Free zones in the UAE: main features

When choosing a free zone for registration, it is important to assess more than just the cost of registration, renewal of the company and the activities offered in the free zone. You also need to consider the infrastructure that is available and the strategic location of each and every free zone.

Generally, based on the proximity of free zones to various logistic hubs, we can divide them all into the following categories:

1) ports-based (Jebel Ali, Kizad, AFZA, Fujairah Free Zone);

2) airports-based (Dubai South, SAIF, DAFZA); and

3) others.

The location becomes an especially important factor, if you plan to import, export, re-export or conduct any other type of trading activity in the country. Companies that conduct trading activities must devise strategy, as to how they will move goods and build logistic chains. To do this, a company needs to be registered in a free zone that is conveniently located and which has the relevant infrastructure.

Naturally, the main transport hubs in the UAE are ports and airports. Practically each of them have free economic zones, adjacent to the port or airport facilities. The port of Jebel Ali is 35 kilometres southwest of the centre of Dubai and is the largest port in the Middle East. In 1985 one of the largest free economic zones of the UAE, Jebel Ali Free Zone (JAFZA), was established around this port. Today the free zone is a home to more than 6000 companies from 120 countries. The port covers an area of 134 sq. kilometres and has 67 berths. It is equipped with the latest technology and has vast storage areas and facilities.

Once Al Maktoum International Airport in Dubai is fully completed in early 2022, it will become the largest cargo airport in the world with a capacity of 16 million tons of cargo per year. Dubai South free zone is located exactly next to this airport. Among the main advantages of this free economic zone is a logistics platform, which includes the Jebel Ali port, the airport and the Etihad railway.

Dubai is actively turning into a regional hub for trade and logistics through the development of infrastructure and implementation of systems needed for smooth and trouble-free transportation of cargo by sea, land and air. As part of this initiative, the Dubai Logistics Corridor was established to connect the sea, land and air and bring together all of the components necessary to create a multi-modular logistics platform for the first time in the Middle Eastern region. This is a duty-free corridor between the seaport of Jebel Ali, which currently handles 70% of the non-oil trade for the Emirates, and Al Maktoum Airport, which allows businesses to import and export goods without any control or tax.

When you have selected a few free zones for yourself, you need to enquire about the warehouses available for rent. The fact is that very often free zones do not have small areas available. Particularly in the case of free zones located in Dubai. So, in Jebel Ali the sizes of warehouses start from 550 sq.m., in Dubai South - from 700 sq.m., Dubai Airport Free Zone also offers warehouses slightly over 700 sq.m. in size. Additionally, since free zones are based in close proximity to ports or airports, their storage facilities are always in demand, therefore it is extremely difficult to track availability of these or those warehouses. At the same time, free zones are constantly updating their portfolios, through building new storage facilities. Therefore, before you proceed with a particular free zone, check the availability of warehouses of relevant size in advance, before you start registration process and enquire, if any newly build warehouses shall become available soon.

If you have not found the infrastructure that suits your business needs, then perhaps you should pay attention to the neighbouring Emirates. So the Ajman Free Zone (AFZA) is located in a close proximity to the large port in Ajman and is 25 minutes away from Sharjah and Dubai airports. AFZA seeks to meet the demands of investors by designing and providing high-quality warehouses with all services and specifications starting from 100 square meters. However, finding available warehouse here is not easy and you'll have to be prepared to be placed on to a waiting list. You should also remember that Sharjah Free Zones, SAIF (Sharjah Airport Free Zone) and HAMRIYAH Free Zone are located next to Sharjah airport and Sharjah port respectively. These free zones, especially Hamriyah, are in high demand, therefore, you shall be also ready to have a limited choice of available warehouses or in general wait for a warehouse to become available. Fujairah Free Zone in Fujairah is based right next to the Fujairah port, and until recently it was mostly catering to the needs of businesses engaged in trade with fuel, oil and other petrochemicals. However, from summer 2017 Fujairah Terminals was established and took over management of the terminals from Fujairah Port Authority. Fujairah Terminals was established under the management of Abu Dhabi Ports. Based on the agreement between Fujairah Port and Abu Dhabi Ports, the latter will have exclusive rights to develop port infrastructure and to undertake operations for containers, general cargo, RoRo and cruise ships. It is in summer 2017 that Fujairah Terminals welcomed the first container feeder vessel. As such, you may also have a closer look at Fujairah free zone.

It is important to remember that if you are planning to open a company for production and manufacturing, you need to take into consideration the fact that some free zones do not allow it in their warehouses. That is, if you want, for example, to start manufacturing something in Umm Al Quwain Free Trade Zone, you will need to rent the land and build your own facilities, although free zone has built its own warehouses, but these can be used only by companies, that are trading, for storage.

If your company simply requires an office for rent in the UAE, it is important to find out if the relevant free zone offers commercial properties for rent, and if so, whether these properties are easily accessible. After all, as we discussed earlier, the office can be leased only in the Free Zone where the company is registered. For example, part of offices that Dubai Internet City free zone offers to its clients is located in Dubai Outsource Zone. Newly established free zones, like SHAMS, may have limited office supply or still be in the process of building commercial properties. Dubai South free zone offices are located quite far from the city center and if you are not planning to rent a warehouse there but just an office, your clients might find it difficult to travel there. If your office is frequently visited by customers, then you should pay attention to the free zone's location as well as the primary transport available to access it. Accessibility is one of the key factors that should be considered when you choose to establish your company in a particular free zone. For example, such free zones, as DMCC, Dubai Internet City, Dubai World Trade Center, Dubai Health Care City and some others have immediate access to the metro and other public transportation.

To conclude, before you decide, which free zone to choose, study carefully the facilities offered by free zones of your interest, research the availability of needed infrastructure and enquire about availability of commercial space you require in advance, before you start the company registration process.

If you want to know more about Dubai freezone company formation, feel free to get in touch with our professional consultant team and we would be delighted to assist you and help you to compare Dubai freezone company setup costs and help you to find that free zone, which would suit your business needs the most.

Disclaimer: Business Boutique UAE-Consultants.com is not affiliated with any particular government or legal entity. Business Boutique does not give professional legal advice nor any other professional advice subject to a public office in the government. This article merely sets out a simple and basic idea as to the reasons of Dubai freezone company setup and Dubai free zone company formation cost. Business Boutique in no way holds nor imposes any official governmental or legal authority and the article herein is only to be taken as a guide. All further governmental or legal issues should be addressed to the corresponding authorities.

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