Pushing production: An open-door policy paves the way for foreign investment

Over the past decade, Ras Al Khaimah has positioned itself as a manufacturing centre in the UAE, with industry making a significant contribution to the emirate’s GDP at over 30%. A number of factors – including its convenient location with good infrastructure connections and non-application of income, sales and corporation tax – have attracted investment.

PARTNERSHIPS: The emirate operates an open-door policy for all foreign investors regardless of their country of origin. The government, through its corporate finance arm, RAK Investment and Development Office (RAK IDO), pursues a policy of forming partnerships with investors in certain fields. The emirate has used free zones to attract investment. Together with the absence of tax which is available across the board, they allow for full foreign ownership of business and free repatriation of capital. RAK Investment Authority (RAKIA) owns and manages two industrial estates, Al Hamra and Al Ghail, which since 2005 have attracted over 900 factories and investment of more than $3.5bn.

NEW LICENCES GRANTED: In 2011 RAKIA granted licences to 1415 new companies, compared to 1108 in 2010, of which 101 were industrial. The top new businesses in RAKIA zones in terms of investment were ITW, SeAH Steel, Vesuvius RAK, TriStar Resources and Mahindra & Mahindra. ITW Insulation systems, a US firm, set up a plant to produce aluminium and stainless steel jacketing for its Middle East market. South Korean steel group SeAH formed a joint venture with RAKIA to build a steel pipe factory with an annual capacity of 150,000 tonnes. The plant, which opened in April 2011, has received investments totalling $70m.

Vesuvius RAK is a metals handling firm, while TriStar Union is a joint venture between Union International, a local holding company, and the UK-based commodities group TriStar Resources, which is building a 20,000 tonnes-per-year processing plant to produce antimony and antimony trioxide. Antimony is used to harden lead, among other purposes, while antimony trioxide has flame retardant properties. The two companies signed a preliminary agreement in July 2011 and the plant is expected to be in operation by July 2013. Meanwhile, Indian vehicles group Mahindra & Mahindra entered a joint venture with RAK Transport Authority to produce armoured civilian vehicles (such as cash transport vans) for the Middle East and African markets. Production began in February 2011.

FURTHER INVESTMENTS: In addition to the large investments mentioned above, RAK has continued to see growth in its areas of traditional strength.

Unifico, a Swiss-based mines and metals group, is in the process of building a copper- and gold-smelting facility with total annual capacity of 500,000 tonnes of copper, with ore expected to be sourced from the company’s mines in Chile. Production is due to commence by the close of 2013. RAK has also continued to attract downstream firms making products with higher added value. In November 2011 Global Glass Solutions, a local company founded in 2009, opened a Dh100m ($27.2m) factory in RAKIA’s Al Ghail industrial estate, with an initial capacity of 360,000 sq metres of various types of glass a year, which the firm aims to increase to 1m sq metres annually within two years.

In April 2011 Eternity Technologies, a subsidiary of Al Dobowi Group, set up an industrial battery plant with a capacity of 1m two-volt units a year, of which 85% is destined for export to regional and global markets. Total investment in the project is Dh200m ($54.5m). In a further recent development, Middle East Specialised Cables, a Saudi manufacturer of cabling systems for a variety of industrial purposes, opened a $45.3m plant with production capacity of 7000 tonnes a year, creating 160 jobs.

Efforts are also under way to revive some traditional industries, such as pearl production. “To revive the cultured pearls industry, the first challenge is to brand the pearls and reach the market,” Daji Imura, the director of the board, CEO and COO of RAK Pearls, told OBG. “It is not about selling to one wholesaler but to a number of wholesalers who will help expand the product.”

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