The taxi passes Jebel Ali, the last train station on the Red line heading out of Dubai. It’s lunchtime and the temperature is in the low 40s. We travel past an industrial park of large warehouses behind locked fences. In the last row of factories before the desert there are large gates that have the feel of a border crossing. There’s a tollgate where a man tells us to stop.
This is the entrance to the largest free trade zone in the Middle East and North Africa region, where, inside the offices of TNA Middle East FZE, the general manager Mukul Shukla is waiting for us. But we can’t reach him on the phone and the guard at the gatehouse won’t let us in without a pass.
Later that day after returning to Dubai, Shukla rings to explain why his Australian based company operates in a free trade zone.
“It’s a great advantage for TNA as it provides smooth operations and ease of doing business.”
TNA sells food processing and packaging equipment. It was established in Australia 33 years ago and now has 27 offices around the world. Its Dubai office coordinates imports and exports across the Middle East and India. He says free trade zones “encourage the relationship between the two countries (Australia and the UAE) and provides a platform for many other companies to set up operations.”
Free trade zones attract foreign investors by offering them 100% ownership and zero taxes. The UAE is home to 37 free trade zones. Including Dubai Auto Zone –the market place for the auto industry and Dubai Gold and Diamond Park – which houses 37 retailers.
Free trade zones have made the UAE very attractive for foreign companies. Including several Australian companies such as, steel production company ITW Construction Systems and ceramic manufactures Claytan Australia.
The Australian Ambassador to the United Arab Emirates, Pablo Kang, says: “The UAE introduced these free trade zones to try and encourage more companies to invest in the region.”
And he says, “more companies could be benefitting from them.”
“There are a number of Australian companies that are set up in the free trade zones that are using it as a hub but I think it’s a bit underdone.”
A free zone company is not allowed to trade directly with the UAE market. This protects the UAE economy. Kang says it is way to “build up its local businesses,” assuring security for local companies.
The government and Austrade are trying to convince companies “to look westwards” and see the opportunities for them to trade and expand their businesses in the UAE.
The companies’ perceptions are holding them back from investing in the region. Kang says they would “much rather do business somewhere more familiar and closer to home like South East Asia or Northern Asia.”
But TNA’s Shukla says, the experience for his company has been positive.
“With the presence of many multinational corporations in Dubai, all local producers’ quality has increased.”