Free trade zones are booming

The UAE has one of the most favourable business environments in the region due to its free zones

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The UAE has one of the most favourable business environments in the region, with its abundance of free trade zones for industry. But although these zones are popular, launching a company in one is not always as easy as people hope.

Still, most free trade zones are increasingly busy places. In the Ras al Khaimah Free Zone (RAK FTZ), for example, the number of new companies increased by almost 15 per cent last year over 2009, with a total of 3,239 new set-ups registering in 2010.

But an expert in Dubai said the process was more complicated than it appeared.

"Free zones call themselves 'one-stop shops' but the information they give people can be contradicting and you usually get different opinions from the people working there," said a person who works with the country's free zones but is not authorised to speak on their behalf.

Oussama al Omari, the chief executive of RAK FTZ, said there are many reasons for its rapid growth. The main one, he added, is the "very minimal capital [requirement] of approximately Dh103,000."

He went on to say that the advantage of a free trade zone is that "we put them under one umbrella and offer them shared services, which is what attracts them."

Mohammed Basheer, the assistant head of sales at Hamriyah Free Zone in Sharjah, said 60 per cent of the 5,000 companies there are entrepreneurial, and that every month the zone welcomes 60 more companies. "Start-ups are very popular here," he said.

The cases of Ahmad Zahran and Ernesto Woeft provide a contrasting view of free zones from the company's perspective.

Mr Zahran, a Palestinian entrepreneur who set up his technology business Infinitec in the Jumeirah Lake Towers free zone, said he regrets his decision.

"It seemed the people [working there] were on a mission to complicate my life. They're unorganised and the process took forever," he said.

Mr Woeft set up his adhesive label manufacturing company, German Label, in RAK FTZ in 2006, and has had a better experience.

He said free zones take care of everything from the warehouse to personnel, electricity and immigration visas.

"RAK FTZ changed a lot since I first started," he said. "You used to have to run for everything, you need a license and to get a license, you need to set up a bank account and it was a bit difficult."

Mr Woeft also said that in Europe it is hard to get things accomplished, whereas here people come to the aid of entrepreneurs.

Christine Orth, the director of Free Zones Specialist and Corporate Services, said the Northern Emirates' free zones are the most popular for setting up a business as they generally offer the least-expensive set-up fees (Dh23,000) and also because they offer start-up packages.

"However, you must travel there to get the process done which can be [inconvenient]," she said. "I've been doing this for the past seven years and although I do tend to get surprises and some things are still illogical, free zones have improved over the last few years."

Ms Orth said she receives five to 10 inquiries on an average day from people looking for help to set up a business in a free zone.

"I think Dubai should turn their empty towers into business incubators because it's needed and there's still room for improvement," she added.