Dr. Free Zone

Mohammed Al Zarouni, Director General, Dubai Airport Free Zone Authority (DAFZA), and Vice Chairman/CEO, Dubai Silicon Oasis Authority (DSOA)

Mohammed Al Zarouni, Director General, Dubai Airport Free Zone Authority, and Vice Chairman/ CEO , Dubai Silicon Oasis Authority

In 1996, Mohammed Al Zarouni handed in the thesis for his PhD in Economics at Durham University in the UK. His topic – a case study on Jebel Ali Free Zone (JAFZA). “The Jebel Ali Free Zone played a major role in increasing movement through the port,” says the UAE national on his findings.

Today he is Dr. Al Zarouni, Director General, Dubai Airport Free Zone Authority (DAFZA), and Vice Chairman/CEO, Dubai Silicon Oasis Authority (DSOA).

He has helped DAFZA become one of the UAE’s most successful free zones. Founded in 1996, the 2.1 sq kilometre area within Dubai International Airport boundaries is packed with over 1,400 businesses, including big names like Porsche, German Mann, Boeing, Airbus, Johnson & Johnson and Christian Dior.

Forty-three per cent of these companies are European, mainly from Germany and the UK. DAFZA offers 100 per cent foreign ownership, 100 per cent tax exemption and no currency restrictions. Businesses can obtain trade, service or industrial licences, and make use of offices, light indusial units, warehouses, and land for construction.

“We need Silicon Oasis as a centre for making the design of
integrated circuits and the related factories,” says Al Zarouni

“Dubai Airport Free Zone is one among the oldest free zones in Dubai with unique facilities and services that provide quality standard of services to the light-industry firms and low-labour intensive tasks,” says Al Zarouni. “These are certainly some of the important factors that differentiate us from other free zones in addition to the location of the free zone close to the airport.”

But if you want to get in there, you’ll have to wait. All spaces are leased out, at least until DAFZA completes its current expansion.

The total area of the new expansion stretches over an area of 84,000 sq metres, and will house more than 700 new companies. Al Zarouni says the AED1.2 billion (US$327 million) project should be completed by next year.

While the Dubai government paid for DAFZA’s initial infrastructure, as well as two buildings and 14 light industrial facilities, Al Zarouni insists the free zone currently stands on its own. “For the rest of the project, including the expansion, we have depended on ourselves.”

OASIS IN THE DESERT After spending his weekday mornings in DAFZA, Al Zarouni heads to the pineapple-shaped headquarters of Dubai Silicon Oasis Authority on the Dubai-Al Ain Road, at the intersection of Emirates Road.

The Dubai government founded Dubai Silicon Oasis (DSO) in 2005 with the goal of creating a global technology hub, by facilitating and promoting modern technology based industries, including those that depend on the design, development and manufacturing of precision electronics, optoelectronic technology, nanotechnology, photovoltaic and supporting equipment and materials industries. Specifically included are industries built around the production of information and communications technologies using semiconductors, “like Silicon Valley,” says Al Zarouni.

“I want to expand this role to bring technology to the country,” he adds.
And he has his eye on the computer chip. “So far, we have achieved one part, which is attracting companies in the fields of research and development, consultancy, marketing and sales. But we still want those companies designing integrated circuits (ICs). In this area, we are still in the beginning,” he says. “IC, that’s the real technology.”

He also sees DSO as a point of manufacturing. “We are going to have factories, but we cannot ignore the role of the designers,” he says.

In fact, he wants the designers so badly, he’s willing to offer them major incentives. They will pay 40 per cent less for office space than other clients, such as consultants and sales and marketing operations; and 30 to 35 per cent for residential space.

This strategy appears to be slowly paying off, as DSO has recently drawn in companies such as Mindspeed, an integrated semiconductor and software network solution provider, as well as software developer Celoxica

Al Zarouni says he has no intention to compete with China. “You shouldn’t compete with others,” he says. “I just follow my targets.”

In real estate, he says, “It is very easy to achieve our target.” But the technology side of his target may be more of a challenge. “We need Silicon Oasis as a centre for making the design of integrated circuits, and, of course, the related factories,” he says.

But he insists Dubai has major advantages over countries such as China. “The infrastructure in Dubai is much better than that in developing countries.”

“The only difficulty is maybe the price of real estate is going up,” he adds. “As we have found success in other free zones, we can make this successful. With the support of the government of Dubai, nothing is impossible. His Highness Sheikh Mohammed bin Rashid Al Maktoum, doesn’t have the word ‘impossible’ in his dictionary.”

The Silicon Oasis headquarters

I BELIEVE Al Zarouni says he believes strongly in free zones. “Of course, not because I’m director of two free zones,” he says. “I’m talking facts. UAE’s government  is establishing free zones in the UAE, especially in Dubai, to stimulate local business,” he says.

According to Al Zarouni, these zones increase demand for national infrastructure such as ports and airports and stimulate foreign trade. The leasing of offices and land contributes to the real estate sector. Companies setting up in these zones provide jobs for local and foreign populations. This, in turn, further stimulates local business, which particularly benefits the service sector. “Those employees spend 70 to 80 per cent of their salaries within the country,” says Al Zarouni.

While a recent study reported that JAFZA contributes to 26 per cent of Dubai’s annual GDP, Al Zarouni says such data is missing for DAFZA. “We don’t have a study showing the exact role of the free zone in the economy,” he says, explaining that he is planning such a study with an external organisation. “Success is measured by far more than DAFZA’s revenue,” he says.

With over 30 free zones housing over 13,000 companies, Al Zarouni says the UAE is at no risk of a free zone overload. “It’s okay, because many of the zones focus on specific fields, like Internet City, Media City and Healthcare City,” he says.

“I’m with the idea, not against the idea.” He says for a free zone to be successful, however, it should have realistic and clear objectives, and it should be selective. “Bring in only those companies who deserve to be in the free zone and in Dubai,” he says. “Focus on companies that add value. Quantity without quality, that’s wrong.”

And he is against the idea of making the entire emirate a free zone. “I am with the idea of having an open door for foreign companies, but we should not open it completely.”