Suppliers react to new ownership laws

Free zones can offer advantages for foreign companies

New ownership laws could make the UAE “more attractive” to investors, foreign construction suppliers have said.

At present, foreigners must have a UAE national as a sponsor and are limited to a maximum 49% stake, except in free zones.

Legislations to allow international companies to hold 100% ownership of businesses they establish in the UAE are expected to be submitted in the next month.

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FEATURED COMMENT I welcome the new plans to allow ownership whithout having a local sponsor. But we cannot compare this with a free zone   2 Comments Read more comments »

“The law could be beneficial to us because it will allow us to have full ownership of our company without having to move to a free zone,” said Mahidine Aϊt, area sales manager of Ciat Middle East, a subsidiary of the French-based company.

“At the moment we have a sponsor but I have no interest in relocating our company to a free zone because, for me, a free zone is only suitable for warehouses.”

The move could pave the way for technology firms to make large capital investments in the UAE and diversify the economy away from its present status.

“If implemented, new ownership laws will be very good for business in general because it gives companies more freedom and will make the emirate even more attractive,” said Christoph Hörmann, general partner Germany-based door manufacturer Hörmann.

Despite the proposed laws, the interest in establishing a company in a free zone is growing.

RAK Free Trade Zone (RAK FTZ) is one of the fastest growing free zones in the area with 7000 registered there since its establishment in 2000.

“From January to November 2009, we have registered 1662 companies from different sectors like IT services, general trading, consulting, industrial and warehousing facilities. Our target for 2009 is 2,000 companies,” said RAK FTZ CEO Oussama El Omari.

“Next year, we are expecting to increase this number by more than 50%.”

Business is also booming in DAFZ; the firm reported a 48% increase in revenue during the first half of this year, compared to the same period in 2008.

One of the key benefits that free zone offer businesses is convenient access to various service companies that operate around them. Dafza Online Electronic Services is one example.

“This service was specially developed to cater the need of Dafza's customers for speeding up all types of services required by the customer which ranges from on-line proceeding of visa applications, residence, license, health, ID cards and the renewal of these documents,” explained Ophelia Pais, executive assistant of US company Newell Rubbermaid, a supplier of labelling solutions which operates in Dafza.