Tuesday, November 30, 2021 khaleej times
UAE FREEZONES
SUPPORTING SMEs
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Creating a Niche for Prosperity Ever since the launch of the region’s first freezone in 1985 with the establishment of the Jebel Ali Free Zone, the UAE created innovative concepts in the sector
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s the UAE gets set to ramp up its industry’s global competitiveness, the opportunities for innovators and developers from around the world to benefit from its vibrant business climate are rife, thanks largely to the multitude of incentives on offer. Whether it’s setting up an expansive manufacturing operation or establishing ultra-connected logistics and distribution services, the business and logistical services zones across the emirates offer an enabling business environment with access to worldwide markets, vast energy supplies at competitive tariffs and raw materials. From the Jebel Ali Free Zone (Jafza) in Dubai to the Khalifa Industrial City (Kizad) in Abu Dhabi; from the Hamriyah Free Zone in Sharjah to the free zones in Ajman, Ras Al Khaimah and Fujairah, each offers a strategic location to complement all business needs, according to the WAM reports. Location is everything for companies that depend on globally connected trade routes; access to the consumer is king. This is central to the success of the UAE’s freezones. The UAE has access to more than 100 countries, which have each signed free trade and bilateral agreements. It also has access to more than 22 custom-exempt countries. In the UAE, free zones generally fall into one of four categories: free trade zones, export processing zones, special economic zones, or industrial zones. Free trade zones, typically located near seaports or airports, mainly offer exemp-
tions from national import and export duties on goods that are re-exported. Local services gain, though there is little, if any, value added to the goods traded. Export processing zones go a step further by focusing on exports with a significant value added, rather than only on re-exports. Special economic zones apply a multi-sectorial development approach and focus on both domestic and foreign markets. They offer an array of incentives including infrastructure, tax and custom exemptions, and simpler administrative procedures. Industrial zones are targeted at specific economic activities, say media or textiles, with infrastructure adapted accordingly. Thanks to the favourable prerequisites the UAE’s freezones offer, they are naturally a major contributor to national economic activity. According to the UAE’s Ministry of Economy’s figures, trade of goods volumes coming out of the UAE’s freezones increased to Dh658.9 billion during 2019, an 11 per cent increase from Dh592.5 billion in 2018. They also contribute greatly to economic diversification. Together, their economic output accounted for 38 per cent of the country’s total non-oil trade during 2019, which amounted to Dh1.7 trillion. Furthermore, the total value of freezone imports amounted to Dh340.6 billion in 2019. As for exports, they increased to Dh41.1 billion, and re-exports amounted to Dh277.1 billion. The Covid-19 pandemic demonstrated the importance of an integrated manufacturing environment that can ensure industrial security in times of crisis. Global supply chain disruptions led industrial companies to rethink the importance of having their partners and suppliers within quick reach to prevent disruptions to production. As such, industrial integration proved its value during the pandemic, demonstrating that manufacturers located in the integrated ecosystem, such as specialised industrial zones, have been
The strong prerequisites, combined with the country’s high agility to adapt to challenging times, fortifies the indispensable role of the UAE’s freezones and special industrial zones not just for the nation, but the global markets that depend on their productivity and performance.
much more resilient when faced with supply chain shocks. Despite the challenging times, the UAE ranked high on the list of the world’s safest countries during Covid-19, thanks to its ability to address the challenges the virus imposed in the industrial and commerce sectors globally. The strong prerequisites, combined with the country’s high agility to adapt to challenging times, fortifies the indispensable role of the UAE’s freezones and special industrial zones not just for the nation, but the global markets that depend on their productivity and performance. It’s a role that Operation 300bn will only further enhance as the nation drives towards becoming a regional and international industrial hub. The Mega Transformation The freezone ecosystem has witnessed a tremendous growth in the last 35 years in the UAE, thus transforming the Arab world’s second largest economy as one of the most sought-after global destinations for entrepreneurs, global investors and conglomerates. Host to around 50 freezones, the UAE ranks top in the world with the most di-
verse range of vibrant economic clusters, and with several more in the pipeline, it will continue to retain that position in its amazing journey towards a post-oil era. Like elsewhere, free zones in the UAE, as the world “free” denotes, are “free from normal regulation” and offer foreign investors 100 per cent ownership in companies registered within them, without charging corporate taxes, import and export duties, 100 per cent repatriation of revenues and profits, reduced documentation and smoother recruitment and visa processes for employees. In the UAE’s remarkable diversification and non-oil industrialisation programme, freezones have been playing a critical role over the years. They have been pivotal in powering the economy to higher growth trajectory by not only attracting foreign investment but also by empowering the private sector to play a central role at reducing its economic dependence on oil, while creating employment. They have also been instrumental in making the UAE adaptive to the fast changing technological and industrial advancements. In collaboration with Abu Dhabi Residents Office (ADRO), a division recently
launched by the Abu Dhabi Department of Economic Development (ADDED), Masdar City Free Zone is already working to promote the Golden Visa to eligible candidates under the qualifying sectors including, investors, entrepreneurs, specialised talents, researchers in various fields of science and knowledge and students with promising scientific capabilities. ADRO is dedicated to helping new residents settle into Abu Dhabi and supports the integration and harmonisation of expatriates with the local culture and society. Abdulla Balalaa, Executive Director, Masdar City, praised the role of the Abu Dhabi Residents Office in reinforcing Abu Dhabi’s position as a leading global hub that continues to promote economic diversification, empowering global talent, and supporting the emirate’s sustainable development. “The Golden Visa is of particular relevance to Masdar City as it is the region’s centre for the research and development of sustainability-focused innovation and technology. Attracting, retaining, and producing the world’s best talent in these key industries, is a fundamental driver to achieving a more sustainable and prosperous future for everyone,” said Balalaa. — rhonita@khaleejtimes.com
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khaleej times Tuesday, November 30, 2021
UAE FREEZONES SUPPORTING SMEs
A Creative Hub
Sharjah Media City (Shams) aims to become a leading regional and international centre of media technology, noting that national cadres are capable of accomplishing significant achievements, says Dr. Khalid Omar Al Midfa, Chairman, Shams
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ffering creative global services based on establishing a comprehensive business community and a hub for small and medium-sized enterprises (SMEs) in a variety of sectors, most notably the media sector, as well as on training media cadres to advance the media and innovation sector, Shams is keen to become a reputed media centre. “For four years, Shams has launched many initiatives, most notably incentive programmes supporting investors in the media sector. During the pandemic last year, Shams offered a 20 per cent discount on licencing fees and a discount of up to 25 per cent for packages for several years,” Dr. Al Midfa explained. The number of companies located in Shams in the first quarter of 2021 increased by 28 per cent, noting figures highlight a 3.4 per cent increase in the overall number of companies operating in freezones in the UAE, totalling 60,600 at the end of the first half of February. He also noted a 60 per cent
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Streamlining Business Setups
Dr. Khalid Omar Al Midfa Chairman, Shams surge in foreign direct investments (FDI) in Sharjah in the second half of 2020 compared to the same period of 2019, adding in 2020, FDIs around the country achieved a growth of 44.2 per cent compared to 2019. With an established ‘Virtual Office’, which enables SMEs to conduct their affairs without renting an office, Shams has helped launched many creative projects. “Shams is part of the preparations for the next 50 years, as we have a clear vision for the future of the media sector in Sharjah and the entire country. Shams also creates economic opportunities for investing in the media, real
Shams is part of the preparations for the next 50 years, as we have a clear vision for the future of the media sector in Sharjah and the entire country.
estate and other sectors,” he further said, adding that under the framework of its preparations for the next 50 years, Shams aims to achieve human capacity building for citizens and support the economy by providing new opportunities, which will increase its competitiveness. On the efforts of Shams to overcome the repercussions of the coronavirus (Covid-19) pandemic, he stressed Shams has overcome these repercussions by ensuring continuity of businesses in the free zone. Speaking about women’s empowerment within Shams, Dr. Al Midfa said that many female cadres are working in leading positions in the free zone, in addition to female entrepreneurs who own promising investment projects. As social media takes over, Shams aims to train a new generation of influencers through series of accredited academic and training courses to boost their marketing skills and enable them to benefit companies in the UAE and the rest of the region, Dr. Al Midfa stated.
(Left to Right) George Hojeige, Chief Executive Officer; Neil Petch, Chairman and Co-Founder; and Geoff Rapp, Co-Founder of Virtuzone
Virtuzone collaborates with UAE freezones to advance local entrepreneurship
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pioneer in the UAE’s business setup industry, Virtuzone is a leading corporate services provider whose story started from the need to fill a market gap — enabling entrepreneurs to navigate the country’s unique business environment and guiding them into making the right choices, from the start. Entrepreneurs might find it hard to let their ideas flow when their minds are occupied with administrative tasks. With more than 60 different business jurisdictions, the UAE’s unique corporate landscape can be a huge advantage, but can also make the business setup process challenging. Being an entrepreneur himself
and seeing how easy it is to get lost in the process, Virtuzone CoFounders, Neil Petch and Geoff Rapp, established the company in 2009 to provide entrepreneurs with a smarter, simpler and more affordable alternative to doing business in the UAE. Virtuzone has formed strategic partnerships with key free zones, allowing them to cut through lengthy procedures and remove uncertainty in the process, while helping entrepreneurs choose a free zone, licence type and business activity that is most advantageous for their company. To date, Virtuzone has enabled over 60,000 entrepreneurs to successfully set up their businesses in the UAE, a feat that involves working closely with free zone authorities to continuously support the nation’s business sector, boost economic activities and further attract foreign direct investment. From catering to an untapped market to becoming the UAE’s
preferred corporate services provider, for over 12 years, Virtuzone has unfailingly used its position as the most trusted corporate services provider in the UAE to empower entrepreneurs and businesses, while helping free zones achieve their goals. As such, Virtuzone has garnered major accolades and recognitions from free zone authorities through the years, including ‘Top Performing Agent in 2020’ from Dubai South and ‘Top Performing Consultant Award 2020’ from Dubai Multi Commodities Centre (DMCC). Looking into the coming year, Virtuzone envisions building stronger and closer partnerships with government agencies to mutually innovate corporate and legal processes involved in company incorporation, while continually creating a pro-entrepreneur ecosystem that can be replicated across all business sectors in the country.
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