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“Free zones are not going anywhere in midterm future”

UAE wants to position itself as an innovation hub, expert says

Gulf News

Dubai

What will happen to free zones in the UAE when 100 per cent ownership is given to onshore?

Sam Blatteis, co-founder and CEO of The Mena Catalysts Inc, a Gulf-based government affairs consulting company, said that free zones are not going anywhere into the midterm.

“They provide many other benefits to companies including commitments to no corporate taxes for lengthy periods of time, no import or export duties, along with 100 per cent repatriation of revenues and profits. The word ‘free’ in free zones essentially means ‘free from normal regulation’,” he said.

But Sukhdev Singh, executive director at market research and analysis services provider Kantar AMRB, said that free zones have a strong existing business, but they [free zones] will have to offer more value-added services to compete in this scenario.

“It could be in terms of longer incubation for start-ups, technology support, ready infrastructure and even lower costs,” he said.

Jyoti Lalchandani, vice-president and regional managing director for the Middle East, Africa and Turkey at International Data Corporation (IDC), said that free zones will continue to be an attractive location for ICT businesses, given its location, ease of operations (centralised government support) and business-friendly set-up.

“There is a conscious move towards creating dedicated zones around investment areas such as technology, education, design, media, and science, ultimately boosting the growth of Dubai’s economy. An interesting development here is the establishment of innovation centres/hubs.

“A number of ICT firms (such as Cisco, SAP, Oracle) have set up these centres within the zone. Additionally, the Tecom group has created in5, an innovation hub that assists promising start-ups through business set-up, smart labs, creative spaces, mentorship and access to investors,” he said.

He does see the country becoming more of an innovation hub rather than software development hub as there are countries like Jordan, India or Egypt that are much cheaper.

“I don’t think UAE wants to position itself as a software development hub and rather wants to position itself as an innovation hub in a bid to create an ecosystem for entrepreneurs to come and invest in new companies. It wants to create an environment for retaining technical skills. With a 10-year visa, companies can retain talent in the country and they can plan ahead,” he said.

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