RAS AL KHAIMAH: HUB OF INVESTMENTS
Mar 12 - 18, 2012
The United Arab Emirates (UAE) is quickly making its presence known on the world stage; the country is shifting away from its dependence on oil and diversifying into new business sectors such as real estate, tourism, world-class sporting events, finance, and construction. Development supported and encouraged by government, economic policy reforms, streamlined foreign investment regulations, and the multicultural lifestyle afforded to nationals and expatriates are contributing to exemplary growth. Despite uncertainty in the regional political situation, still the country is stable and at low risk. In sum, the United Arab Emirates appears intent on attracting businesses from many parts of the world, now and throughout the 21st century.
Following the discovery of oil in the 1960s, the principal sources of revenue in the Emirates were oil- and gas-related products. Today, this industry is the single largest driver of the UAE's economic prosperity and growth. To reduce its dependence on oil, one of its emirates Ras Al Khaimah diversified herself into other industries and manufacturing. By 2000, Ras Al Khaimah had the highest capital investment in the industrial sector in UAE.
The economy of RAK is anticipated to compliment and follow the Dubai model in its economic growth strategy. RAK is not a major oil producer, so it has focussed on developing its industrial sector. Especially RAK is trying to emerge as an investment destination par excellence.
MAIN SECTORS OF RAS AL KHAIMAH'S ECONOMY
Real Estate - numerous residential areas, offices, commercial buildings are constructed in Ras Al Khaimah.
Tourism - Ras Al Khaimah is becoming a new destination on tourist maps. Ras Al Khaimah is home to five star hotels and beach resorts. Like Dubai, Ras Al Khaimah also opened to offer leisure opportunity for both residents and visitors and for this, new tourism projects are under construction.
Building materials - Ras al Khaimah opened the UAE's first cement company in the early 1970s and is now the UAE's largest producer of cement. In the 1980s, the emirate formed Ras al-Khaimah Ceramics, which has become the world's largest ceramics producer.
Manufacturing and High-Tech Industry - In the 1980s, the emirate formed Gulf Pharmaceutical Industries (Julphar), the Persian Gulf region's first pharmaceuticals company. Falcon Technologies International (FTI) represents high-tech industry and produces optical storage media (CDR, DVDR and BDR).
Service sector - is recently growing sector with its prominent RAK Bank and RAK Insurance companies.
Agriculture and Fisheries - in the past, these were the main economic sectors of Ras Al Khaimah. Nowadays, they are still significant providing foodstuff not only for the Emirate but for the whole country.
Under the guidance of the Crown Prince H.H Sheikh Saud Bin Saqr Al Qasimi, the RAK government has embraced the concept of free enterprise as a vehicle for progress and development. The government is proactive in its approach for attracting foreign investments by creating an incentive based environment and a suitable climate for investment in Ras Al Khaimah. RAK offers excellent investment opportunities in diverse ever-growing economic areas. The following sectors offer attractive investment opportunities:
The emirate derives its economic importance from the abundant raw materials, which have made the emirate the main producer of cement, building materials, quarries, and ceramics. More recently, companies from other parts of the manufacturing sector have invested in RAK: pharmaceuticals, electronics, automotive industry, metalworking and machinery, as well as food processing.
Along this global manufacturing base for high value added industries with high regional growth potential, such as:
a. Electronics/White Goods
c. Rubbers and plastic components, products
d. Paints and additives
g. Leisure and entertainment
i. Electrical and Infrastructure projects
It is estimated that the costs of setting up a factory in Ras Al Khaimah are about 20 per cent lower compared to other destinations due to lower prices of land, better logistics, no taxes and low customs duties and reduced overheads or costs incurred in bureaucratic delays.
Ras Al Khaimah allows investors to save time to complete a project from zero date to a fully operating factory in around 6 to 12 months. These factors, coupled with lower living costs, competitive freight costs and easy access to the rest of the UAE, have created an optimal environment for manufacturing industries to set up their UAE business operations in Ras Al Khaimah.
Proximity and excellent road connections to the fast-growing but congested markets in Dubai have made Ras Al Khaimah an ideal location for logistics and warehousing for both the UAE and the GCC markets.
Ras Al Khaimah has a state-of-the-art container terminal in Mina Saqr Port and one of the best bulk handling ports in the region in Al Jazeera. The emirate is also developing smaller ports in Ras Al Khaimah and Al Jeer to serve regional traffic and complement the above large ports.
Expansion plans for the Ras Al Khaimah Airport and the launch of RAK Airways in late 2007 have boosted the logistics infrastructure of the emirate tremendously.
Growing space limitations and lacking infrastructure in major logistics hubs near large ports have encouraged logistics companies to look for alternative locations and Ras Al Khaimah is one of them.
The service sector in Ras Al Khaimah is still less developed than in Dubai and thus offers many opportunities. The main advantage of the emirate, however, is its proximity to Dubai, which allows RAK-based companies to provide services to this fast-growing global business hotspot very cost-effectively due to the lower costs of living and doing business in Ras Al Khaimah.
The main attractions of the real estate market in Ras Al Khaimah include underdeveloped local market for residential and commercial properties, proximity to Dubai, lower costs of living in Ras Al Khaimah and diversified landscape offering both nice beaches and mountainous areas for leisure activities. Hot water springs, sand dunes, mountains and scenic locations provide attractive opportunities for investors in tourism-related projects. Attractiveness of investment opportunities in the real estate sectors has prompted many foreign investors to invest in Ras Al Khaimah.
The government of Ras Al Khaimah has launched an offshore facility, the second in the UAE, which is expected to attract investors looking for a new tax haven. The International Companies Registry allows foreign investors to register offshore companies in the RAK's Free Trade Zone without the need to establish a physical presence in the UAE. Ras Al Khaimah offshore scheme provides some distinct advantages like the provision of "bearer shares" under which an entity may decide not to disclose the owner's identity. In such cases, the shareholder's identity is known only to the appointed agent. However, the government may ask the shareholder's identity if required in cases such as bad transactions.
The government of Ras Al Khaimah encouraged the manufacturing and service industries by creating infrastructure conducive to free trade and free enterprise. The free trade zone was established for this purpose and existing industrial zones are also being expanded. The government streamlined licensing and other regulatory procedures. In addition, the authorities assumed a significant role in developing water supply, electrical facilities, telecommunications and transportation. They also invested in capital-intensive industries with long gestation periods such as mining and extraction, cement and building materials.
There are no corporate or personal income taxes. Except for oil and gas-producing companies and branches of foreign banks in Abu Dhabi, Dubai and Sharjah, there are no direct corporate income taxes, nor are there any withholding taxes. The currency is fully convertible, and there are no restrictions or taxes on the repatriation of capital or earnings.
No doubt, Ras Al Khaimah is emerging as a viable investment alternative with increasingly large numbers of firms choosing to locate their operations there rather than in already well-established but increasingly overcrowded parts of the UAE. The costs of living and doing business in Ras Al Khaimah are markedly lower than in Dubai, for example, while the distance of less than 100 kilometres between Ras Al Khaimah and Dubai can be covered in less than one hour. This enables companies to take advantage of being very close to Dubai but avoiding any negative impacts brought by the high growth there.