “Masdar City is nurturing the region’s first dedicated clean-tech cluster, anchored by a research institute specialising in advanced energy and sustainable technologies,” said Mohammed Al Fardan, Director of the Masdar City Free Zone, while speaking to Wam news service.
Dubai South’s Ansari could be speaking about any of the zones in the UAE when he says: “The free trade zones at Dubai South are a value-added solutions provider and business facilitator, playing a more direct role in the customer’s success story.”
