Dubai’s Airport Free Zone (DAFZA) has bagged the Global Free Zone of the Future 2012/13 award. The ranking was given by fDi Intelligence, a division of Financial Times. Dubai International Financial Centre, another Dubai free zone, ranked second.
Free zones from the Middle East, particularly those based in the UAE, dominated the rankings. Twenty three of the top 50 zones came from the Middle East region with 14 of them from the UAE alone.
Many trade analysts say DAFZA is the fastest growing free zone in the Middle East and impressed the independent judging panel for its excellent transportation links and a clear focus on attracting FDI.
The zone currently has more than 1300 companies. DAFZA is increasing its environmental awareness and is implementing ‘green buildings’ and an International Organisation for Standardisation (ISO) energy management system.
Following is the top ten listing of Global Free Zone of the Future 2012/13 award:
- Dubai Airport Free Zone (UAE)
- Dubai International Financial Centre (UAE)
- Shanghai Waigaoqiao Free Trade Zone (China)
- Iskandar (Malaysia)
- DuBiotech (UAE)
- Tangier Free Zone (Morocco)
- Freeport of Ventspils (Latvia)
- The Clark Freeport Zone (Philippines)
- Chittagong Export Processing Zone (Bangladesh)
- Dubai Media City (UAE)
DAFZA also took the top spot in the ‘Best Airport Zone’ category. Morocco’s Tangier Free Zone and The Clark Freeport Zone in Philippines bagged the second and third places respectively.
DAFZA said it has set ambitious targets for expansion and diversification and is taking measures to hedge against potential challenges presented by the global economic climate in the short to medium term. It has also kept a careful eye on the long term.
“The next expansion will be in the next year,” Dr Mohammed Al Zarooni, Director General of the Dubai Airport Free Zone, said. “We have made plans for expansion in the future, to eventually bring another 1,500 companies to the Dubai Airport Free Zone, because we have space for that and we can expand,” he added.
DAFZA’s goal is to attract 600 to 700 additional companies in the next five or six years, which has seen it average 100 new companies each year. With the airport free zone currently based on a 700,000-square-metre site, it is hoping to expand eastwards this year, with a view to occupying a 100,000-square-metre leasable area. “We have already attracted 1,450 companies,” said Dr. Al Zarooni. The intention is to further increase that number, while keeping an eye on the quality of investments, he added.
The DAFZA director general, who is also the head of Dubai Silicon Oasis, said he is aware of the need to diversify free zone’s economic partners, with European companies accounting for 37% of the businesses present currently in DAFZA.
“We are thankful we brought many companies in last year from Japan. This year our focus will be on Far East – Singapore, South Korea, Hong Kong, Japan, China and even India – in case we face some difficulty in bringing more companies from Europe, America and Australia.”
Free zones: A Success Story
At present about 40,000 businesses operate from more than 30 free zones across the UAE.
Apart from being offered a tax-free status, free zone companies do not require a local partner/sponsor. Therefore, companies based in free zones apparently fare better than their counterparts outside free zones, under tough economic conditions.
Jebel Ali Free Zone (JAFZA), the country’s oldest and largest free zone accounts for more than 21% of Dubai’s GDP and nearly 8% of the UAE’s GDP.
Free zones also create an “economic spillover effect” and not only fuel growth in other sectors such as logistics, aviation, tourism, etc, but also create opportunities in other sectors of the economy.
Chairman of the World Free Zone Convention (WFZC) Graham Mather, highlighted the vital role that free zones can play in helping the global economy through difficult times. Addressing the 11th WFZC event in Shanghai in November 2011, he said free zones “have much to offer” at a time when the world is desperately seeking job creation, economic growth and development ahead of an anticipated downturn amid a worsening eurozone crisis. “Free zones are key to the world’s search for growth,” he added.
Citing a World Bank study analysing the benefits of free zones, which include the ability to absorb unemployed labour, raise skills and productivity levels, and generate taxes from inception, Mather said these are among the reasons why many countries are returning to the free zone model or newly embracing it as a way out of economic troubles. “All areas of the world could benefit from free zones and they all need them,” he said.
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