What brings Becker Paints from Germany, Seah Steels from South Korea and Ashok Leyland from India to a business hub in the United Arab Emirates (UAE)?
These manufacturers are among the 7,000 companies that have set up operations in the nearly 30 million square metres of land owned and managed by Ras al-Khaimah Investment Authority (RAKIA).
This 10-year old business hub, in Ras al-Khaimah (RAK), UAE, is made of two industrial parks. The first, Al Hamra, is around 7 million square metres, where companies can lease land for warehouses, offices and other accommodations. The second, Al Ghail Industrial Park, consists of 23 million square metres.
“On an average, RAKIA leases out over 1 million square feet of raw land every month,” says Rino Sabatino, CEO of RAKIA. Recently, Asian Fibres signed up for 860,000 square feet of land at an investment of $100 million; roofing and cement maker Everest Industries took up about 750,000 square feet of raw land. Nearly 30 per cent of the companies that have set up operations are from India and an equal number from Europe.
So what draws companies to RAKIA? For one, it consists of both a free zone, where 100 per cent foreign ownership is allowed, as well as a non-free zone, where 51 per cent local ownership is mandatory. This contrasts with other entities in West Asia, where a sector is either entirely in the free zone or the non-free zone.
Also, the business hub has invested more than one billion dirham (AED) for infrastructure development. In this calendar year, 100 million dirhams were earmarked for pure infrastructure development, notes Sabatino. The area has sound connectivity including Saqr Port, RAK airport, good roadways and Etihad railway, which is under construction.
Efficiency of process is another attraction. “A company can, at a conservative estimate, sign up with us within 10 days, depending on the complexity” notes Sabatino. RAKIA has instituted a one-stop-shop process, where everything — immigration, civil defense and environment — is available in one building.
Companies also benefit from the vibrant demand in the Gulf Cooperation Council (GCC) as well as the Middle East and North Africa (MENA) regions. There are other sweeteners as well — zero corporate tax, zero personal income-tax and repatriation of all profits.
Companies also get easy and direct high-level access to talent — both local and expats. The concept of rule of law with the court is alive and well in RAK, notes Sabatino.
Companies that set up operations can take comfort in the financial strength of RAK. For instance, during the global financial crisis in 2008, RAK maintained its rating internationally with credit agencies – ‘A/A-1’ from Standard & Poor’s and ‘A’ from Fitch.
Recently, S&P has reaffirmed its rating. Also, London-headquartered International Finance Magazineawarded the title of Best Free Trade Zone in the GCC to RAKIA.
The company is currently investing in infrastructure at its Al Ghail industrial park and wants to bring in at least 5,000 additional companies in the next two to three years. “We customise our working relationship with the companies based on their specific needs”, says Sabatino. He gives the example of Ashok Leyland, which is the only manufacturer in the automotive sector in Al Ghail Industrial Park, building over 3,000 buses for the GCC market. On the other hand, there is Guardian Glass, which is a multinational, even as the majority of the 7,000 companies are small and medium enterprises.
But how do companies hear about and partner with RAKIA? “We know the top seven or eight sectors that really work well or thrive in RAK. We then go to a country and identify 10 or 20 companies that we would like to contact.
“There’s some initial dialogue for a couple of months, when we send out information to the investor company. We then shortlist companies and conduct road-shows. So, by the time we meet the investor, it is no longer an introductory meeting — we know each other and can hit the ground running”, explains Sabatino.