How UAE free zones are leading through the crisis
UAE free zones have risen to the challenge with lower fees and bespoke packages
UAE residents may be working from home, but business hasn’t stopped — particularly in the country’s many free zones. Over the past couple of weeks, free zone authorities have further enhanced their already strong digital channels, while slashing business fees and rolling out economic special incentives.
At Sharjah Media City (Shams), entrepreneurs can launch a company from the comfort of their homes within the space of a day. Business owners or shareholders don’t need to be physically present at the Sharjah-based free zone, says Dr Khalid Omar Al Midfa, Chairman of Sharjah Media City. “I am happy to say that our business set-up process, right from registration to payment and documentation, can be completed remotely,” he tells GN Focus.
Not only is our business setup process digitised, but even our customer support is available online for any transactions after business set-up. We have dedicated customer service representatives for each of our companies, who are available to help them avail of our services.
“Not only is our business setup process digitised, but even our customer support is available online for any transactions after business set-up. We have dedicated customer service representatives for each of our companies, who are available to help them avail of our services.”
RAKEZ, the Ras Al Khaimah Economic Zone, achieves similar results with its Portal 360. “At RAKEZ, we used to require our clients to come to one of our offices to set up their company, but that’s now a thing in the past,” says Ramy Jallad, Group CEO, RAKEZ.
Portal 360 allows clients to set up their business remotely with RAKEZ. Clients can register their business with us, given that they meet all the requirements and are able to upload the necessary documents.
“Portal 360 allows clients to set up their business remotely with RAKEZ. Clients can register their business with us, given that they meet all the requirements and are able to upload the necessary documents. Now, almost everything can be done remotely. [Clients] can fill out the forms, upload necessary documents, sign electronically and pay. Just recently, we even implemented the online signing of the memorandum of association.”
Where physical documents are required, the free zone arranges for these to be picked up and dropped off within the UAE.
In September, the UAE was rated the region’s most competitive digital economy and 12th in an annual World Digital Competitiveness Ranking compiled by IMD Business School. Thanks to improvements in capital availability, digital transformation and entrepreneurship, it is now the world’s most agile for business. With their relatively unencumbered operations, free zones have been some of the earliest authorities to take a responsive, digital-first approach.
Faisal Toukan, CEO of Ziina, a smartphone-linked social peer-to-peer (P2P) payments app that is launching in April, says about 90 per cent of the set-up process was completed online. Ziina is part of the Tecom Group’s In5 Tech Centre, a platform to foster innovative start-ups. Tecom runs 11 free zones across the UAE.
“We applied and pitched Ziina to the In5 board, and once approved, the set-up process was easy,” the 26-year-old Jordanian-American says. The In5 team and a partner law firm, LegalIntro, guided him through the process. “Everything from submitting the required documentation for the articles of association to receiving our establishment card (on the Dubai Development Authority’s Axs.ae portal) can be done online. The only offline requirements were that I had to sign a few documents in person.”
Gateway to emerging markets
Toukan says he was drawn to a free zone in the UAE for its geostrategic location and business-friendly environment. “The UAE offers a compelling combination of corporate and income tax exemptions, a strategic location with great access and proximity to the world’s largest and fastest emerging markets, and a government committed to supporting businesses by way of welcoming policies, state-of-the-art technologies and world-class infrastructure. In addition, the UAE is the gateway to the GCC’s largest economy Saudi Arabia, which is a significant factor for tech start-ups in terms of their growth potential and ability to scale fast.”
The UAE offers a compelling combination of corporate and income tax exemptions, a strategic location with great access and proximity to the world’s largest and fastest emerging markets, and a government committed to supporting businesses by way of welcoming policies, state-of-the-art technologies and world-class infrastructure.
Overall, he adds, advantages for start-ups operating within a free zone include easy registration, single-window clearances and one-stop administration services, “thereby offering business owners complete peace of mind”.
Another example is Scale2Dubai, a global entrepreneur programme launched by District 2020, the free zone associated with Expo 2020 Dubai. Successful applicants will be given the support they need to launch and scale up, as well as benefits such as two years of free working space and visa and business set-up help.
The UAE is home to some 50 free zones, special economic areas with relaxed tax and trade rules that are themed around different industries or business sectors so as to be able to promote entrepreneurship in underrepresented economic areas. The strategy saw foreign trade out of Dubai’s free zones alone rise to Dh592 billion in 2019, an 11 per cent increase year-on-year. Free zones across the UAE totalled Dh592.4 billion in value, or 36 per cent of the UAE’s non-oil foreign trade in 2018, the last year for which figures are available.
There’s no doubt that the free zones are a driving force in the growth of the economy in the UAE.
“There’s no doubt that the free zones are a driving force in the growth of the economy in the UAE,” explains Karl Hougaard, Founder and Managing Partner at Trade License Zone (TLZ), a one-stop-shop that helps companies set up business in the UAE.
“Over the past few years in particular, we have seen several new free zones, such as the International Free Zone Authority (IFZA); Ajman Media City and Khalifa Industrial Zone Abu Dhabi (KIZAD), all taking flexibility, cost-effectiveness and customer service to the next level, and providing more aspiring entrepreneurs with a platform to set their business ideas in motion.”
Responsive price efficiencies
Just how quickly UAE authorities respond to the business climate is demonstrated by the way DP World, the owner of Jebel Ali Free Zone, announced cuts of between 50 and 70 per cent in licence registration and administration costs earlier this month for businesses operating in the free zone.
Similarly, IFZA and TLZ have just launched an all-inclusive licence and visa care package that offers a spot saving of Dh11,000 for start-ups, while supporting individuals and families currently in need of visa solutions. The deal offers new start-ups a trade licence and one residency visa for three years for a total of Dh19,555 (inclusive of VAT).
It covers associated costs such as the establishment card (for a year), medical fitness tests, Emirates ID registration and e-channel registration fees as well as office lease agreements, while discounting family dependent visas at 20 per cent. TLZ is further boosting the package with Dh6,000 in add-ons such as office space, website development and VAT consultations. The deal is available until mid-April as of now, Hougaard says, with flexibility on several elements.
Whatever other business challenges entrepreneurs may be facing right now, getting their businesses off the ground shouldn’t be among them.
Dubai Free Zones Council launches economic stimulus initiatives
Measures launched on Saturday include the following:
■ Postponement of rent payments for up to six months
■ Facilitating financial payments through easy instalments on a monthly basis
■ Refunding various security deposits and guarantees
■ The cancellation of a number of penalties for companies and individuals
■ Allowing intra-corporate transfer of labour between companies and sectors operating in the free zones through permanent or temporary contracts without penalties during 2020
GN Focus report