RAK FTZ's lower costs attract companies to shift base
Ras Al Khaimah Free Trade Zone is emerging as an attractive and competitive location for international companies seeking a base to serve the UAE and the rest of the GCC. It was recognised as the Best Emerging Free Zone at the Middle East Logistics Awards and has witnessed a 215 per cent increase in the number of registered companies since 2005. And the authority that runs it looks forward to hosting a minimum of 15,000 companies over the next five years.
In this interview with Emirates Business, Oussama El Omari, the authority's CEO and Director-General, explains how the zone intends to complement other business locations in Abu Dhabi and Dubai. He also talks in detail of the authority's expansion plans.
How does RAK FTZ sees itself in relation to other free trade zones in the UAE and the region?
Three parameters characterise a good FTZ – location, which is a fixed parametre, cost and quality, which are non-fixed. RAK FTZ has it all. Dubai is more expensive – we cost 50 per cent less, rents and related expenses are lower and so is traffic. The success of a FTZ is linked to service and a personal approach to business. We are the first FTZ in the region to set up a business centre in the heart of a city. We do not expect clients to just arrive and set up a factory, they want to see the government departments, how they perform and interact with people. We have set up business centres in Abu Dhabi, Dubai, New York, Cologne, Germany, Mumbai and Istanbul. We also provide logistical distribution services, which we believe no other FTZs in the region offer. More free zones imply more business with better quality, but not more competition. RAK FTZ complements Abu Dhabi and Dubai as business locations.
How does RAK FTZ plan to achieve its objectives?
We look forward to accelerating and diversifying the emirate's economic base by meeting the needs of the business services sector, increasing quality employment opportunities, creating a business climate and providing property options conducive for the growth of local and international companies. We will generate business by segmentation and enhance value by adding services.
How fast is RAK FTZ growing in terms of revenues and the number of registered companies?
We are expecting a 75 per cent growth in revenues this year. RAK FTZ is one of the fastest-growing free zones in the region and has a reputation for being one of the most cost-effective, as well. Since 2005 the number of registered companies has increased from 1,362 to 4,300.
What kind of companies are registered with RAK FTZ and how many do you expect to have in the next five years?
General trading, IT services and consulting firms make up the bulk of the registered companies, though RAK FTZ has seen growing interest in the manufacturing sector. German building materials producer Knauf plans to build its first facility in the Middle East at the RAK FTZ Industrial Park – the plant will produce 40 million sqm of gypsum board per year. So based on our forecasts and expectations, we look forward to having between 15,000 and 20,000 registered companies at RAK FTZ within five years.
What is RAK FTZ doing to accommodate skilled UAE nationals?
One of our current objectives is to increase the number of emiratis in our workforce. Ras Al Khaimah is the only emirate where the population of UAE nationals exceeds the number of expatriates. Emiratis make up 45 per cent of RAK FTZ's staff.
What effect will international market trends such as inflation, rising raw material costs, staff shortages and the declining US dollar have on RAK FTZ's expansion plans?
These factors may have an indirect impact but we have not felt the effects at RAK FTZ. Three months ago we registered a €150 million (Dh868m) company from Germany.
Are firms moving to RAK FTZ from other expensive free trade zones?
Yes. RAK FTZ's advantages such as location, competitive costs and quality are motivating companies to shift their facilities here. We also see ourselves as an investment and promotion agency.
What are RAK FTZ's current projects and future expansion plans?
RAK FTZ's current facilities consist of the Business Park and phase one of the Industrial Park. Phase two of the Industrial Park is a Dh1-bn, 27-sqkm development project that will involve dredging the creek. We expect to host 200 companies once the second phase is completed. Our plans also include the Navigator Business Centre, which is a Dh1.2bn world-class integrated back office programme, and the new Al Ghayl Industrial Park. We are planning a container port and dry dock initiative, exploring waterfront investment opportunities and accelerating skills provision through an Education Park and Academic Centre.
PROFILE: Oussama El Omari, CEO and Director-General of Ras Al Khaimah Free Trade Zone
El Omari has been responsible for the development of RAK FTZ since its inception in 1997.
His knowledge of world trade and global import and export trends has resulted in him chairing the UAE Free Zone Round Table and he is Secretary-General of the World Economic Processing Zone Association.
He established business parks in Ras Al Khaimahh and spearheaded international liaison offices in India, Turkey, Germany and the new office in New York to promote RAK FTZ globally.
He is active in the educational development of Ras Al Khaimah, serving on the board of the Higher Colleges of Technology.
He was trained at international schools in Morocco and France and holds a BSc in chemical engineering and an MBA from the US.