The 2023 iteration of fDi Intelligence’s flagship Global Free Zones of the Year awards recognise the best free zones across geographies and specialisations among the 69 that participated in the awards this year. The Excellence awards crown those zones whose best-practices in four areas – sustainability, governance, non-fiscal incentives and infrastructure investment – set a benchmark for the whole industry. 

EXCELLENCE AWARD FOR SUSTAINABILITY

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Winner: Jebel Ali Free Zone, UAE

From the number of free zones participating in this year’s awards emphasising their green credentials, it is clear that sustainability is becoming a key tenet within the SEZ world. However, none have communicated such firm and ambitious targets as Jafza in Dubai. The DP World-owned free zone aims to become carbon neutral by 2040 and net-zero by 2050. Compared to 2019 figures, it has already reduced its carbon footprint by 5%.

Its crowning achievement so far is the installation of the Middle East’s biggest rooftop solar project, consisting of 158,000 panels that produce more than 30% of Jafza’s electricity needs. It is now in the process of electrifying equipment at Jebel Ali Port, such as onsite vehicles, quayside cranes and storage solutions. In addition to these flagship projects, Jafza’s sustainability efforts filter down to the smallest detail. It has invested Dh105m ($29m) on retrofit projects, such as replacing air conditioners with energy-efficient versions and water-saving programmes. 

Highly commended: Katowice Special Economic Zone, Poland

Among KSEZ’s many forward-thinking strategies is its approach to clean energy. This is consistent with the profile of its tenants, the majority of which, according to the free zone, are targeting net-zero carbon emissions by the end of 2035. KSEZ programmes to help clients achieve this goal include: the creation of seven energy clusters to generate and trade renewable power; a 88 hectare so-called special energy zone in the city of Bytom, which will be dedicated to renewables and heat energy; and plans to construct a photovoltaic farm with a capacity of more than 36 megawatts. 

KSEZ is also pursuing newer forms of carbon-free energy. It has worked with the Silesian University of Technology to launch the Silesian-Malopolska Hydrogen Valley, supporting the development of a local clean fuel ecosystem. In addition, last year it started investigating the possibility of powering local operations with small modular reactors, which are cleaner and safer than traditional nuclear plants.

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EXCELLENCE AWARD FOR GOVERNANCE

Winner: Dubai Multi Commodities Centre, UAE

The continuing success of DMCC in attracting and maintaining tenants, and in the Global  Free Zone of the Year awards, is in no small part due to its top-class governance system. Its governance structure is consistently subject to review, to ensure it provides the utmost transparency, efficiency and professionalism for its tenants and other stakeholders. Over the past 12 months, DMCC has made several changes to strengthen its processes.

It has become a regulatory authority for the country’s economic substance reporting process, which works to improve the tax transparency of UAE companies and acts as an interlocutor between the government and its tenants. It also works with the government to combat anti-money laundering by conducting inspections to ensure compliance with national rules, while its digital procurement system ensures transparent supplier selection processes. Finally, in line with its status as a global trading hub for diamonds, DMCC continues to strengthen its efforts to combat any illegal trading. In addition to its participation in the Kimberley Process, a global certification scheme that tackles so-called conflict diamonds, DMCC recently unveiled its Dubai Diamond Exchange Tender Best Practices Forum. This is a world-first initiative designed to enhance trust between buyers and sellers.

Highly commended: Katowice Special Economic Zone, Poland

In addition to being named runner-up in the sustainability category, the judges also recognise KSEZ for its outstanding approach to governance. Its governing bodies include representatives from local, regional and national institutions, which fosters transparency in the free zone’s decision making. Clearly stated rules, plus a collaborative work environment, help create a constructive administrative backdrop for tenants. In 2022, it built on these efforts by introducing a new remote voting system.

Judges were also impressed by KSEZ’s community, health and educational initiatives encompassed by its ESG policy. It includes worthy contributions to charities, training for local students, and retraining workers that have been made redundant. Its cooperation with schools, plus commitment to improving workers’ qualifications and access to medical care, also shows its willingness to go beyond simply providing a business environment. 

EXCELLENCE AWARD FOR NON-FISCAL INCENTIVES

Winner: Jebel Ali Free Zone, UAE

After many years of discussion, from 2024 EU countries are to introduce the OECD-championed 15% global minimum corporate tax rate, possibly triggering its adoption across geographies. The nature and size of the reform’s impact on free zones is yet to be determined, but it underlines SEZs’ need to offer a broad range of benefits — including non-fiscal — to maintain their global competitiveness. 

This year’s judges believe Jafza’s offering in terms of logistics, trade support and world-class infrastructure give it an edge over its competitors. It is home to Jebel Ali Port, which handles 80% of Dubai’s trade volume and gives tenants access to 180 destinations through 80 weekly services. Its sea-to-air connections are second to none. Companies can discharge cargo from the port and transfer it to Al Maktoum International Airport — which is being redeveloped to become the world’s biggest — via a customs bonded corridor in just 45 minutes. In addition, Jafza has maintained the fee reductions it offered during the pandemic, to boost business within the region. 

Highly commended: Klaipėda Free Economic Zone, Lithuania 

A different suite of impressive non-fiscal incentives are being offered along the Baltic Sea coast by Lithuania’s Klaipėda Free Economic Zone. For more than a decade, the SEZ has seen non-tax benefits as its key differentiator in attracting and retaining business. This is reflected by its tenants receiving €8m across all types of financial support in 2022, while paying more than €107m in taxes and generating turnover worth €1.7bn.

Instead, its biggest attractions include speed of launch, which is supported by sites that have pre-approved construction permits, existing manufacturing facilities that can quickly be customised, and the fast-tracking of large projects. Other benefits cited by investors include infrastructure and surrounding transport — which have been improved over the past year thanks to new roads and warehouses — and aftercare. Investors also value the opportunities that come from the free zone’s strong relations with the city’s investment promotion agency, universities, local government and port.

EXCELLENCE AWARD FOR INFRASTRUCTURE INVESTMENT

Winner: Dubai Multi Commodities Centre, UAE

Despite having world-class infrastructure, DMCC is not complacent about improving the facilities available to its investors. Over the past year, the Dubai-based free zone has made significant progress on its 81-floor Uptown Tower in its uptown district. All offices in what will be a 340-metre tall building were pre-leased in 2022, and this year it started work on delivering two new mixed-use developments in the area that will reach 28 and 21 stories. Meanwhile, in the Jumeirah Lakes Towers (JLT) district, it has spearheaded another round of green initiatives. These include solar car shades above parking lots that will deliver 9000 megawatt hours of energy each year; borewells to provide sustainable groundwater sources to JLT lakes; and the planting of new trees covering 33,000 square metres. In line with its international mix of tenants, DMCC’s activities haven’t been limited to Dubai. In May this year it opened a new representative office in Mumbai to act as a one-stop shop for Indian businesses wanting to set up in DMCC.

Highly commended: Jebel Ali Free Zone, UAE

Over the past 12 months, Jafza has made notable investments in a broad range of infrastructure spanning trading, logistics and warehousing. Undoubtedly one of the highlights is last year’s opening of its 2.1 million-square-foot Yiwu Market, which provides a place for both wholesale and retail trade and is already attracting more than 5000 visitors daily. Jafza invested Dh600m ($163m) in the marketplace, which is backed by both its owner, DP World, and China Commodity City Group, which operates the world’s biggest wholesale market in Zhejiang province.

Jafza has also recently completed the construction of a new 495,000-square-foot logistics park that is already fully occupied by both SMEs and large tenants. In terms of logistics, Jafza continues to upgrade its port infrastructure by developing assets that can be used by all tenants, such as quayside conveyor belts, pipelines, temperature-controlled silos and equipment for cargo handling. It is also working with Etihad Rail to move forward the Jebel Ali Rail Terminal, which will facilitate sea-to-rail transfers.

Free Zones Awards 2023

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