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Economic Environment of
Business
Free Zones in UAE
Shakeel Ahmad, XLRI
HSBC Economic Bulletin of 2001 second quarter
http://www.econresearch.com/Datapak/Economi
c/hs01q2b.html
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Free Zones - Features
Complete freedom of ownership toforeign investors
All shipments of goods are exemptfrom Customs duty with no time
limits.
Investors are not subject to municipaltaxes on rental of industrial or office
space.
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Free Zones - Features
Centralised service (JAFZA) whichhandles government relations on
behalf of investors.Convergence between worldwide
trend towards economic
liberalisation & obligations of theUAEs anticipated membership in
the World Trade Organisation
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Free Zones - Features
UAE had taken the lead indeveloping free zones.
Remarkably successful in attracting
foreign investment.All new foreign investment in the
UAE gravitates to the free zones.With open economy and soundpolicies, U.A.E.has turned oil
curseinto a blessing IMF
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Name Emirate Establishment
Ahmed bin Rashid Free Zone Umm Al Qaiwain 1988
Ajman Free Zone Ajman 1988
Jebel Ali Free Zone Dubai 1985
Dubai Gold and Diamond Park (a) Dubai 2000Dubai Airport Free Zone Dubai 1999
Dubai Ideas Oasis Dubai 2000
Dubai Internet City Dubai 2000
Dubai Media City Dubai 2000
Knowledge Village Dubai 2002
Fujairah Free Zone Fujairah 1987
Hamriyah Free Zone Sharjah 1995
Ras Al Khaimah Free Zone Ras Al Khaimah 2000
SAIF Zone Sharjah 1995
Al Ain Free Zone Abu Dhabi ...
Musaffah Free Zone Abu Dhabi ...
Ruwais Free Zone Abu Dhabi ...
Saadiyat Island Abu Dhabi 1996
Designated
Free zones in the UAE
Operating
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Does it come Free?
Cost of Incorporation: much higherEquity Capital required (minimum onemillion in JAFZA).
What about Cost of Space? BetweenUS$22 and US$33 /foot2 /year.Dubai Media City: Annual licensing fee
US$4,000.Jebel Ali: most expensive but mostextensive infrastructure most
comprehensive range of services.
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Why UAE?
Strategic Central Location.The infrastructure,
communications and quality oflife.Simplest possible relationshipwith government.Not just Business Freedom!
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Why Free Zones?
Most industrialised countries do nothave 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.
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Overall
rank
Country Overall
score
Foreign
investment
Property
rights
15 Bahrain 2 2 123 United Arab Emirates 2.15 3 2
45 Jordan 2.7 2 3
53 Kuwait 2.75 4 2
58 Tunisia 2.85 2 3
60 Oman 2.9 4 3
70 Qatar 2.95 3 3
72 Saudi Arabia 3 3 3
76 Morocco 3.05 2 4
79 Algeria 3.1 2 488 Lebanon 3.15 3 4
121 Egypt 3.55 3 3
134 Yemen 3.75 4 4
145 Syria 4.1 4 4
151 Iran 4.55 4 5153 Libya 4.75 5 5
155 Iraq 5 5 5
1 Hong Kong 1.35 1 1
2 Singapore 1.55 1 1
3 New Zealand 1.7 1 1
Table 1. Middle East and selected other countries: economic
Source: The Heritage Foundation.
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JAFZA: Over 2200 companies
from 100 countries
Asia Pacific
28%
GCC & ME
35%
Europe
27%
America
10%
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JAFZA: Over 2200 companies
from 100 countries
Acer, Black & Decker, Compaq,Daewoo, GAP, Honda, Johnson &
Johnson, Nestle, Nissan, Nivea,Philips, Samsung, Sony,Bridgestone, Bayer, Hewlett-
Packard, Xerox, Nokia,DaimlerChrysler, Toshiba
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0
10000
20000
30000
40000
50000
60000
Year 1979 to 2002
Year Total Vessels Total Tonnage (x1000)
JAFZA: VOLUMES (1979 to 2002)
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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 CIScomprising of 1.6 billion people and
GDP of US$ 1.1 trillion.
Serve IT and Telecom companies,multimedia businesses, Internet start-
ups, remote services providers, venture
capitalists and incubators.
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DIC: Dubai Internet City
DIC is the Middle Easts biggestIT infrastructure built inside afree trade zone.
While U.A.E. GDP represents17.4% of GCC total, it has a
20.3% market share of the ITmarket.
World-first and largestimplementer of IP Telephony.
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DIC: WORLD-WIDE PRESENCE
Number of Companies in DIC : 325
Middle East
27%
Africas
2%
Americas
15%UK & Europe
33%
Asia Pacific
4%
Sub Continent
19%
Middle East Africas Americas UK & Europe Asia Pacific Sub Continent
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THE GOLD & DIAMOND
PARK
The Gold & Diamond Park is partof the Jebel Ali Free Zone Area.
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DUBAI MEDIA CITY
Phase I launched in January 2001,houses around 96 mediacompanies across all media
segments.PHASE II Opened in August 2002.
PHASE III: Under Construction.
BOUTIQUE OFFICES: OpeningJune 1st, 2003.
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DUBAI CARS & AUTOMOTIVE
ZONE [DUCAMZ]
An area of 8 million sq. ftTRADING IN USED CARS.
Left-hand drive vehicles: Exported into thelocal markets.
Right Hand driven vehicles: Mainly
exported to India, Afghanistan, Pakistan,Yemen & other African Countries.
www.ducamz.co.ae
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AJMAN FREE ZONE [AFZ]
Cheap Energy.Economical wage structure and easy access
to vast work force.
Total exemption from all import and exportduties.
Total elimination of all service charges andhidden fees.
Exceptionally low handling charges.
Low lease prices. Low tariffs in the region.
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Dubai Knowledge Village
Under Dubai Technology and MediaFree Zone (TECOM).Knowledge Village is a vibrant,
connected learning community thatwill develop the regions talent pooland 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.
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SHARJAH AIRPORT INTERNATIONAL
FREE ZONE [SAIF]
Where Fortunes Are Made
http://www.saif-zone.com
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UAE: Per Capita GDP & BOP
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UAE: Exports & Imports
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UAE: Real GDP Growth & Current
Account Balance
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UAE: Fiscal Bal & GDP Per
Capita adjusted for PPP
GCC k t i di t
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Population,
m
end-2000 1999 1999 1999
Bahrain 0.7 4,088 3,588 95 b 3,417,216Kuwait 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 3,063,989Saudi
Arabia
20.2 45,730 a 28,032 479 27,041,165
UAE 3.1 28,153 a 32,518 a 17,374 15,387,697GCC total 28.9 103,050 79,198 19,509 55,505,207
1999 or latest year
Source: population estimates by Edwards Economic Research Inc; exports and
imports from International Monetary Fund
GCC market indicators
Exports, $m Imports, $m Re-exports, $m Air
passengers
GCC: conventional oil resources as of December 31 1996
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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
Zone
5.4 4.7 1.9 12 1999 1.80%
Oman 5 6 1 12 1998 4.80%
Qatar 5.3 4.2 0.5 10 1994 3.60%Saudi
Arabia
77.3 202.2 20.5 300 2013 3.00%
UAE
- AbuDhabi
14 62.3 3.7 80 2017 2.80%
- 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 36 516.4Source: Oil and Gas Journal, April 7, 1997
GCC: conventional oil resources as of December 31, 1996
Units: billion barrels
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THANK YOU
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