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The Dubai Model and UAE Free Zones

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A Political Economy of Free Zones in Gulf Arab States

Part of the book series: International Political Economy Series ((IPES))

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Abstract

Dubai’s expansive free zone system is considered a model for regional and global free zone development. However, the establishment and growth of Dubai’s flagship free zone at Jebel Ali in the 1980s and 1990s occurred alongside the emergence of other free zones in the hydrocarbon-scarce northern emirates. The commercial success of Jebel Ali was not guaranteed, and Dubai had several political objectives for its first free zone. In the early 2000s, Abu Dhabi’s government began aggressively promoting free zone development in the oil-abundant, capital emirate. Without a federal mechanism for coordinating free zone development across emirates exercising a large degree of economic policy autonomy, these commercial entities proliferated drastically during the high-growth years of the early 2000s. The consequent development outcomes included successful business clusters and commercial flops.

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Notes

  1. 1.

    Interview 3, Emirati manager at Jebel Ali Free Zone, Dubai, March 31, 2016.

  2. 2.

    Interview 35, former consultant at JAFZA and managing director of consultancy focusing on special economic zones, Dubai, May 31, 2016.

  3. 3.

    It is worth noting that a number of oil and gas companies are registered clients of the free zone.

  4. 4.

    Interview 46, senior manager at Economic Zones World, Dubai, UAE, July 23, 2016.

  5. 5.

    National Industries Park is not a free zone but rather an onshore investment park.

  6. 6.

    Interview 17, managing director of an economic zones services company sponsored by TECOM, Dubai, UAE, May 23, 2016.

  7. 7.

    Statistics rely on population estimates of 223,430 Emirati citizens for 2016 and Dubai Statistics Center—Labor Force Survey 2016 figures indicating that 48.2% of Dubai’s citizens are “economically active.”

  8. 8.

    Data on free zone sector analysis provided remotely by interviewee 23 on April 14, 2016.

  9. 9.

    Interview 23, manager at Masdar Free Zone, Abu Dhabi, April 14, 2016.

  10. 10.

    Ibid.

  11. 11.

    Interview 22, British owner of consulting firm registered in Abu Dhabi’s Masdar Free Zone, Abu Dhabi. April 14, 2016.

  12. 12.

    Interview 34, partner at UK training company based in Abu Dhabi but registered to RAK Free Zone, remote conversation from Dubai, UAE, May 28, 2016.

  13. 13.

    A group of global airlines has claimed that Etihad airlines received $15.2bn in capital transfers, interest free loans, and other subsidies since 2004 (“Airline” 2015).

  14. 14.

    Interview 49, business journalist at Thomson Reuters, Abu Dhabi, UAE, July 24, 2016.

  15. 15.

    Interview 47, consultant at Khalifa Industrial Zone Abu Dhabi (KIZAD), Abu Dhabi, UAE, July 24, 2016.

  16. 16.

    Interview 47, consultant at Khalifa Industrial Zone Abu Dhabi (KIZAD), Abu Dhabi, UAE, July 24, 2016.

  17. 17.

    Interview 47, consultant at Khalifa Industrial Zone Abu Dhabi (KIZAD), Abu Dhabi, UAE, July 24, 2016.

  18. 18.

    Bahrain possesses an established reputation as a hub for Islamic banking and finance, Qatar opened the Qatar Financial Centre (QFC) in 2005, and Saudi Arabia developed the King Abdullah Financial District in Riyadh.

  19. 19.

    Interview 48, senior manager at Abu Dhabi Global Market, Abu Dhabi, UAE, July 24, 2016.

  20. 20.

    Interview 48, senior manager at Abu Dhabi Global Market, Abu Dhabi, UAE, July 24, 2016.

  21. 21.

    Interview 49, business journalist at Thomson Reuters, Abu Dhabi, UAE, July 24, 2016.

  22. 22.

    Interview 49, business journalist at Thomson Reuters, Abu Dhabi, UAE, July 24, 2016.

  23. 23.

    Interview 23, manager at Masdar Free Zone, Abu Dhabi, April 14, 2016.

  24. 24.

    Ibid.

  25. 25.

    Data on Masdar Free Zone fees provided remotely by Interviewee 23 on April 14, 2016.

  26. 26.

    Figures sourced from interviews and data collection conducted by the author.

  27. 27.

    Interviewees 22 and 30 both suggested that Jebel Ali Free Zone provided Dubai with the first-mover advantage in FZ development in the region.

  28. 28.

    Interview 55, a director from Hamriyah Free Zone, Sharjah, UAE, August 11, 2016. [Arabic]

  29. 29.

    Interview 56, staff member at Ajman Free Zone. Ajman, UAE, August 11, 2016.

  30. 30.

    This figure was calculated by multiplying 15,000 companies by AED 11,900, the cheapest annual company registration. Registration fees for executive offices can cost as much as AED 60,000, so the actual revenue generated from licensing and registration was likely much higher than the estimate. Estimates and prices are based on December 2016 figures.

  31. 31.

    Interview 56, staff member at Ajman Free Zone, Ajman, UAE, August 11, 2016.

  32. 32.

    Most of the investors registered with AFZ are Indian, Russian, or European.

  33. 33.

    Interview 57, staff member at Sharjah International Airport Free Zone, Sharjah, UAE, August 11, 2016.

  34. 34.

    Interview 35, former consultant at JAFZA and managing director of consultancy focusing on special economic zones, Dubai, UAE, May 31, 2016.

  35. 35.

    Interview 56, staff member at Ajman Free Zone, Ajman, UAE, August 11, 2016.

  36. 36.

    Interview 58. Manager at Ras Al Khaimah Investment Authority (RAKIA). Ras Al Khaimah, UAE. August 14, 2016.

  37. 37.

    Interview 59, source closely associated with RAK Maritime City, remote conversation in Dubai, UAE, August 16, 2016.

  38. 38.

    The free zone rented out approximately six million square meters of real estate in 2015, and the free zone charged AED 40 per square meter of leased land.

  39. 39.

    Interview 59, source closely associated with RAK Maritime City, remote conversation in Dubai, UAE, August 16, 2016.

  40. 40.

    Interview 24, senior corporate manager of Fujairah Free Zone, Fujairah, UAE, April 18, 2016.

  41. 41.

    The figures are taken from the Fujairah Statistics Centre Statistical Yearbook 2015.

  42. 42.

    Interview 24, senior corporate manager of Fujairah Free Zone, Fujairah, UAE, April 18, 2016; Interview 56, staff member at Ajman Free Zone, Ajman, UAE, August 11, 2016.

  43. 43.

    Interview 24, senior corporate manager of Fujairah Free Zone, Fujairah, UAE, April 18, 2016.

  44. 44.

    Interview 6, vice chairman of major real estate company, Abu Dhabi, August 7, 2014.

  45. 45.

    Interview 24, senior corporate manager of Fujairah Free Zone, Fujairah, UAE, April 18, 2016.

  46. 46.

    Figures provided remotely by a Fujairah Free Zone employee on February 2, 2017.

  47. 47.

    Interview 19, Emirati manager at Jebel Ali Free Zone, Dubai, March 31, 2016.

  48. 48.

    Interview 23, manager at Masdar Free Zone, Abu Dhabi, April 14, 2016.

  49. 49.

    Interview 24, senior corporate manager of Fujairah Free Zone, Fujairah, UAE, April 18, 2016.

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Mogielnicki, R. (2021). The Dubai Model and UAE Free Zones. In: A Political Economy of Free Zones in Gulf Arab States. International Political Economy Series. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-71274-7_3

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