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01 December 2023

UAE free zones helped Turkey's EU bid

Tony P Restall (SUPPLIED)

By Shashank Shekhar

UAE has involuntarily played a role in ensuring that Turkey joins the European Union (EU) without scraping its massive free zones, the CEO of a company involved in EU construction projects has said.

Tony P Restall, President and CEO of Development Services International, a Thailand-based company, said that the UAE free zone model helped Turkey continue with the process of joining the EU even though the Union vehemently opposed to the Central Asian country's free zones.

EU may announce the reversal of its free zone policy, Restall said.

"Having worked on EU Free Zone Projects – the feeling was that the EU was not entirely convinced that free zones were the way forward. Hence when Turkey wanted to join the EU, the Union encouraged Turkey to close all of its free zones.

"However, recently we believe the EU has changed its position on free zones and we sense that the EU could well reverse its free zone policy having viewed the success of the UAE economic model," Restall told Emirates Business.

Restall had been involved with one of EU projects in Aden where EU officials said "they were in principle opposed to a free zone".

Within an economic union like the EU or GCC, free zones heighten the prospects of a port being used for re-export to member nations of the union.

However, that has clearly not happened in the case of UAE; in which case, not only does the cluster of emirates continue to remain a part of the GCC common markets, it also operates a record 29 free zones on its soil besides planning nine new ones.

Turkey introduced a legislation to allow construction of free zones on its soil 24 years earlier.

The first free zones sprang up in the country in 1985. In 1995, the volume of trade in Turkey's free zone stood at $300 billion (Dh1.1 trillion).

The EU may also allow the setting up of free zones in the fringe states like Albania, which will enter EU in near future, Restall said.

"They gave Ireland a waiver when it joined the European Union. The EU has so far opposed establishment of free zones as it collides with its tax-free regimes and policies. Besides, it also inversely effects EU's policy on residency and nationality status. These are the problems that individual members are grappling with," Restall said.

UAE's free zones have succeeded so far on account of cutting through red-tape and allowing liberal lifestyle to those who are a part of it.

"The success of the UAE Free Zones has been attributed to the liberal lifestyle of the UAE and the ability to cut through red tape. Other countries aspire to replicate the success of the UAE free zones but invariably fail due to over bureaucracy and lack of leadership.

"Legislation usually gets tied down with red tape resulting in complete inertia. Space is now becoming a premium item in the UAE as well as proximity to competitive logistics and availability of feedstock material such as natural gas," he said.

Places like Qatar, Oman and Iran and Bahrain have all vied to set up free zones.

However, they have failed to attract as many companies as the UAE.

"Places such as Oman, Iran, Bahrain and Qatar have all tried to copy the UAE model, but in our opinion it's not just about copying the free zone model it's as much about supporting lifestyle.

"You have to ask the question: Is this somewhere I want to live and work. Clearly places such as Iran's free zones and those of Oman have failed to gain momentum due to those factors," Restall said.