The Dubai Airport Free Zone has seen 20 per cent growth in the number of companies setting up shop and profits over the past year. However, Mohammed Al Zarouni, director-general of the zone authority, told Emirates Business it is nearing capacity and beginning to consider other avenues of growth, including expanding outside the zone in Dubai as well as overseas.
How was the zone’s performance in 2007?
In general it was very good, and the zone recorded 20 per cent growth as the number of companies in the zone reached 1,312, up from 1,101 in 2006. This means 211 new companies entered the zone in 2007. Also, returns grew by 20 per cent compared to 2006.
What do you attribute the growth to?
I believe that the rise in the number of companies as well in the value of rents largely contributed to raising zone returns.
And how were your returns in 2007?
I would rather not talk about our returns as much as I would like to talk about our service. We are known for distinguished service.
Some companies in the zone have complained about high fees and say they are somewhat exaggerated. What is your response?
I would like to make it clear that the government in general is not focused on raising fees, and the recent government rent cap law is the best proof. But in the light of expansions and rising building costs, I cannot lease and lose money. And I believe our prices are reasonable compared to the services and facilities we offer; the zone is close to the airport and city centre. The price matches the service and the zone is not a real estate agency that rents buildings. We offer services, facilities, marketing, management, solutions and security. And I would like to confirm here that once the cost of services and facilities are down, we will review our prices.
What type of companies are hosted by the zone?
The zones hosted 1,312 companies covering all sectors, from aviation and jewellery to electronics. And some 54 per cent of companies come from advanced industrial countries. European companies make up 41 per cent, 12 per cent are American, 19 per cent are from the Gulf, one per cent are Australian and the rest come from other parts of the world.
Dubai is heading for privatisation of projects and free zones. And international companies have started to set up centres in those new projects and zones. Has this affected your activities and marketing strategy?
Undoubtedly, the new projects do have an effect. Big companies always look for the proper place and environment regardless of their original place. And this is a natural thing. I believe the effect of new projects slows the growth of the zone.
However, there are always new sectors that can be attracted. And any sector has ebbs and flows – this is the nature of the economy.
Has this prompted you to head for a selective policy with regard to companies?
Since the beginning, we have believed in the policy of selection and concentrating on quality rather than quantity. And we did not want to turn into mere renters as much as we wanted to attract technology and foreign investment, create job opportunities and to revive services and the economy of Dubai and the UAE in general. We believe the zone has to contribute to the gross domestic product of Dubai and has added new value to the emirate’s economy. Therefore, we deliberately selected companies that can directly or indirectly contribute to Dubai’s economy. Our contribution to the emirate’s GDP is currently witnessing a considerable growth, and there are now companies employing some 8,000 staffers [in the zone]. Profits are not a top priority for us. Rather it is attracting technology, expertise and investments that can be of benefit to the country and Dubai economy.
Have you changed your marketing strategy?
Yes. We now concentrate on companies that make small but precious products such as gold, diamonds, electronics, cosmetics, medical supplies and other companies. And let us be frank, the zone now is undergoing wide expansion and I do not believe that companies making big products will be able to expand in the zone in the future as we have exploited each and every inch.
Does this mean you will leave out aviation sector companies?
I did not say that. I just said we have a limited space at the moment. Any company that wants to join is welcome.
Dubai now has eight specialised zones. Do you think the new companies will come to your crowded zone, especially considering the work on the new airport project?
Do you have plans to open a branch at the new airport?
At the moment we are concentrating on the current airport and free zone.
Have you applied to run the free zone of the new airport?
No, we have not.
Have you been asked to run it?
We have not been asked so far. And if we are, we would be honoured to accept. We have the potential and expertise to run any free zone in the world. We have 12 years of experience. Now negotiations are under way to rent a plot of land in the new airport. We will be investors rather than operators.
What about your efforts to run free zones outside the UAE?
Practically speaking we have received requests from several countries. But we are reserved for many reasons, including economic and political reasons. We do not take any step unless we were sure that it will benefit us and our partners. We must consider the economic situation, political stability, infrastructure of the city and other elements.
What about running the free zone in Sudan?
We have been in talks with the Sudanese to exchange expertise but have not signed any agreement with any country.
Where has the zone expansion reached?
We are now in the sixth phase of expansion, and when this phase is over the zone will extend over some 900,000 square metres. We have tried as much as possible to exploit the area to the maximum, and we have stopped the policy of leasing land inside the zone. We also have a plan to expand outside the free zone.
How many companies are you targeting for 2008?
We hope to grow by 300 new companies.
Dafza aims to grow by 300 companies in 2008