Abu Dhabi has thrown another punch in its fight to claim Dubai’s title as the logistics hub of the Middle East. Having already launched its own airline and announced plans to expand both its airport and seaport, the UAE capital has now passed a law allowing 100% foreign ownership of companies based in the Industrial City of Abu Dhabi (ICAD) and a number of other planned free zones. The emirate is also to expand the already massive ICAD by launching the 10 km2 ICAD 2.
The economy of Abu Dhabi has traditionally been reliant upon its huge oil reserves. However, in recent years, the emirate has attempted to diversify its industrial base by encouraging foreign direct investment (FDI), as well as through investment in its transport links. As part of this drive, the government also established the Higher Corporation for Specialized Economic Zones (HCSEZ) in 2004, which is charged with creating a number of specialised free zones. “We aim to develop new and strategically important sectors by having HCSEZ as the main gate to all aspects of economic development,” said Sheikh Hamed Bin Zayed Al Nahyan, the chairman of Abu Dhabi’s Department of Planning & Economy and of HCSEZ.
“This will be achieved by ensuring that HCSEZ provides integrated state-of-the-art infrastructure and services through specialised economic zones that offer investors a business-friendly environment,” he said.
“Our objective is to attract and promote industries that are knowledge, energy and capital intensive in order to transform Abu Dhabi into a manufacturing, services and logistics hub,” Sheikh Hamad continued.
The latest step in this plan is to allow 100% foreign ownership of companies based in ICAD. This move will enable overseas companies to avoid having a local sponsor, which then means that they retain full control of their investment and of the returns. The free zone will also offer a range of other investment incentives, such as simplified procedures and tax exemptions.
HCSEZ is also planning to open a number of other free zones in the coming years following ICAD, which first opened in 2004. These will begin with ICAD 2, which will open in 2007, and then a number of industry-specific clusters, including metals, building products and construction materials, oil & gas services, automotive, pharmaceuticals and logistics.
“Today, Abu Dhabi’s industrial base is composed of individual companies in fragmented industries,” said Sheikh Hamad at the launch of ICAD 2. “But now, our goal is to create high value industry clusters and transform the emirate into an industrial, services and logistics hub.”
Alongside the opening of the free zones, Abu Dhabi has also invested in developing its transport links. The emirate launched its own airline in 2003, Etihad Airways, which soon ordered a large fleet of aircraft, including a number of freighters for its successful cargo division. These aeroplanes will also be based at a huge new airport, which is currently being built alongside the existing facility. The emirate’s deepwater port, Port Zayed is also being enhanced and expanded following its transfer to Dubai’s private port operator, DP World, last summer. The emirate’s transport links may also soon be further enhanced by a UAE railway.
However, while Abu Dhabi has more land than Dubai and deeper pockets, its neighbour has gained a strong advantage from its earlier investment in logistics and transportation. Emirates Airline, for instance, is now celebrating its 20th anniversary, while the Jebel Ali free zone, which is just an hour’s drive from ICAD, is already well established internationally. Dubai also still has plenty of capacity to offer through its existing free zones and the new Dubai Logistics City and the wider Jebel Ali Airport City development.
Local logistics companies are excited though, by the new opportunities that Abu Dhabi will offer. “We are interested in anything that will help to facilitate the activities of our business and our industry,” said Issa Baluch, chairman & CEO, Swift Freight International. “The fact that there will be some incentives to get investments to go in there [ICAD] and to build their presence makes it an attractive option,” he added.
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