Dubai: Trade through the free zones represented 33 per cent of the UAE’s non-oil trade in 2014, according to Sultan Al Mansouri, UAE Minister of Economy.
“Free zones play a key role in globalising and diversifying the UAE’s economies, that adopt the principles of free trade. They help stimulate trade and investment, and facilitate the transfer of skills, knowledge and technology,” he said yesterday at the opening session of the first annual International World Free Zone Conference and Exhibition, which was attended by Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai.
During 2014, free zone trade grew by 16 per cent over the previous year, Al Mansouri said. The UAE today boasts 36 free zones with specialised sectors for trade, clean energy, industry, ICT, media, finance, gold and metals, and health care, he said.
The UAE has driven its economy with a focus on the foreign trade, investment and industry sectors.
These efforts have resulted in strengthening diversification and boosting the UAE’s trade status globally by increasing its competitiveness, according to Al Mansouri.
The UAE has also become the leading Arab country for attracting foreign direct investment. FDI flows increased from $4 billion in 2009 to $11.85 billion in 2014, he said.
Juma Mohammad Al Kait, Assistant Undersecretary Foreign Trade Affairs at the UAE Ministry of Economy, attributed the successful economic model of the UAE to the strength of the structural component and the policy of economic diversification pursued by the country.
“Back in 2000, the UAE had a small oil-dependent economy with a gross domestic product (GDP) of Dh383 billion, which progressively climbed up, growing by 286 per cent to Dh1.4 trillion in 2013,” he said.
He is expecting steady economic growth of five per cent in the coming five years.
“Understanding their importance in ensuring sustained global growth, the UAE government has assigned special focus to ensuring the success of free zones operating within the country,” Al Kait said.
He attributed this success to the country’s ability to provide investors and businesses with advanced infrastructure and enabling services as part of its business-friendly landscape and transparent regulatory environment.
UAE free zones allow 100 per cent ownership, allow the transfer of all profits outside the country, while providing exemptions on customs and tax, he said.
Al Mansouri said that free zones will undoubtedly emerge as an essential and integral part of the national strategy for future economic development and will certainly play a more significant role in global trade in general.
“However, to be truly successful free zones have to offer more than just a place for business with relaxed regulation,” he said.
They need to be established carefully in strategic locations. At the same time, governments have to provide them with the right infrastructure, and implement appropriate regulations for their growth, he said.
The number and scope of free zones that should exist in any country for best results is still debatable. Even if there is such a desired limit, markets in Asia, Europe and the Middle East are still to reach that point, he said.