The promoter of RAKIA Georgia Free Industrial Zone LLC is Ras Al Khaimah Investment Authority (RAKIA), a nodal agency of the government of Ras Al Khaimah in the United Arab Emirates. The industrial heartland of the northern part of the UAE, Ras Al Khaimah benefits from its central location, long coastline and large areas of open land. Its limestone deposits also make it a natural base for the country’s cement industry.

Without the sizeable hydrocarbon reserves of some of its neighbours, Ras Al Khaimah has focused on attracting export-oriented investment, offering an open business climate and good infrastructure. It is now a regional industrial hub, with leading companies involved in various segments, including cement, pharmaceuticals, quarrying, steel and the flagship ceramics sector. These industries, relatively unaffected by the global downturn, are building on their advantages and expanding beyond the UAE.

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RAKIA is one of the most important drivers of industrial development in the emirate. Since its launch in 2005, it has offered a wide and growing range of services to investors wishing to establish in Ras Al Khaimah, through both free and industrial zones.

The authority has been responsible for both enhancing and publicising the emirate’s competitive advantages for industries, including the financial benefits. Within the free zones, Ras Al Khaimah has 100% income and corporate tax exemptions, no foreign exchange controls, the right to 100% capital and profit repatriation and a fully convertible currency. On the regulatory side, firms are allowed 100% asset ownership inside the free zones and, in addition, enjoy exemptions from trade barriers, quotas and restrictions on the hiring of expatriates. Labour legislation is liberal and licensing and trade procedures are streamlined.

 

Selling point

RAKIA estimates that locating a business in Ras Al Khaimah can increase bottom lines by between 30% and 35%, compared to other emirates and other countries in the region, due to the cheaper land and labour costs. There is also a significantly lower cost of living. Ras Al Khaimah also has a very central location for industries.

RAKIA estimates that the total population of the greater region is 1.8 billion and that the emirate has access to approximately 50% of global markets – that is, those in the Middle East, Europe, Africa and the Indian subcontinent. The transport infrastructure (there are four ports) and proximity to other major transport centres (Dubai is a 50 minute-drive away) allow companies to capitalise on this geographical advantage. Finally, the emirate has a high level of economic, political and social stability.

Added to this are RAKIA’s services and its swiftly issued permits and licences. Perhaps most importantly, in a region in which registering and launching a company can involve hours of paperwork, RAKIA has ‘single-window clearance’. It often forms equity partnerships in projects with investors, hedging risk and lowering capital requirements, and can also offer installed infrastructure, with land, warehouses, office space, labour accommodation and roads.

This brings the total capital costs down even further, as companies establishing in Ras Al Khaimah do not have to invest in their own infrastructure. The free zones are designed so that companies have all the services they need in order to flourish, in one place. As a result, Ras Al Khaimah was rated the ‘Most Attractive City for FDI’ in the Middle East and Africa by fDi Magazine in 2009.

Investor-friendly policies and flexibility have brought in an array of international brands, including Guardian Glass, ARC International, Franke, Duscholux, Mitsui, Kludi, Becker Industries, Kempe, Ashok Leyland and many others.

RAKIA registered more than 6000 companies between its inception and the end of the third quarter of 2009, when including its newer Ras Al Khaimah offshore wing.

Overall, investment has topped $2.5bn and investors have come from 96 countries: 36% from the Middle East, 35% from Asia, 18% from Europe and the balance from other parts of the world.

There has been a considerable increase in the registration of European companies from previous years. Almost 75% of the European investments in RAKIA are from Germany, the UK, France, the Netherlands, Switzerland and Austria. Some 23% of registered companies are industrial enterprises, but this figure is not necessarily representative, as many of the biggest firms are manufacturers.

RAKIA acknowledges that not all of its registered companies will want to set up large-scale operations directly. The strategy is to attract firms to establish trading companies in the emirate and then encourage them to expand into manufacturing. The organisation’s officials are confident that once firms have located in the region, they will be quick to build on their initial investments.

 

Success story

In the first 16 months of operations alone, all of RAKIA’s initial 2.2 million square metres of zoned land at Al Hamra was leased out, with another 2.2million m2 (now extended to 2.83 million m2) leased to industrial zone clients; respectively, 89% and 90% of the companies in the zones are manufacturers. Following this success, RAKIA undertook the development of 25million m2 in the Al Ghail industrial area, 6 million m2 of which is designated as free zone. It has licensed more than 230 manufacturing industries there already.

In December 2009, the authority announced it would be introducing sectoral clusters in its industrial zones to help investors enhance co-ordination and competitiveness.

Geographically concentrating industries brings a wealth of benefits, such as specialisation, increased productivity, less dependence on imports, reduced transaction costs, higher innovation rates and the pursuit of joint solutions to common problems.

By using synergies and integrated facilities, industries can learn, grow and succeed together, applying complementation and co-operation for global competition as a group rather than competing with each other.

RAKIA has the means to provide the perfect environment for this concept with an industry-driven strategy, vast industrial land, the necessary legal framework, efficient infrastructure, premier industrial facilities and the provision for integrated common facilities such as office blocks, research and development labs, warehouses and factories.

As a strategic partner, RAKIA can identify and attract adequate companies for a harmonious homogeneity, as well as define and action further growth opportunities.”

RAKIA has signed a memorandum with banks in Ras Al Khaimah in a move that will greatly benefit investors in the emirate. Under the agreement, the banks will provide financing to firms for their projects in RAKIA industrial parks. S&P has affirmed its ‘A’ long-term and ‘A1’ short-term sovereign credit ratings on Ras Al Khaimah, which has built tremendous confidence for both banks and investors.