With free zones proliferating around the Middle East, Ras al-Khaimah is adding new dimensions to differentiate its zone from the competition.
On September 17, Ras al-Khaimah announced that it will establish the International Companies Registry, an offshore centre dedicated to providing a tax haven for foreign capital. Under the new initiative, companies will be able to register offshore companies in Ras al-Khaimah Free Trade Zone (RAKFTZ) without the need to establish a physical presence - a rarity in the UAE.
Officials at RAKFTZ said that they have already started screening agents, which will be responsible for overseeing the registry of offshore entities, and they plan to inaugurate the offshore centre by October 1.
"This is a great step forward for us in our ambitious plan to make the free trade zone one of the best in the region with diversified investment vehicle opportunities. The scheme will help businessmen and investors to develop new business models", said Oussama El Omari, CEO for RAKFTZ at a seminar for UAE business representatives.
RAKFTZ expects that "around 10 entities" will be incorporated in the coming month, and they will be "mostly asset management companies." Although the offshore companies will be part of the RAKFTZ, they will not be able to conduct business within the zone or within the UAE.
One of benefits of Ras al-Khaimah's centre is its flexibility. At the time of their incorporation, offshore entities will be able to choose which legal system - such as US or UK - they will follow. Officials say this will eliminate concerns over certain UAE ownership legislation, which does not provide clear inheritance rights for foreigners.
The centre will also allow international companies to own properties designated for freehold in the UAE.
Ras al-Khaimah, however, is not the first emirate to set up offshoring opportunities. In 2003, Dubai established the Jebel Ali Offshore centre, which has successfully attracted hundreds of companies.
But RAKFTZ insists that their particular offshoring capabilities make them stand apart. "There are no other centres in the Middle East with our features," said Johnson George, manager legal department for RAKFTZ.
He points out that Ras al-Khaimah offshore companies will not be required to hold annual meetings or submit audited financial reports - two minimum standards of Jebel
Ali Offshore centre. RAK offshore entities can have only one director, while Dubai mandates two.
The costs, which are Dh2000 ($544) to establish a company with a Dh1500 ($408) renewal fee, are also considerably lower than other centres.
One of the challenges Ras al-Khaimah will face is finalising the regulatory environment. As a tax-free country and a destination for large amounts of foreign capital, the UAE has had a tough time shaking allegations that its shores are a place for money laundering.
Addressing this issue El Omari told the local press, "We are appointing three top international law firms to make sure that all these companies that are registering in this programme follow international law and anti-money laundering requirements."
Officials note they are very carefully selecting agents to be sure they are capable of safeguarding the offshore centre's reputation. The September 17 conference was in part a platform for RAKFTZ to make public their desire for top UAE-based law firms to become involved in the regulatory process.
The development of a more diverse range of investment options only give momentum to the free zone, which has been growing in leaps and bounds since its establishment. It has watched its customer base climb from 30 companies in 2000 to over 2100 in 2006.
In the coming years, RAKFTZ knows that the competition in the UAE - and in the region - is only going to increase, so it realises it must continue to roll out initiatives to catch the eye of investors.
From its International Companies Registry initiative, officials at the free zone appear committed to keep the focus on the customers, even if that means overstepping their traditional responsibilities.
As El Omari says, "We have created a millennium free zone, we are really changing the definition. Because now the free zone concept is no longer you register a company, you give them space and that is enough. [Clients] really want you to help them expand; they want you to be their partners."