UAE Freezones: air and sea ports and free zones

You will find here the presentation of the UAE Freezones (air and sea ports and free zones).

Dubai Ports & Free Zones

For centuries, Dubai has been known as the City of Merchants, an allusion to its international trade based on the creek that divides today’s city in two. Wooden vessels continue to load and unload their cargoes. Although such trade remains, Dubai has moved on and at the dawn of a new millennium can boast two highly successful ports competing favorably with other entrepots around the world.

The Ports

Dubai ’s two important marine terminals are Port Rashid and Jebel Ali Port (35 kilometers to the south of the city). Together they comprise the largest port complex in the Middle East. More than 100 shipping lines serve the ports, which makes the complex one of the great transshipment centers of the world. The Dubai Ports Authority (DPA) has managed them since May 1991.

The two terminals have, between them, a total of 102 deep-water berths and 25 gantry cranes. In 1998, 2.8 million (TEUs) passed through the ports, propelling them into eleventh place among world container ports. In the first nine months of 1999, total tonnage handled by the two ports rose by seven percent, when compared with the same period and more than 2 million TEUs were handled.

Supporting the substantial container trade are two repair yards, Middle East Container Repair in Port Rashid and Emirates Container Repair in Jebel Ali. These companies are fully capable of handling the repair of all types of TEU, whether in steel or aluminum.

In addition to container traffic, general cargo is also handled and specialized facilities have been developed to meet the specific demands of such trade such as a 43,000 cubic meter cold store in Jebel Ali, and Timberland, which is a huge storage and distribution center for timber and wood-based products.

The Gulf’s re-distribution centre

Given Dubai’s location at the heart of a vast region which includes the GCC states, Iran, the Indian sub-continent, the CIS, Russia and the eastern and northern littorals of Africa, the twin ports have been developed not only to channel goods to what is a small local market but also, as a hub for distribution to the region. In order to develop to the ports as transshipment centers, the DPA has encouraged the availability of efficient cargo handling, specialized storage facilities, an effective in-house trucking operation and the use of fast, accurate cargo control systems.

As a result of the growth and efficiency of these ports, many multinational companies established a presence in Dubai and Jebel Ali seeking to derive the benefits of being closer to their markets, reducing the supply time and stock investment, as well as achieving reduced transportation costs to destination countries.

Jebel Ali Free Zone

Jebel Ali Free Zone, alongside the eponymous port, was founded in 1985 and is under the management of the Jebel Ali Free Zone Authority (JAFZA) which cooperates closely with the Dubai Ports Authority.

Built around the world’s largest man-made port, Jebel Ali Free Zone includes manufacturing, trading and services companies as well as distribution companies covering the Middle East, the Asian sub-continent, Africa, the former Soviet Union, Eastern Europe and many other locations in the world.

By the end of 1999, the Jebel Ali Free Zone had 1600 companies registered originating from 90 countries. In terms of activities, 70 percent of the companies are involved in trading and 25 percent in industry. The remaining 5 percent are service providers.

A company can be incorporated in Jebel Ali as totally independent Free Zone Establishment (FZE). A Zone Establishment has a distinct legal identity and, contrary to other establishments, can be incorporated with a limited liability limited to the extent of the paid-in capital which is Dhs one million.

The advantages and benefits of a Jebel Ali base include:

  • 100 percent foreign ownership: Jebel Ali Free Zone companies do not need a local partner. JAFZA itself acts as the nominal sponsor;
  • No recruitment/sponsorship problems: the Free Zone Authority also acts as the nominal sponsor of the staff the companies wish to hire. There are no regulations regarding the employment of UAE nationals;
  • 100 percent repatriation of capital and profits: no corporate taxes are imposed and repatriation of both profits and capital is allowed;
  • No currency restriction; Dubai’s trading tradition, is based on the free flow of capital and profits and the absence of exchange control. The Free Zone follows the same policy;
  • No corporate taxes for 15 years: companies operating in the Jebel Ali Free Zone are exempt from corporate taxes for a minimum of 15 years, renewable for a further 15-years period;
  • No personal income taxes;
  • Abundant energy: the Jebel Ali Power Station serves both the water and power needs of the Free Zone;

Dubai ports and the Free Zone contributed to making of Dubai the success story of today and a world-class trading centre. At the beginning of the year 2000, the Free Zone had well in excess of 1600 companies registered.

Dubai International Airport

Dubai International Airport , which expansion was completed in early 2000, is one of the most modern in the world and is currently ranked among the top 20. The airport serves over 7.2 million passengers per year with 90 international airlines reaching out to more than 120 destinations.

Dubai Airport Free Zone

The Dubai Airport Free Zone (DAFZ) became operational on 15 January 1999. The zone is located on 1.2 million square meters of land, including apron space of 473,000 square meters, on the north side of Dubai International Airport. The free zone offers two four-storey buildings, 24 warehouse units and over 200,000 square meters of undeveloped land available for companies to build their own structures.

As DAFZ is situated on the airport perimeter, the activities which are permitted are limited to high value - low volume products, service companies, high technology and IT companies, light industry, assembly operations and activities related to the aviation industry.

A number of multinational companies already having established a presence, including Boeing, Chanel, Matsushita Avionics, Rolls-Royce and many others.

The incentives offered by DAFZ include exemption from corporate tax, import and export taxes and personal income taxes; 100 per cent foreign company ownership; repatriation of capital and profits; abundant and inexpensive energy and excellent air, sea and land transportation links. Licenses to set up must be obtained from the DAFZ which is the competent authority on the matter.

Other Free Zones in Dubai

Dubai Internet City

Announced late in 1999, operational in 2000, the Dubai Internet City, located in the city of Dubai, is the world first Internet free zone. Its mission is to create an infrastructure, environment and attitude that will enable New Economy entreprises to operate locally, regionally and globally from Dubai, with significant competitive advantages.

Dubai Internet city is the first complete Information Technology and Telecommunications center in the world to have been built inside a free trade zone. Dubai Internet City offers modern, ready-to-operate, fully serviced office space catering to the specific needs of today’s new economy companies. These offices offer cutting edge technology and provide both wired and wireless networks.

Dubai Internet City allows 100% foreign ownership of companies, and laws relating to partnerships with local sponsors have been waved. Sales, companies earnings and private income are exempt from taxation.

Dubai Internet City houses the world’s first interrnet e-learning establishment and the a Research & Development Center for new technology initiatives.

Dubai Media City

Dubai Media City is a free zone specially configured for companies involved in media. Dubai Media city allows 100% foreign ownership of companies, and laws relating to partnerships with local sponsors have been waved. Sales, companies earnings and private income are exempt from taxation

Sharjah Ports & Free Zones

For many years, Sharjah was an international trading center with vessels visiting its ports from many parts of the world. Cargo was delivered to jetties alongside Sharjah creek. Today modern port facilities are available on both the emirate’s coasts – the Arabian Gulf and the Gulf of Oman. The main features of both ports are their container handling facilities inter-linked by a dedicated network of transporters which convey goods, under bond, from one port to another, in just three hours.

Sharjah container terminal

The Sharjah container terminal, on the Arabian Gulf coast, was the first such terminal to be completed in the Middle East. With a 586 meter-long quay and a depth of 11.5 meters, two third generation container ships or two “roll-on-roll-off” vessels can be handled simultaneously.

Overall the terminal covers 150,000 square meters with a storage capacity of 8000 TEUs plus a dedicated transit shed and weighbridge. TEU handling has shown 10 percent growth per year.

Khorfakan container terminal

Located on the UAE’s Indian Ocean coast, outside the Arabian Gulf and avoiding the necessity of transiting the Straits of Hormuz, Khorfakan Container Terminal is sited on the UAE’s only natural deep water port. Khorfakan Container Terminal has established itself as the logical container transshipment port of the UAE.

This ultra-modern container terminal now has 1060 meters of berths and 300,000 square meters of storage area capable of accommodating 18,000 TEUs. Together with its sister port in Sharjah, Khorfakan Container Terminal is served by over 30 shipping lines.

One of the latest free zones in the UAE is the Hamriyah Free Zone (HFZ) which was established on Sharjah’s Gulf coast to the north of the emirate in 1995. The concept behind HFZ is the development of a pre-eminent industrial area with access to world markets through the emirate’s sea and airports.

Ten million square meters of land have been assigned as an industrial and commercial area with access to a 14 meter-deep harbor capable of handling petrochemicals as well as bulk and general cargoes. Whilst HFZ authority provides some pre-built buildings it has adopted the policy that investors should have the freedom to develop their own facilities. An international business center with 100 executive suites, as well as labor accommodation, is nevertheless provided.

The incentives offered by HFZ include: 100 per cent foreign ownership, full duty exemption, profit and capital repatriation, 15 years leases, renewable for a further 15 years, corporate or personal tax exemption, good transportation links, dedicated electrical paver, cheap energy, good infrastructure.

As at the end of 1999, 77 companies were incorporated in HFZ, out of which 28 were industrial ventures, 40 were involved in trading and 9 provided services.

Sharjah International Airport, the recipient of the “best international air cargo award” in 1998, is one of the oldest in the Middle East. It has carved out a niche for itself as the biggest air cargo hub in the Middle East and Africa, with connections to 230 destinations worldwide, of which 75 within the CIS. It is the site of Lufthansa’s second largest hub after Frankfurt, with 300 flights monthly moving over 9000 tonnes of cargo.

Sharjah Airport International Free Zone (SAIF-Zone)

Sharjah Airport International Free Zone (SAIF-Zone), the first airport free zone in the world to become ISO certified, is located adjacent to Sharjah International Airport. Established in September 1995 – the SAIF-Zone is the home for nearly 400 companies of which 47 were involved in industry, 259 in trading and 88 in services.

The SAIF-Zone offers fully serviced and furnished executive offices, pre-built warehouse units with adjacent office space, vacant land for private development, a container parking area and temporary storage areas. Also available are facilities for manufacturing, assembling, packaging and import/export/re-export activities.

The incentives available are much the same as those for other free zones in the region, including corporate and personal taxation and duty exemption; 100 per cent foreign ownership; no restrictions on repatriation of capital and profits without and foreign exchange transactions; sponsorship for all staff and 15 years leases renewable for a further similar period.

The SAIF-Zone authority is the competent authority to license companies in the zone. Four types of licenses are offered, these are the industrial, commercial, general trading or service license. As to the legal form, it is limited to a Free Zone Enterprise, a Free Zone Company, a branch of a foreign company or as a branch of a UAE company.

Established adjacent to Ajman Port in 1998, the Ajman Free Zone (AFZ) is capable of accommodating up to 600 companies. By the end of 1999, there were nearly 500 companies licensed by the AFZ authority.

Late in 1999, 24 warehouse units were built within the AFZ and construction commenced on a purpose-designed IT park with 100 office units. The Ajman port has 12 berths capable of handling 1000 vessels a year. In 1998, the value of Ajman’s exports through the free zone exceeded US$ 153 million.

Many of the benefits offered by AFZ are similar to those offered by other free zones. A particular note should be drawn on the total elimination of all service charges or hidden fees, a 20 years renewable lease, a guaranteed 40 years tax and duty fee exemption and the lowest tariffs and lease prices in the region.

The AFZ authority is the competent authority to license companies in the zone. Four types of licenses are offered, these are the industrial, trading, professional/service, national industrial and off shore licenses. As to the legal form, it is limited to a Free Zone entity (capital USD 50,000), a Free Zone Company (capital USD 137,000), a branch of a foreign company, as a branch of a UAE company or an offshore company (capital USD 14,000).

Fujairah Port is the only port of the UAE located the Indian Ocean and therefore avoiding the use of the narrow Straits of Hormuz en route to Arabian Gulf ports. As a result of its location and a relatively calm marine environment, the port has attained a place in the top three bunkering ports in the world.

The port of Fujairah has a one kilometer quay, nearly 200,000 square meters of storage yard, refrigerated facilities exclusively for containers and a repair yard capable of handling both steel and aluminum containers.

The allied free trade zone, which was established in 1987, has grown steadily over the years under the name of the ‘Zone of Convenience’. Incentives offered by the Fujairah Free Zone are similar to other free zones in addition to being on the east coast which represent a reduced sailing time. On presentation of this document and following agreement of the Free Zone Authority, the project may commence.

In late 1999, nearly 90 companies maintained presence here, of which 21 were engaged in manufacturing, 35 in trading and the others were warehousing facilities.

A fairly new free zone located near the Ras Al-Khaimah sea port.

Umm Al Quwain Port and Free Zone

Located 45 kilometers north east of Dubai, Ahmed Bin Rashid Port of Umm Al Quwain, has four quays capable of receiving vessels up to 210 meters in length and with draft of no more than 10 meters. During 2000 an expansion of the port was started to accommodate larger and deeper draught vessels.

Conclusion

Every emirate now has its own free trade zone, with Sharjah and Dubai having extra facilities at their respective airports. There are about over 3500 companies, of various profiles and sizes, operating successfully in these zones. The activities of these companies are not confined to the UAE but reaches out to the Arabian Gulf and other global markets such as those of Iran, the CIS, the Indian sub-continent and east Africa. As these markets grow, so will the free trade zones of the UAE .