Despite the headwinds brought about by geopolitical tensions and economic uncertainty in 2022, the primacy of Dubai Multi Commodities Centre (DMCC) as the world’s best free zone remains a constant. For the eighth consecutive year, the UAE’s biggest free zone has been crowned ‘Global Free Zone of the Year’, while the position of special economic zones (SEZs) in the world has been strengthened by the need for scale in forward-looking sectors.

The judging panel – three external and two from the fDi team – assessed 67 zones that submitted entries for fDi’s Global Free Zone of the Year 2022.

While DMCC led the pack, established peers China’s Dalian Free Trade Zone and Poland’s Katowice Special Economic Zone earned second and third place, respectively, in the global top 10. Overall, Emirati zones fared well in fDi’s ranking, with Sharjah’s Hamriyah Free Zone Authority coming in fourth place, followed by Ajman Free Zone in fifth and Khalifa Industrial Zone Abu Dhabi (KIZAD) in sixth. 

Polish zones Pomeranian Special Economic Zone and ódź Special Economic Zone placed seventh and eighth respectively, while Costa Rica’s Coyol Free Zone was ninth and the Mauritius Freeport tenth. Out of the top 10, seven zones are located in either the UAE or Poland — both countries have been global flag-bearers for the use of free zones to promote economic development over the past three decades.  

Global winners

Winner: DMCC

The Dubai-based DMCC has won Global Free Zone of the Year for the eighth year in a row. The judges were impressed by the zone’s sustained attractiveness to new members, its promotion of the crypto sector and its commitment to creating a robust ecosystem for the trade of commodities. 

In line with a record year for greenfield investments into free zones, the DMCC attracted a record 2485 new tenants over the course of 2021 and 665 new tenants in Q1 2022, its best Q1 performance since its launch in 2002. The zone now counts more than 21,000 companies among its members. 

With its focus split between diamonds, crypto and coffee, the DMCC has continued to adapt with the times. Following the launch of the crypto centre last year, the number of crypto companies operating in the zone totals 361. In the first quarter of 2022, 16% of the 665 new member companies were crypto and blockchain-related, while the world’s biggest crypto exchange, Binance, was also granted a virtual asset licence with DMCC this year.

The increase in tenants coincided with an appetite among investors for more office space. ​​In 2021, 287 tenants expanded the size of their offices in DMCC, out of which 43 moved to larger spaces.  

The zone also has a range of new infrastructure developments, such as the mixed-use Uptown Dubai District, and it plans to make Jumeirah Lakes Tower (JLT) the first smart and sustainable district of its kind in the region, powered by a 5G network.

Another stand-out element is the zone’s means of plugging gaps in international trade. The DMCC Coffee Centre, established in 2018, connects coffee producers with traders and consumers, sidestepping any intermediaries. In 2021, the DMCC Coffee Centre processed more than 9000 metric tonnes of coffee, up by 2000 metric tonnes from 2020 figures. The DMCC Tea Centre, meanwhile, handled more than 35,580 metric tonnes of tea, representing a 14% increase from 2020.

The judges were impressed by the zone’s commitment to maintaining trade relations. Following the Abraham Accords, DMCC’s Dubai Diamond Exchange signed a memorandum of understanding with the Israeli Diamond Exchange. It is also working with the UAE government on comprehensive economic partnership agreements (CEPAs) to enhance trade across the globe. As it stands, the zone contributes more than 10% to Dubai’s GDP.

Highly commended: Dalian Free Trade Zone

Dalian Free Trade Zone (DFTZ), the biggest zone in northern China, moved up the top 10 to secure second place in this year’s ranking, from third in fDi’s Global Free Zone 2021.  

Dalian Free Trade Zone comes highly commended due to its investment attraction, technology developments and regulatory flexibility. Notable investors set up shop in the zone in 2021, with South Korean semiconductor manufacturer SK Hynix investing in a brand new wafer fab in Dalian Free Trade Zone, having acquired the manufacturing assets from US chip giant Intel.

The judges also rewarded the zone’s adaptability and tech ambitions. It is encouraging tenants to become “technologically advanced SMEs”, in line with the Chinese government’s push towards a self-sufficient, high-tech economy. DFTZ has also accelerated the development of its automotive sector, having attracted Chinese and foreign heavyweights, such as state-owned Chery Automobile, Chinese-Japanese JV Dongfeng-Nissan and German carmaker Volkswagen. In 2021, the region’s auto industry achieved an output value of Rmb18.4bn ($2.7bn), a year-on-year increase of 16.1%. 

The judges were particularly impressed by DFTZ’s plans to attract research institutions and artificial intelligence (AI) start-ups to develop the Dalian Digital Valley Park and Northern China’s largest supercomputing centre. In line with its automotive aims, it has also developed a lithium battery cluster. 

Not everything has been easy for both Chinese and foreign companies operating in China this year, however, as the prolonged Covid-19 lockdowns have strained the economy. In June, the zone launched 51 relief policies to help small and medium-sized enterprises weather the headwinds whipped up by economic uncertainty and promote stable growth in the industrial economy.

As for bigger investors, the zone co-operated last year with China’s State Administration of Foreign Exchange and the Bank of China to provide a bespoke offshore trade finance supervision scheme for multinational energy trading house Trafigura.

This article first appeared in the October/November 2022 print edition of fDi Intelligence.