Ras Al Khaimah is actively promoting itself as a production and re-export hub for the Middle East, although it faces stiff competition from other Gulf states, especially its fellow emirate, Dubai
Ras Al Khaimah (RAK) is pinning much of its hopes of attracting new business on its rapidly developing free trade zone (FTZ), which was established in the year 2000 to attract investment and boost economic diversity by moving the emirate away from a dependence on natural resources and agriculture toward a service based economy.
The FTZ can boast a certain degree of diversity itself, as it consists of three main, but separate sites the RAK Free Trade Zone Technology Park, the RAK Free Trade Zone Industrial and the RAK Free Trade Zone Business Park.
According to Oussama El Omari, the chief executive officer and director general of the Free Trade Zone Authority (FTZA), both Ras Al Khaimah's location at the crossroads of Europe and Asia and the strong business opportunities in the region can help the zone to develop. This is in spite of, or indeed partly due to, the ongoing global economic crisis.
"With the international crisis, western countries are looking to this part of the world as a safe investment destination," he told Commerce on November 5. "The region is emerging as a re-export centre, as reflected in our growing trade, and we want to make sure that we help those western countries to get out of the crisis by creating export programmes and business opportunities for them," he added.
There are already some 5,000 companies registered in the FTZ, a number the zone's management hope will double in the next three years. To meet this objective, FTZA has been pursuing an aggressive business strategy to promote itself in overseas markets. Having already established offices in Dubai and Abu Dhabi, the zone's management has opened offices in India, Germany, Turkey and most recently the US.
Indeed, there would appear to be a strong business rationale behind promoting the FTZ in the US, El Omari said. "In light of the fact that more than 13 percent of Gross Domestic Product (GDP) in the US comes from exports and that US companies are seeking more tools to export their goods, we see a growing potential coming from the US market by supporting the US trade and export from Ras Al Khaimah."
Another market being targeted is Turkey. According to RAK FTZ's regional manager in the country, there are already around 80 Turkish firms registered in the zone, with more expected to follow.
This interest is only natural considering that Turkey is now the 15th largest economy in the world; it is the perfect time and opportunity for them to establish headquarters or branches outside of Turkey and the RAK FTZ is the very gateway to make that happen. One of the advantages that the FTZ is seeking to play on when attracting potential occupants is that it is not Dubai.
Indeed, the zone is positioning itself as an alternative to its fellow emirate.
The FTZA says companies operating in the zone are able to benefit from all of the services provided in Dubai, but at a more competitive price.
"Dubai's boom has made it one of the most expensive locations in the world," El Omari said in the November edition of the magazine Site Selection. "Therefore, it is much better for service providers working with clients or projects there to come to RAK, 45 minutes away, and provide their services from here."
Perhaps ironically, the economic crisis could undermine some of RAK's cost advantage over its rival. With property prices in Dubai having dropped by four per cent in October according to a study by HSBC, and new projects coming on line to boost office and industrial space, rental costs are likely to fall.
A positive help to the FTZ is the government's future plans to build four power stations amounting to more than 500 megawatts, all due to be operational within three years, which will supply RAK FTZ's future needs.
RAK FTZ is also looking for temporary and alternative power to make sure that their current clients and projects will have uninterrupted electricity supply.
Despite these difficulties and competition, RAK's FTZ has established itself as a popular alternative to Dubai, with around 1,500 new companies having based themselves there in the past year, according to the FTZA.
© Commerce 2009
