Economic Environment of Business

Free Zones in UAE

HSBC Economic Bulletin of 2001 second quarter http://www.econresearch.com/Datapak/Economi c/hs01q2b.html
Shakeel Ahmad, XLRI

Free Zones - Features

Complete freedom of ownership to foreign investors All shipments of goods are exempt from Customs duty with no time limits. Investors are not subject to municipal taxes on rental of industrial or office space.

Free Zones - Features

Centralised service (JAFZA) which handles government relations on behalf of investors. Convergence between worldwide trend towards economic liberalisation & obligations of the UAEs anticipated membership in the World Trade Organisation

Free Zones - Features

UAE had taken the lead in developing free zones. Remarkably successful in attracting foreign investment. All new foreign investment in the UAE gravitates to the free zones. With open economy and sound policies, U.A.E.has turned oil curseinto a blessing IMF Survey

Free zones in the UAE Name Operating

Ahmed bin Rashid Free Zone Ajman Free Zone Jebel Ali Free Zone Dubai Gold and Diamond Park (a) Dubai Airport Free Zone Dubai Ideas Oasis Dubai Internet City Dubai Media City Knowledge Village Fujairah Free Zone Hamriyah Free Zone Ras Al Khaimah Free Zone SAIF Zone

Emirate
Umm Al Qaiwain Ajman Dubai Dubai Dubai Dubai Dubai Dubai Dubai Fujairah Sharjah Ras Al Khaimah Sharjah Abu Abu Abu Abu Dhabi Dhabi Dhabi Dhabi

Establishment
1988 1988 1985 2000 1999 2000 2000 2000 2002 1987 1995 2000 1995 ... ... ... 1996

Designated
Al Ain Free Zone Musaffah Free Zone Ruwais Free Zone Saadiyat Island

Does it come Free?

Cost of Incorporation: much higher Equity Capital required (minimum one million in JAFZA). What about Cost of Space? Between US$22 and US$33 /foot2 /year. Dubai Media City: Annual licensing fee US$4,000. Jebel Ali: most expensive but most extensive infrastructure most comprehensive range of services.

Why UAE?
Strategic Central Location. The infrastructure, communications and quality of life. Simplest possible relationship with government. Not just Business Freedom!

Why Free Zones?

Most industrialised countries do not have free zones. Hong Kong and Singapore do not have free zones. Bahrain, rated the most free economy in the Arab world: nationwide free zone. Future of UAE: WTO will change the structure. Soon.

Table 1. Middle E t and s elected other countries : economic as Overall Country Overall Foreign Property rank s core inves tment rights 15 Bahrain 2 2 1 23 United Arab Emirates 2.15 3 2 45 53 58 60 70 72 76 79 88 121 134 145 151 153 155 1 2 3 Source: Jordan Kuwait Tunis ia Oman Qatar Saudi Arabia Morocco Algeria Lebanon Egypt Yemen Syria Iran Libya Iraq Hong Kong Singapore New Zealand The Heritage Foundation. 2.7 2.75 2.85 2.9 2.95 3 3.05 3.1 3.15 3.55 3.75 4.1 4.55 4.75 5 1.35 1.55 1.7 2 4 2 4 3 3 2 2 3 3 4 4 4 5 5 1 1 1 3 2 3 3 3 3 4 4 4 3 4 4 5 5 5 1 1 1

JAFZA: Over 2200 companies from 100 countries

America 10% Asia Pacific 28%

Europe 27%

GCC & ME 35%

JAFZA: Over 2200 companies from 100 countries

Acer, Black & Decker, Compaq, Daewoo, GAP, Honda, Johnson & Johnson, Nestle, Nissan, Nivea, Philips, Samsung, Sony, Bridgestone, Bayer, HewlettPackard, Xerox, Nokia, DaimlerChrysler, Toshiba

JAFZA: VOLUMES (1979 to 2002)

60000 50000 40000 30000 20000 10000 0 Year 1979 to 2002 Year Total Vessels Total Tonnage (x1000)

DIC: Dubai Internet City

Dubai Internet City is the Knowledge Economy hub of the region. Target an area stretching from Egypt to India, and from South Africa to the CIS comprising of 1.6 billion people and GDP of US$ 1.1 trillion. Serve IT and Telecom companies, multimedia businesses, Internet startups, remote services providers, venture capitalists and incubators.

DIC: Dubai Internet City

DIC is the Middle Easts biggest IT infrastructure built inside a free trade zone. While U.A.E. GDP represents 17.4% of GCC total, it has a 20.3% market share of the IT market. World-first and largest implementer of IP Telephony.

DIC: WORLD-WIDE PRESENCE

Number of Companies in DIC : 325

Sub Continent 19% Asia Pacific 4%

Middle East 27%

Africas 2% UK & Europe 33% Americas 15%

Middle East

Africas

Americas

UK & Europe

Asia Pacific

Sub Continent

THE GOLD & DIAMOND PARK

The Gold & Diamond Park is part of the Jebel Ali Free Zone Area.

DUBAI MEDIA CITY

Phase I launched in January 2001, houses around 96 media companies across all media segments. PHASE II Opened in August 2002. PHASE III: Under Construction. BOUTIQUE OFFICES: Opening June 1st, 2003.

DUBAI CARS & AUTOMOTIVE ZONE [DUCAMZ]

An area of 8 million sq. ft TRADING IN USED CARS. Left-hand drive vehicles: Exported into the local markets. Right Hand driven vehicles: Mainly exported to India, Afghanistan, Pakistan, Yemen & other African Countries. www.ducamz.co.ae

AJMAN FREE ZONE [AFZ]

Cheap Energy. Economical wage structure and easy access to vast work force. Total exemption from all import and export duties. Total elimination of all service charges and hidden fees. Exceptionally low handling charges. Low lease prices. Low tariffs in the region.

Dubai Knowledge Village

Under Dubai Technology and Media Free Zone (TECOM). Knowledge Village is a vibrant, connected learning community that will develop the regions talent pool and accelerate its move to the knowledge economy. Work with Dubai Internet City and Dubai Media City to develop the skills and know-how of the industry.

SHARJAH AIRPORT INTERNATIONAL FREE ZONE [SAIF]

Where Fortunes Are Made

http://www.saif-zone.com

UAE: Per Capita GDP & BOP

UAE: Exports & Imports

UAE: Real GDP Growth & Current Account Balance

UAE: Fiscal Bal & GDP Per Capita adjusted for PPP

GCC market indicators Population, Exports, $m Imports, $m Re-exports, $m Air m passengers end-2000 1999 1999 1999 or latest year 1999 Bahrain 0.7 4,088 3,588 95 b 3,417,216 Kuwait 1.9 12,192 7,617 226 b 3,795,218 Oman 2.4 7,094 a 4,678 1,183 2,799,922 Qatar 0.6 5,792 a 2,765 a 151 b 3,063,989 Saudi 20.2 45,730 a 28,032 479 27,041,165 Arabia UAE 3.1 28,153 a 32,518 a 17,374 15,387,697 GCC total 28.9 103,050 79,198 19,509 55,505,207 Source: population estimates by Edwards Economic Research Inc; exports and imports from International Monetary Fund

GCC: conventional oil resources as of December 31, 1996 Units: billion barrels Cumulative Reserves, Yet to be Ultimate Depletion Depletion production median discovered recovery midpoint rate to date probability date Bahrain 1 0.1 0.1 1.2 1976 16.40% Kuwait 27 60.5 7.5 95 2017 2.70% Neutral 5.4 4.7 1.9 12 1999 1.80% Zone Oman 5 6 1 12 1998 4.80% Qatar 5.3 4.2 0.5 10 1994 3.60% Saudi 77.3 202.2 20.5 300 2013 3.00% Arabia UAE - Abu 14 62.3 3.7 80 2017 2.80% Dhabi - Dubai 3.1 1.5 0.3 5 1991 5.90% - Sharjah 0.4 0.4 0.4 1.2 2006 2.10% Total 138.5 341.9 36 516.4 Source: Oil and Gas Journal, April 7, 1997

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