From the top floor of Ras Al Khaimah Investment Authority's (Rakia's) Amenity Center Towers, with the sun beaming in through the windows and a vast sandy coastline stretching out below, it is not difficult to understand why Ras Al Khaimah (RAK) attracts foreign investors.

“We would not have taken an office here if we were not happy,” says Sharon Darbyshire, commercial director of sealing and jointing specialist Novus Sealing. “If I look at Dubai, for example, it is a great place to visit. But it is certainly not where I would want to live.”


Johannes Fahrendorf, general manager of wire weaving specialist Haver Middle East, also praises RAK's advantages as a business base. “It is lovely here,” he says. “There is an international community and you find more or less everything you need [for business].”

Competitive advantage

While RAK’s natural beauty is an enormous asset, investors perceive it as an added bonus of setting up base in the emirate. Haver Middle East, which was established in RAK as a subsidiary of the Germany wire weaving company Haver Group, is testament to RAK’s popularity among foreign companies, which is growing thanks to ever-improving infrastructure and competitive rental rates.

“When we arrived in 2008, it was at the time of the [property] boom and in Dubai the rents were ridiculous,” says Mr Fahrendorf. “The terms there were not as good as here in RAK, and Rakia invested time and effort in being very professional and establishing a one-stop shop [for investors].”

In the seven years since its inception, Rakia has been at the helm of RAK's inward investment push. It provides investors with the appropriate infrastructure and facilities, as well as offering advisory services. Rakia has thus far registered more than 11,892 companies, attracting investments worth $3.5bn. Business transactions principally occur within Rakia’s two industrial parks, which are located in Al Hamra and Al Ghail and were designed to attract sustainable industries that will enable RAK to diversify its economic base.

“We started in Jebel Ali Free Zone [in Dubai] and we moved our operations to RAK,” says Joseph McKeever, CEO of Spatial Composite Solutions, a crew training company. “We moved because we managed to find a factory that was a perfect fit for our operations, and Rakia supports your needs. You have more freedom to grow your business here and if we want to see people in Rakia, they are quite accessible.”

Low-cost option

As well as the incentives offered to firms doing business in its industrial parks, Rakia has been keen to facilitate firms of all sizes at a lower cost than other emirates. For Kim Childs, general manager of Pro Scan Middle East, a medium-sized consultancy company, the simplicity and cost effectiveness of setting up in RAK was key to the company's decision to relocate.

“Prior to establishing [in RAK], we were working in Abu Dhabi,” she says. “The cost of doing business there far outweighed the benefits [as] the majority of our clients are outside the country. For us, RAK is a much more efficient and economical location.”

Several companies are looking to set up in RAK, principally to access the Middle East and neighbouring markets. Rakia has recognised the emirate's unique positioning close to these markets and it has been intent on putting in place the infrastructure, and marketing itself as a cost-effective destination where companies can set up shop with ease and access other markets.

Location was paramount to the decision made by Switzerland-based industrial manufacturer Franke Artemis to establish a subsidiary – Franke Washroom Systems – within Rakia’s industrial zone. “We started operating in RAK in 2007 and we have an entire supply chain management and a production plant here,” says Alexander Peiper, managing director of Franke Washroom Systems. “We serve four key markets: the United Arab Emirates, Oman, Qatar and Saudi Arabia. RAK is the perfect location for centralised logistics. We face lower basic costs and there is a good road infrastructure. It is easy to grow here and Rakia is very supportive and open.”

Teething problems

Nevertheless, some investors have been frank in admitting that, unlike its more experienced counterparts such as Dubai's Jebel Ali, RAK's industrial zones have suffered from a number of teething problems, most significantly with electricity supply. “While RAK’s rent is cheaper, the electricity is not,” says Ms Darbyshire.

Spatial Composite Solutions' Mr McKeever says: “The issue of electricity is a very real one. We have an issue in this building where the intention was that the mainline power was to be provided by a government-owned entity in Rakia, and that did not happen. There are independent services providers that can bring power but there is a lack of coordination between [them].”

Nonetheless, while acknowledging its shortcomings, the CEO of Rakia, Dr Khater Massad, maintains that Rakia will rectify these problems.“We had a problem some time ago but Rakia has installed two power plants,” he says. “One power plant in the Al Hamra industrial zone is 40 megawatts. In Al Ghail we have put an 80-megawatt power plant, and today we have excess electricity in Al Ghail industrial park. Now we are putting an overhead line between [the two] and in two months there will be no power problems at all.”

In the seven years since its inception, Rakia has worked hard to learn from problems and challenges such as these, and it has been praised for efficiently addressing investor concerns. With both RAK and the larger Middle East region predicted to be key growth markets, the investors that spoke to fDi Magazine were unanimous in agreeing that as the investment authority continues to improve RAK’s business environment, Rakia’s industrial zones can only grow in popularity.