2 New Free Zones in UAE Will Strategically Boost The Economy
Updated: Sep 18
6th March 2023
The UAE has announced two new free zones that cater specifically to businesses operating in the digital and virtual asset space and companies in the military and security sectors. Future focused and aligned with the UAE's strategic plans and economic development strategy, the two new free zones will help to attract FDI with very specific offerings.
RAK Digital Assets Oasis Free Zone, which will be based in Ras Al Khaimah, and is due to be launching in Q2 2023, will be the new free zone catering to digital and virtual asset (VA) companies; whilst the military and security free zone is based in Abu Dhabi, within the existing Tawazun Industrial Park.
Below, we'll share the information that we know so far. We'll start with RAK Digital Assets Oasis. (Go directly to the Tawazun free zone information.)
Introducing RAK Digital Assets Oasis Free Zone (RAK DAO)
Aligned with the UAE's ambition of becoming one of the most innovative countries in the world*, RAK DAO will be the world's first free zone solely dedicated to digital and VA companies. Little information is known about RAK DAO, so here is what we know so far.
What types of businesses RAK DAO free zone for?
RAK DAO will be suitable for innovative companies carrying out non-regulated activities and operating in new and emerging sectors, such as:
Virtual asset wallets
Non-fungible tokens (NFTs)
Decentralized Autonomous Organisations (DAOs)
Decentralized Applications (DApps)
The free zone is intending to attract progressive, disruptive entrepreneurs and businesses which will transform the current status quo.
Where is RAK DAO free zone located?
The new free zone is being purpose-built in Ras Al Khaimah, which is northern-most of the seven emirates making up the UAE.
What are the requirements for setting up in RAK DAO free zone?
Whilst the initial launch announcement from the new free zone claims it will be 'innovation-enabling', the regulations, processes and timescales have not yet been made public. Free zones are regulated by the government in the respective emirate where they are located, but each free zone has its own, independent regulations.
What infrastructure will be available?
Specific details are yet to be confirmed.
Once the legal structures are launched, they will determine what physical or virtual office requirements license holders will need as part of their business setup.
How much will the RAK DAO free zone license cost?
The costs have not yet be released.
Will it be possible to get a UAE visa in RAK DAO free zone?
Residence visa applications will relate to the business license; hence it is necessary to setup the company first and complete the issuance of the free zone license. Upon successful setup of the business, visas can be applied for. However, all visas are subject to immigration approval; and therefore, not guaranteed.
The UAE's Digital Transformation Timeline (for reference purposes)
Regulatory Framework for Stored Values and Electronic Payment Systems was launched; replaced by the actual regulation, Stored Value Facilities (SVF) Regulation, in 2020.
Dubai Blockchain Strategy was launched.
UAE Strategy for Artificial Intelligence (AI) was launched to achieve the objectives of the UAE Centennial Plan 2071; boost government performance; use an integrated smart digital system that can overcome challenges and provide quick efficient solutions; make the UAE the first in the field of AI investments in various sectors; and, create a new vital market with high economic value.
Abu Dhabi Global Market (ADGM) was the first jurisdiction in the world to launch a regulatory framework for virtual assets activities.
DMCC Free Zone launched DMCC Crypto Center to attract blockchain and crypto businesses. It currently boasts more than 500 crypto companies and claims to be the largest crypto ecosystem in the region.
Dubai Metaverse Strategy was lauched to turn Dubai into one of the world’s top 10 metaverse economies.
Law No. 9 of 2022 Regulating the Provision of Digital Services in the Emirate of Dubai was launched to accelerate digital transformation, enhance the provision of digital services, and promote digitisation.
Law No. 4 of 2022 Regulation Virtual Assets in the Emirate of Dubai was launched and the Virtual Assets Regulatory Authority (VARA) was established as the regulator - the world's first independent VA regulator.
Digital Economy Strategy was launched to double the contribution of the digital economy to the UAE's GDP from 9.7% (Apr 2022) to 19.4% by 2031 and the UAE Council for Digital Economy was established to oversee the strategy, chaired by Omar bin Sultan Al Olama, Minister of State for Artificial Intelligence, Digital Economy, and Teleworking Applications.
VARA published it's Virtual Assets and Related Activities Regulations 2023, a comprehensive framework of rules and guidelines for the business activities it regulates. NOTE: businesses are not permitted to offer regulated virtual assets services or activities in Dubai without receiving VARA approval.
In the Agility Emerging Markets Index 2023, the UAE ranks 2nd for digital readiness.
In Ookla's Speedtest Global Index (Median Country Speeds January 2023), the UAE tops the Mobile Global Performance list, ranking in 1st position; and in 4th for Fixed Broadband Global Performance. On a city level, Dubai tops the Mobile Global Performance list and Abu Dhabi ranks at 8th position; and, Abu Dhabi is 4th for Fixed Broadband Global Performance.
* Global Innovation Index 2022, UAE ranks 31st out of 132 global economies.
Introducing Tawazun Free Zone
Tawazun Council, which is the UAE's defense and security acquisitions authority, has established it's new 2.8sqm free zone, for military and security companies, within the existing Tawazun Industrial Park in Abu Dhabi. The announcement came immediately after the successful IDEX and Navdex exhibitions at the end of February, where Tawazun Council signed 56 procurement deals with a combined value of more than AED23 billion.
The new free zone supports the UAE’s strategic diversification plans to become an industrial hub to contribute to the national economy. Thus, it is aligned with Abu Dhabi's industrial strategy 'Operation 300bn' and the 'Make It In The Emirates Campaign'.
What types of businesses Tawazun free zone for?
The new Tawazun free zone will be suitable for defence and security companies, their supply chain and other strategic manufacturing companies, as:
electronic and technical activities
safety and security
research and development
Tawazun Industrial Park is already home to 31 companies in the defense, security, aerospace and strategic manufacturing sectors.
Where is the new Tawazun free zone located?
The free zone is a dedicated area within Tawazun Industrial Park, which located in Abu Dhabi; inland, to the east of Al Rabah, and west of Al Ajban and Sweihan; with easy road access to Dubai and the Northern Emirates via the recently upgraded E311 highway. It is strategically located to provide easy land, sea and air connectivity.
What are the requirements for setting up in Tawazun free zone?
These can be discussed for genuine business setup inquiries, alongside obtaining a proposal of costs (see 'How much will the free zone license cost', below.)
What infrastructure is available?
Tawazun Industrial Park provides a safe and secure environment, with varying levels of security and restricted access areas for manufacturing facilities in line with the respective needs of the industry. Full on-site support, including construction project management, health and safety, regulatory authority (for approvals, permits and completion certificates), IT, facilities management, testing and validation. There are also retail and leisure facilities.
The types of facilities available for leasing include:
Industrial facilities suitable for manufacturing, assembling and storage of defense and security products
It should be noted that all admissions to Tawazun Industrial Park are subject to prior security vetting and approvals.
How much will the Tawazun free zone license cost?
The license fees vary depending upon the specific requirements, e.g. the activities of the license, type of commercial premises and size etc. For an accurate proposal of costs it will be necessary to specify exactly the proposed nature of the businesses which is intended to be practised within the free zone, facility requirements, business plan and details of the project to be engaged in.
Will it be possible to get a UAE visa in Tawazun free zone?
Upon the successful issuance of the trade license, once the company is setup, it is then possible to start applying for visas.
Additional benefits of Tawazun free zone
Tariff-free access to the GCC and MENA markets due to the UAE free trade agreements
Duty-free imports of machinery, equipment, and raw materials for production
No taxes on personal and corporate income, and full repatriation of capital as per federal law
Abu Dhabi's Industrial Timeline (for reference purposes)
Abu Dhabi Ports was established to facilitate logistics, industry and trade.
Kizad, an industrial, trade and logistics centre, opens in Abu Dhabi; renamed Kezad in 2022.
Tawazun Industrial Park opens
Khalifa Port begins operations, handling a wide range of cargo to facilitate global trade.
Kizad Free Zone was launched; now Kezad.
Industrial Development Bureau was established to regulate and develop Abu Dhabi's industrial sector.
EDGE was established to bring a conglomeration of state-owned companies in the military sector under one umbrella. Focusing on four core fields: Platforms & Systems, Missiles & Weapons, Electronic Warfare & Cyber Technologies, and Trading & Mission Support, Edge's purpose is to bring innovative technologies and services to market with greater speed and efficiency.
Khalifa Ports expansion announced to increase capacity and attract new business; subsequently inaugurated in 2022.
TA'ZIZ was launched to produce in-demand chemicals at world scale in Al Dhannah (the new name for Ruwais). TA'ZIZ comprises three zones:
TA'ZIZ Industrial Chemicals Zone - chemicals production
TA'ZIZ Light Industrial Zone - will convert the outputs from the chemical zone into consumables
TA'ZIZ Industrial Services Zone - an ecosystem of support services for the above two zones
HOPE Consortium launched to deliver a complete supply chain solution to facilitate availability of the Covid-19 vaccine worldwide.
Abu Dhabi Terminal and Khalifa Port implement the region's first port truck unloading system.
Industrial Development Bureau launched Smart Manufacturing project to support adoption of new manufacturing technologies.
ADNOC and GE announced plans to develop a power generation decarbonisation roadmap
Abu Dhabi Industrial Strategy launched to double the size of it's manufacturing sector to AED172 billion, create 13,600 skilled jobs, and increase it’s non-oil exports by 143% to AED178.8 billion, by 2031.
Kizad (now Kezad) launched the region's largest multi-category wholesale food trading and logistics hub.
Operation 300bn was launched to raise the UAE's industrial sector's contribution to the national GDP from AED133 billion to AED300 billion by 2031.
Emirates Development Bank (EDB) allocated a portfolio of AED30 billion to support industrial sectors. It will contribute to financing 13,500 SMEs and creating 25,000 jobs.
The UAE has an established reputation as being the home to lots of sector-related free zones, since the first was established back in 1985 - Jebel Ali Free Zone (JAFZA). That's almost 40 years ago! Back then, the aim was the same as it is today, to diversify the economy and attract foreign direct investment (FDI).
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Written by Jenny Hunt
Founder, Gateway Group, Abu Dhabi & Dubai, United Arab Emirates
FORBES' Top 100 Most Influential Women in the Middle East