While the world seems wracked with financial crises and Europe struggles to come to terms with its sovereign debt problems, Sharjah’s Hamriyah Free Zone seems to be doing alright, thanks very much.
As the UAE’s fastest-growing free zone, Hamriyah now has close to 5,500 registered companies representing 138 nations operating in its two sites – not bad for a company that has continued to grow exponentially, despite the recent international financial turmoil. And, according to its director general, Dr. Rashid Al Leem, there are no signs of that growth abating just yet. Situated 20km north-east of the Sharjah city centre, the Hamriyah Free Zone was established by Emiri decree in November 1995, and centres around the Hamriyah Port (not to be confused with Dubai’s Al Hamriyah port), its deep-water harbour and shallower inner harbour.
The free zone is split into two areas: the main 220ha zone (Phase 1) that includes the port, and Phase 2, a 120ha development on the opposite side of the E11 main road, designed to attract large industry, and supporting small- to medium-sized enterprises (SMEs). The two areas were linked together with the opening of a $32.6m interchange late last year that cut travel time between the areas by at least 30 minutes, and transformed the lives of those operating at the free zone.
It is the latest in a long line of developments that have seen HFZA grow from 76 companies in March 2000, when Al Leem joined the company, to close to 5,500 by February 2012. That growth, in the main, has been down to Al Leem’s leadership, that of his management team – and the support they have received from local government and international businesses. It has not come easy: Al Leem and his team has had to forge its business ties traditionally – by meeting people face-to-face, and developing a bond of trust and reliance that only comes with time.
“Do not get me wrong: we have had companies leave us over the last year – but they have been smaller businesses, micro-businesses, a majority of which are offices. This is part of the business life,” said Dr. Al Leem.
Hamriyah is a multi-billion dollar enterprise. Al Leem would not talk financials, but has been quoted as saying the free zone has attracted over $20bn in foreign investment since it was established in 1995. While he is unable to reveal annual turnover, Dr. Al Leem is happy to illustrate the success of the free zone with other statistics.
“We announced in January 2011 that we expected 700 to 800 companies to join HFZA. And, yes, we had companies leave – but the facts are that we have penetrated new markets, we have done more marketing, and that saw 1,327 new companies join last year,” he said. “There is no way I could have dreamed of that.”
Dr. Al Leem admits to being a little green under the collar when he was approached by H.H. Sultan bin Mohamed Al-Qasimi, Sharjah’s ruler, to explore the future potential of the free zone. Dr. Al Leem had been working for AMOCO at its Sajaa gas plant as a production superintendent, and says the remote location of the work certainly helped get him acquainted with the fledgling free zone in 2000. “I never knew about free zones, what they did, or what their businesses were all about. I knew that His Highness had a vision, so the first day I came here I decided to drive through the area. There was nothing but water on one side and desert on the other,” he explained. “We did not even have an office. Everything was done out of Portacabins,” said Dr. Al Leem.
H.H. Al-Qasimi’s idea was to create an industrial heart for Sharjah that would attract and retain foreign investment which, in turn, brings jobs and economic prosperity to the wider region. It is a relatively straightforward concept, but it is not a plan that came together overnight.
“To build industries, you need the upstream industries and downstream businesses to come together, so you need the facilities. You also need to have offices to support the sales and everything. So, we started to work on that – but, as they say, the road is full of bumps. It is not that easy,” said Dr. Al Leem.
As a logistics hub, Hamriyah has a lot going for it. It is not only situated in the only emirate with ports on both the Arabian Gulf and Indian Ocean coasts, it also has tremendous links with the Sharjah International Airport Free Zone and wider UAE. It is 11-hours closer, in sailing time, to the Strait of Hormuz than Dubai’s Jebel Ali.
The 14.5m deep-water harbour was developed in 2002-05 by Halcrow to replace the original pontoon dock. The port facility now has a berth for LPG tankers and another for grain and general cargo ships. The grain berth also has a rail-mounted vacuvator, while specialist equipment can be brought in to cater for other cargo. There is one 3,500HP tug-boat stationed at the port, while others are called in from Sharjah’s Port Khalid as required.
At a cost of $96.6m, the inner harbour project was one of the biggest ever undertaken by the HFZA. It required the dredging of the existing main channel to a depth of 9m, and the excavation of more than five million cubic metres of sand, rock and soil, to create two basins, one 5m deep, and the other 7m deep.
HFZA also poured millions into developing roads, facilities and other infrastructure to help attract business. It has recently signed an agreement to build the first 32 warehouses for its new Logistics Village, a 100ha site in Phase 2. The $13.6m deal was signed by Hamriyah Fabricators, and the buildings will be the first ‘green’ buildings certified in Sharjah. HFZA also recently signed a $20.4m deal to boost power capacity within Phase 2.
New infrastructure projects have certainly helped generate more business but, as Dr. Al Leem said, it has not been easy. “In the beginning, it was very difficult. If you have something tangible, like an iPad, you can go to the market and make a big thing about it. You can see it, touch it, use it – so it is quite easy to sell. Here, you are selling something intangible. You are selling a service,” said Dr. Al Leem.
“People had to drive here to see what was here. You have to build the human touch. That is the difficult thing: building trust, convincing people that you will do what you say, and that they can trust that their investments are safe in your hands,” he added.
“That was the real challenge, because we were new in the region. Even when you travel to neighbouring countries – India, for example – historic connections matter. When you are young, fresh and new, it is not easy.” Hamriyah’s focus on SMEs has also helped fuel expansion on-site. Phase 2 is currently 70% occupied and, if you count land set aside under a memorandum of understanding for a large, multinational steel producer’s plans to build a plant, is 90% committed to current, ongoing and future projects. Plans for the steel factory rely heavily on a deal to supply gas into Sharjah from Iran, but delays in commissioning the pipeline have meant work has not yet started on plant construction.
“We have a couple of clients waiting for gas to push ahead with their plans. So far, because of the political situation and so many things, it has not happened yet. It is a very tricky, big question that we need to find an answer for,” said Dr. Al Leem.
Surrounding these larger industries with smaller downstream business was also a conscious decision by HFZA. “The theme was integration. If you are able to bring a steel company to the free zone, you are able to attract other industries as well,” said Dr. Al Leem. “We started an initiative called ‘Zoning the Zone’, where we looked at grouping our industries together. People felt it was a good idea because again, it means they are close to each other, and they understand the nature of their business and how risky it is. It means they can really co-operate with each other.”
Other business initiatives have also helped. Hamriyah has centralised many functions that would require staff and management to leave the site for official business. HFZA has a fully-fledged clinic with different access points for labourers and management, which is designed to help speed work-visa processing; the traffic department has an office on-site to help speed licence applications; the Sharjah Chamber of Commerce also has an office on-site.
HFZA also developed the SHE-Q club, which holds regular, free-to-attend meetings for executives to network and discuss new safety, health, environment and quality initiatives.
“We started to see bigger companies wanting to come in, even the banks, because they realised it was a good opportunity to speak to a large number of people, all gathered in one place. It is not easy to get 100 executives in a room together, and it is a way where you can really exchange information and benchmark yourself with what is happening in other industries. “This has been really successful, and has helped people have more belief and more faith in what we do here.”
As for future expansion, Al Leem said there were no plans for a Phase 3 at HFZA. “But I am proposing to the government that we develop the seafreight side now, and look at the port infrastructure itself – maybe dredge a little deeper, and have more facilities to complement what we have. If you can have a container terminal here, then it will be amazing for the port.”For all the latest construction news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.