Dubai's Free Zone Trade Registers AED394 Billion in Nine Months

Dubai-UAE: 22 December, 2018 – His Highness Sheikh Ahmed bin Saeed Al Maktoum, Chairman of the Dubai Free Zones Council (DFZ Council), noted that Dubai's free zones have made a significant contribution to the growth of non-oil trade. Free zone trade in Dubai hit AED394 billion in the first nine months of 2018, accounting for 41 percent of the emirate's total trade during the same period and marking a growth rate of 22 percent. Imports amounted to 54.5 percent at AED215 billion, while exports and re-exports reached 45.5 percent at AED179 billion. Overall, free zones have generated 31.9 percent of Dubai's GDP.

His Highness Sheikh Ahmed bin Saeed Al Maktoum added that this growth is due to the efforts on the ground and promotional campaigns of the free zones to attract foreign direct investment to Dubai. He stressed that the achievements of the free zones testify to the emirate's attractiveness for investors and businessmen across sectors.

The Chairman of the DFZ Council pointed out that China topped the list of Dubai's largest free zone trade partners in the first nine months of 2018 with a total trade volume of AED59 billion. Saudi Arabia placed second globally and first in the Arab region with a trade value of AED34.2 billion, closely followed by India with AED34 billion. He noted that with more than 41,000 companies employing over 354,000 people, Dubai's 24 free zones are key drivers of the emirate's and the wider UAE's economy.

Top-notch Economy

His Highness Sheikh Ahmed bin Saeed Al Maktoum praised the outstanding performance of Dubai's free zones during the first nine months of 2018 and highlighted their role as important economic hubs and centers of foreign direct investment that are poised for growth and expansion. He added that Dubai's economy relies on the efforts of the free zones to diversify the national economy and explore the non-oil future in line with the objectives of the Dubai Plan 2021 to elevate the emirate's global status in all aspects and to establish its economy as a major contributor to the global economy.

His Highness Sheikh Ahmed bin Saeed Al Maktoum noted that free zones support the strategic objectives of Dubai's leadership, and its plans to build a strong and competitive economy based on diversity as a fundamental pillar. He pointed out that the free zones' approach has strengthened the confidence of foreign investors in the emirate's economy and its sustainable growth in the short and long term. This aligns with Dubai's keenness to develop its role as a link between markets of the East and West while serving as a unique global model for identifying and pursuing business opportunities despite the challenges facing global trade.

His Highness Sheikh Ahmed bin Saeed Al Maktoum emphasized that free zones reflect the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, to transform Dubai into the smartest city in the world through leveraging its state-of-the-art infrastructure and attractive investment incentives to position it as a gateway into the region and a preferred destination for global companies in the field of smart and sustainable cities.

His Highness Sheikh Ahmed bin Saeed Al Maktoum directed Dubai's free zones to focus their efforts in 2019 on adapting to the global economic climate that is witnessing a recovery while maintaining their outstanding performance in attracting foreign investments and supporting economic development.

Pioneering Model for the World

His Highness Sheikh Ahmed bin Saeed Al Maktoum noted that Dubai's free zones lead the way in providing integrated services that enhance the flow of global investments and facilitate trade. They also serve as a proof of concept for, and an accelerator of, innovative economic solutions that are up to date with the latest trends in digital transformation, smart services, freehold ownership, and flexible economic and regulatory frameworks.

His Highness Sheikh Ahmed bin Saeed Al Maktoum stressed that the positive results are due to the Council's keenness to boost the participation of all free zones in Dubai in stimulating the emirate's economy and increasing its competitiveness on the global trade landscape. He pointed out that Dubai's free zones have enabled the rise of new economic sectors that support the objectives of the UAE Centennial 2071.

His Highness Sheikh Ahmed bin Saeed Al Maktoum added that the ability of Dubai's free zones to provide a conducive environment for the set-up and operation of companies of all sizes and stages of the life cycle, active in diverse sectors, has enhanced their attractiveness over the past years. In addition, Dubai's strategic geographical location makes it ideal for companies aspiring to expand in the region or to open their regional headquarters to increase the efficiency of global supply chains and trade routes.

His Highness Sheikh Ahmed bin Saeed Al Maktoum highlighted the keenness of Dubai's free zones in realizing the vision of the Government of Dubai to further advance the commercial capabilities of the emirate through expanding trade and economic relations with various countries around the world. He also pointed out that Dubai's winning bid to host Expo 2020 allows free zones to play an even more active role in consolidating Dubai's pivotal position on the international trade map, improving its competitiveness, and strengthening its leadership in building bridges of global economic cooperation.

His Highness Sheikh Ahmed bin Saeed Al Maktoum noted that the results achieved by Dubai's free zones year on year are testament to the strategic vision of the Government of Dubai. He emphasized that the geographic location of Dubai on the global trade map and its open skies policy make it a preferred destination for entrepreneurs across sectors to base their business.

Commending the pioneering approach implemented by Dubai's free zones, His Highness Sheikh Ahmed said it encourages local and international investors from different fields to diversify their portfolio, and enables easy access to outstanding trade opportunities for all. Through an internationally standardized legislative framework and an advanced smart services system, the free zones drive entrepreneurship and facilitate transactions for capital owners while guaranteeing efficiency, transparency, and business prosperity.

Effective Measures to Boost Success

In 2018, the DFZ Council carried out a series of proactive steps and decisions that helped achieve the current growth. Notably, the Council introduced lower business fees within free zones in response to the directives of His Highness Sheikh Mohammed bin Rashid Al Maktoum to reduce the cost of doing business and facilitate investments.

Furthermore, the DFZ Council signed a memorandum of understanding (MoU) with the Department of Economic Development in Dubai (DED) to streamline business practices and operations for free zone-based companies that boosted various economic sectors and attracted foreign investment while strengthening Dubai's position as an ideal destination for setting up, operating, and growing a business.

The MoU directs free zone establishments seeking to perform service activities in Dubai to provide an electronic link for the exchange of information between the relevant free zone and DED. The entity requesting the operations permit is also required to obtain the approval of its respective free zone authority and submit an application to DED in line with the established procedures after ensuring that the service to be authorized does not fall within the remit of any other regulatory body in the emirate.

Integrated Efforts

In 2018, the DFZ Council focused on enhancing the integration of comprehensive economic development efforts with other relevant institutions and agencies. The Council held bilateral meetings with bodies such as the Department of Tourism and Commerce Marketing to discuss the best ways of cooperating to promote growth, achieve sustainable development, and leverage joint economic opportunities to attract foreign investment.

The DFZ Council also inked another agreement with DED to include the customers of free zone companies in the consumer protection system, resulting in higher transparency and consumer confidence as well as a faster response to customers' requirements.

Moreover, the Council initiated cooperation with the Federal Tax Authority to facilitate the transactions of free zones and investors with the Authority, and contributed to Dubai's promotional plan for attracting foreign companies and investments to the emirate.

E-Commerce

In 2018, the DFZ Council implemented an e-commerce initiative in coordination with various government and private sector entities with the aim of transforming Dubai into a preferred e-commerce destination in the region and stimulating the emirate's economy through attracting foreign investments into the field.

In collaboration with the security authorities and Smart Dubai, the Council launched a unified online platform for free zones that speeds up licensing procedures and approvals, in addition to improving accuracy.

The Council also reviewed the Dubai Blink initiative, which seeks to set up the first digital platform for free zones that leverages artificial intelligence and blockchain technologies to power interaction between companies and institutions. The initiative will open new opportunities for investment and redefine the concept of investment development in free zones.

Unified Data

In 2018, the DFZ Council completed the first phase of consolidation of the Free Zones Database in cooperation with Dubai Statistics Center. The unified database system accelerates the response of free zones in meeting the needs of customers, investors, and strategic partners, and enhances their growth opportunities in the near and long term.

The database is particularly relevant given the rise of economic concepts based mainly on data and the accuracy of their analysis and classification, and enables stakeholders to benefit from the applications of fifth-generation communications, big data, and blockchain technology that protects data and facilitates digital transactions across the world.

It also leverages other internet applications and cutting-edge artificial intelligence technology, and encourages entrepreneurs and emerging companies in promising new disciplines to bring their projects to fruition in Dubai.

Comprehensive Strategy

In 2018, the DFZ Council worked with various free zones to develop a comprehensive strategy that contributes to predicting promising opportunities, preparing for upcoming challenges, and supporting free zones in marketing themselves locally, regionally, and globally.

Moreover, the strategy upholds the pioneering position of free zones in creating initiatives that attract investment, stimulate SMEs, and motivate entrepreneurs and innovators from around the globe to choose Dubai as a preferred business destination for its vibrant environment, and enabling business regulations and facilities.

The strategy also supports the integration of efforts of Dubai's diverse free zones in contributing to the implementation of the emirate's initiatives that aim to continue its journey of excellence, such as the Smart Dubai initiative. Furthermore, it drives the execution of state-of-the-art strategies in fields such as artificial intelligence, advanced sciences, advanced skills, and supports building the national quality of life framework, as highlighted during the latest edition of the UAE Government Annual Meetings.

Freedom of Movement

In line with the nation's ambitions to top competitiveness indicators and boost its ease of doing business ranking, in 2018, the DFZ Council members agreed that enabling the transfer of branches of companies among Dubai's free zones will create a conducive environment for expansion, which boosts the volume of business across the emirate.

Governance

The DFZ Council also examined measures to combat money laundering and the financing of terrorism in line with international standards to ensure Dubai's and the UAE's sustained top ranking in this domain. One suggestion was to establish an integrated and autonomous department within each free zone focused on regulation and finance that would oversee the preparedness and compliance of the respective free zone in these aspects.

Success Story and Role Model

Chaired by His Highness Sheikh Ahmed bin Saeed Al Maktoum, Chairman of the Dubai Civil Aviation Authority and Chairman of the Emirates Group, the DFZ Council comprises 24 free zones, including Jebel Ali Free Zone (JAFZA), Dubai International Financial Centre (DIFC), Dubai Creative Clusters Authority (DCCA), Dubai Airport Freezone (DAFZA), Dubai Multi Commodities Centre (DMCC), Dubai South, Dubai Silicon Oasis Authority (DSOA), Dubai World Trade Centre (DWTC), Dubai Healthcare City (DHCC), Meydan Free Zone, and International Humanitarian City (IHC).

The achievements of these free zones in attracting foreign direct investment have been integral to Dubai's success, making them the subject of extensive economic studies on how to stimulate the local economy and linking them to the most important blocs of the global economy. This success story has encouraged many countries in the region, and the world at large, to draw inspiration from Dubai's experience, and include similar free zone development plans in their strategic goals and long-term vision.

Dubai initiated the establishment of free zones to encourage foreign trade, attract foreign investment, and thereby enhance its strategic position. The free zones complement Dubai's and the wider UAE's political stability, flexible legislations, competitive tax policies, and advanced infrastructure to shape a liberal economic climate conducive to sustainable development.

With their outstanding facilities that create a dynamic environment for startups, SMEs, and creatives, the majority of the free zones in Dubai serve as models for success on a regional and global level.

Dubai free zones offer 100 percent foreign ownership to registered companies within their ecosystem, enabling them to enjoy tax and customs benefits, such as tax exemptions on exports and imports, and other trade concessions, including zero restrictions on employment or sponsorship.