Why Jebel Ali Freezone?
For traders who sell products in the Persian Gulf and South Asia, the Jebel Ali Free Zone is a dream come true. Foreign companies can use Dubai as a distribution or manufacturing base without having to pay import duties or form partnerships with local companies in the United Arab Emirates. In Jebel Ali, a foreign-owned business essentially operates as "offshore" concern.
Outside the Jebel Ali Free Zone, commercial law in the United Arab Emirates requires foreigners to go into business with local U.A.E. firms or sponsors who are entitled to own at least 51 percent of the business and its profits. But inside Jebel Ali, there is no need to bother with these rules. Foreign companies are free to manufacture, trade and form joint ventures as they please.
To register, a person need only fill out a two-page questionnaire and fax it to the authorities in Dubai. An initial response takes about a week, and then a handful of forms need to be processed and notarized, including the applicant's articles of incorporation. By keeping down the bureaucracy, Jebel Ali can deliver office keys to new clients in less than two months.
The Free Zone is located 35 kilometers southwest of Dubai city and is built around the world's largest man-made port. It covers 100 square kilometers, of which about 30 percent has been leased. An array of investment incentives has attracted more than 850 companies, including almost 100 American firms. Most companies are set up to re-export goods through Dubai to other markets, the largest being Iran and India. Here are some of the main benefits:
- 100% foreign ownership
- 100% repatriation of capital and profits
- No minimum capital investment
- A shareholder's liability is limited to the amount of its paid-up share capital
- No currency restrictions
- No corporate taxes
- No personal income taxes
- Ready-made factories and warehouses
- Excellent infrastructure, support services and communications
- Access to a consumer market of 1.4 billion people.
Who uses Jebel Ali?
Japan's Sony Corporation operates a 23,000-square meter warehouse in the Jebel Ali Free Zone. It is the largest storage space in the world for a single product type electronics. Other multinationals such as Black & Decker, Daewoo, General Motors, Grundig, H.J. Heinz, Hyundai, IBM, McDermott, Mitsui, Samsung and York International also have taken advantage of Jebel Ali. But the majority of Free Zone business is done by smaller traders whose names are not well known. In fact, some clients use less than 35 square meters of office space, but such clients "must be very active," Chairman Sultan Ahmed Bin Sulayem tells the Risk Report.
Business at Jebel Ali includes manufacturing, trade, services and distribution. In 1994, the companies in the Free Zone sold $1.6 billion worth of goods around the world, and Dubai officials expect rapid growth in the coming years.
When Jebel Ali opened in 1985, Indian and Gulf state companies were first in the door. Sixteen registered in the first year. Now an average of 16 new companies register each month. About 40 percent of the companies are from industrialized countries in Europe, the United States and the Far East. There are 200 European companies and about 100 from North America. The U.A.E. accounts for close to 200, India 154 and Pakistan 34. The are about a dozen companies from the former Soviet Union and a dozen from China and Hong Kong.
Reference: The Wisconsin Project 2003