STRONG PILLARS

Ras Al Khaimah 2017 | ECONOMY & FINANCE | FOCUS: FREE ZONES

If diversification is the mantra, economic stability is the endgame. RAK Free Trade Zone (RAK FTZ) embodies that drive, offering bargain prices for companies to set up within its borders. Over the years it has worked hard to attract a melting pot of businesses from a widening pool of investors.

RAK FTZ added 600 companies to the zone's portfolio over 2016, bringing the total tally to 8,600. This follows a period of doubling the number of companies between 2011 and 2015, effectively solidifying its position as the key economic driver for the Emirate. Despite the low oil price environment that has been dragging growth in many economies to a standstill, the Emirate has a solid growth outlook going forward.

Established in 2000, RAK FTZ through its marketing and awareness campaign has created a name for itself around the world. Its registered companies originate from 100 countries worldwide. To cater to all of them, today the RAK FTZ is comprised of four parks—academic, business, industrial, and technology—reflecting RAK's preference for industrial companies, with manufacturing making up 25% of the Emirate's GDP. The FTZ published expansion plans back in 2014, which were completed by the middle of 2015, adding 30% capacity to the biggest of the parks, technology, which specializes in light and medium industries, alongside logistics and warehousing. This was part of a bid to attract more Chinese and Indian companies, with Asian investment already accounting for around 25% of the companies situated in the four parks.
The technology park was earmarked for a second expansion, although there has not been any more news on that front since the middle of 2015, but a doubling of capacity was touted—increasing the overall landmass to 30 million sqft. Almost a year later, Ashok Leyland, the world's fourth largest commercial vehicle maker, announced a AED36.5 million expansion of the facilities to double its output of buses from 12 to 24 units per day. The company's factory is a joint venture with Rakia and is the only certified local bus factory in the GCC region.

It also seeks to attract companies from the colder markets of Russia and the CIS, announcing in June 2016 that it would be participating in two major business conferences in Russia: Intax Expo 2016 and CIS Wealth 2016. RAK FTZ also won an Innovation Award, winning the category of “Innovative Development of Free Zones” at the Emirates and Europe Economic Forum held in Warsaw, Poland, in May 2016.

The RAK FTZ also lies in the region's country of choice for anyone wishing to establish a manufacturing facility. The UAE's history of economic and political stability has proven quite the attraction in the GCC, especially with the affordability that the Emirates offer expats. The government has also been proactive in supporting the growth of RAK FTZ, setting up one single point for communications, helping investors to set up their businesses as quickly as possible with minimal paperwork.

Licenses are as little as AED2,000 per annum for companies in the service sector, but even trading businesses will only pay AED5,000—relatively low considering the infrastructure and connectivity that comes with it. SMEs are also welcome; lower capital requirements as small as AED100,000 are part of a policy aimed at supporting the segment, which remains a key part of the economic make up of the Emirate.
The FTZ is RAK's largest free zone, but not the only one; the Emirate has RAKIA and the Maritime City Zone, which was established in 2009.

Ports, logistics, and warehousing are seen as staple and necessary infrastructure for any progressive economy, and are likewise relatively resilient to oil price drops due to the highly industrialized nature of Ras Al Khaimah's economy.