The Ras Al Khaimah Economic Zone (RAKEZ) was established in 2017 to oversee, regulate, and consolidate the Ras Al Khaimah Free Trade Zone (RAK FTZ) and the Ras Al Khaimah […]
The Ras Al Khaimah Economic Zone (RAKEZ) was established in 2017 to oversee, regulate, and consolidate the Ras Al Khaimah Free Trade Zone (RAK FTZ) and the Ras Al Khaimah Investment Authority (RAKIA). As a result of this consolidation, RAKEZ became one of the largest economic zones in the region with over 13,000 companies—an impressive number not far off Dubai’s 14,000-company-strong DMCC.
Like DMCC, RAKEZ offers advantages such as 100% foreign ownership, unrestricted repatriation of capital and profits, and 100% tax exemption. Yet it is substantially more cost effective to set up in RAKEZ compared to Dubai. In addition, RAKEZ offers investors a 10% reduction in setup costs and allows them to spread installments over 12 months. These efforts earned the economic zone an award for Set-Up Cost Reduction in the 2017 fDi Global Free Zones of the Year rankings. RAKEZ consists of five economic zones, half of which are industrial zones that cater to manufacturing, industrial projects, trading, assembly, and logistics. In this way, the new entity is signaling its continued emphasis on the industrial sector. A key driver of developing special economic zones is the diversification of economies. This is particularly important in the MENA region, which according to the World Bank suffered a sharp decline in growth, down from 5% in 2016 to just 1.7% in 2017 due to a slowdown in oil exports. Narrowing the scope, the UAE followed the trend and recorded growth of only 1.4%. With contracting local demand from Dubai and Abu Dhabi, growth in Ras Al Khaimah similarly reduced in 2017. Still, rating agency S&P reports that the Emirate exceeded national numbers by achieving an estimated growth rate of 1.5% during the same year. Looking to reverse this trajectory, countries across the region, and especially the GCC, are spreading their proverbial eggs across multiple sectors. The World Bank Global Economic Outlook for 2018 predicts that growth in the GCC will accelerate to 3% as a result of efforts to promote non-oil sector activity. Ras Al Khaimah has indeed set the benchmark for diversification, with 95.2% of the economy in the non-oil production sectors. Under RAKEZ, the new drive has been to develop the distribution and trading services, information technology, healthcare, and logistics sectors in addition to the burgeoning tourism sector and the traditional core of industrial manufacturing. But it is still the industrial sector that remains the biggest contributor to Ras Al Khaimah’s GDP, growing from 33.1% in 2015 to 36% in 2017. Diversification through RAKEZ would be developed on top of the Emirate’s strong industrial foundations. Efforts to increase non-oil-sector activity offer industrial sector players in RAKEZ access to growing local and external markets in an economy set for long-term growth. At the same time, it also provides the industrial sector with an opportunity to improve its slice of the GDP. Finally, lower costs and an ease of entry through RAKEZ offer smaller companies the opportunity to expand alongside the economy. The UAE consists of an array of economic free zones competing for investment. Hopefully, the consolidation of RAK FTZ and RAKIA creates a stronger, more powerful brand with which to attract new industrial and other non-oil sector players. Ras Al Khaimah has been growing quickly and has set itself up for further growth. RAKEZ spearheads this growth initiative and is part of a long-term vision for a more diverse economy that is well known on the global stage.
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