United Arab Emirates: An Investors' Paradise: Jebel Ali Free Zone

Last Updated: 19 June 2017
Article by STA Law Firm
Most Read Contributor in United Arab Emirates, August 2018

How much time does it take to construct a tower? A couple of years, maybe? Well then, how much time would it take to build a metropolitan city that allures international investors into the center of a desert? Some thought ought to be given to that! Dubai became the target of global paparazzi when mammoth number of investors fled into the region to take advantage of the dynamic corporate facilities and tax incentives provided by the free zones in the Emirate. The Jebel Ali Free Zone (the JAFZA), among others, located along the coast lines of Dubai has only succoured in this elevation of the country's economy with its robust infrastructure and flexible rules and regulations. Therefore, this incidental venture has drifted a long way to become the world's largest free zone since its establishment over two decades ago.

The JAFZA is globally renowned for its business friendly corporate environment that is deep-rooted in international trade practices and corporate governance structures. Further, the strategic location of the free zone along the Jebel Ali Ports coupled with its relative proximity with the novel Al Maktoum International Airport is the cherry of the pie to investors employed in the import and export industry. However, the diversity of licenses provided by the free zone authority is the paramount rationality to the free zone's popularity. Therefore, JAFZA has been the home ground to companies dedicated in research and development and e-commerce activities since the free zone authority has been keen on offering sector-specific licenses. Further, foreign companies are also provided with the option of validating their presence in the free zone by setting up a limited liability local entity in the free zone vide an 'offshore registration license'.

The free zone allures investors from all the nooks and corners of the planet with across-the-board real estate opportunities that range from large plots to tailor made offices and retail outlets. Further, companies conducting operations that involve large quantum of goods may also rent the pre-fitted warehouses in the free zone to store their merchandise. The dedicated business park of the free zone has laid down an array of ready to use offices that enable investors to commence their operations without the hassle and financial burdens associated with setting up offices and local infrastructure. However, the scope of real estate properties in the free zone is not limited to generic offices and workstations; JAFZA also offers residential complexes that could house the labour force of the companies established in it. Further, the customized development solutions team of JAFZA aids investors to meet their sector-specific corporate and operational demands downright. Therefore, investors may plan and develop their office premises and operational facilities with the view to accomplish distinct entrepreneurial goals depending upon their peculiar business models. Ergo, it is safe to opine that all that glitters is gold when it comes to the investment climate that floats over the United Arab Emirates.

Various international corporate giants and domestic investors have ushered into JAFZA with the view to establish a regional base that can exploit the commercial and industrial market of the Middle East. This investment phenomenon has in turn provided investors with an unmediated access to the large business market operating within the free zone. Further, the authorities have laid down a lucid process for company formation in Jebel Ali Free Zone to ease the burden of legal documentation and other formalities that arise during the setting up of an entity in the free zone. However, investors are advised to analyze their commercial requirements and comprehend the regulations of the free zone before initiating the incorporation process to avoid future encumbrances. Further, the below table will shed light on some objective aspects of company formation in Jebel Ali Free Zone in order to provide our readers with a cogent understanding of the investor climate in the free zone:-

TOPIC

DETAIL

Types of companies

  1.          Free zone company (2-50 shareholders);
  2.          Free zone establishment (single shareholder);
  3.          Public listed company (2-50 shareholders); and
  4.          Branch (owned by parent company)

Types of licenses

Trading, industrial, service, e-commerce, national industrial license, innovation license and offshore registration.

Major benefit(s) to investors

Ideal location of the free zone; specialized licenses and dynamically expanding number of entities within the free zone.

Major feature(s) of the free zone

Dedicated in-house traders' market and state of the art infrastructure.

Compatibility of the free zone

JAFZA is the home to investors from numerous industries ranging from agriculture to light aircraft manufacturing. However, the free zone is best suited to companies involved in import and export activities.

Viable alternatives

The Dubai Airport Free Zone (the DAFZA) offers similar products and facilities as the JAFZA. Further, the ideal location of the DAFZA next to the Dubai International Airport has transformed it into an appealing base for players in the aviation and import and export industries. However, JAFZA is known as one of the best free zones in the world due to its modern infrastructure and licensing facilities.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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