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RAK is pinning much of its hopes of attracting new business on its rapidly developing free trade zone (FTZ), which was established in 2000 to attract investment and boost economic diversity by moving the emirate away from a dependence on natural resources and agriculture toward a service-based economy.
The FTZ can boast a certain degree of diversity itself, as it consists of three main but separate sites - the RAK Free Trade Zone Technology Park, the RAK Free Trade Zone Industrial and the RAK Free Trade Zone Business Park.
According to Oussama El Omari, the chief executive officer and director general of the Free Trade Zone Authority (FTZA), both Ras Al Khaimah's location at the crossroads of Europe and Asia and the strong business opportunities in the region can help the zone to develop. This is in spite of, or indeed partly due to, the ongoing global economic crisis.
"With the international crisis, western countries are looking to this part of the world as a safe investment destination," he told OBG on November 5. "The region is emerging as a re-export centre, as reflected in our growing trade, and we want to make sure that we help those western countries to get out of the crisis by creating export programmes and business opportunities for them," he added.
There are already some 5000 companies registered in the FTZ, a number the zone's management hope will double in the next three years. To meet this objective, FTZA has been pursuing an aggressive business strategy to promote itself in overseas markets. Having already established offices in Dubai and Abu Dhabi, the zone's management has opened offices in India, Germany, Turkey and most recently the US.
Indeed, there would appear to be a strong business rationale behind promoting the FTZ in the US, El Omari said. "In light of the fact that more than 13% of Gross Domestic Product (GDP) in the US comes from exports and that US companies are seeking more tools to export their goods, we see a growing potential coming from the US market by supporting the US trade and export from Ras Al Khaimah," he told OBG.
Another market being targeted is Turkey. According to RAK FTZ's regional manager in the country, there are already around 80 Turkish firms registered in the zone, with more expected to follow.
This interest is only natural considering that Turkey is now the 15th largest economy in the world; it is the perfect time and opportunity for them to establish headquarters or branches outside of Turkey, and the RAK FTZ is the very gateway to make that happen.
One of the advantages that the FTZ is seeking to play on when attracting potential occupants is that it is not Dubai. Indeed, the zone is positioning itself as an alternative to its fellow emirate.
The FTZA says companies operating in the zone are able to benefit from all of the services provided in nearby Dubai, such as a high-grade transport network and infrastructure, but at a more competitive price.
"Dubai's boom has made it one of the most expensive locations in the world," El Omari said in the November edition of the magazine Site Selection. "Therefore, it is much better for service providers working with clients or projects there to come to RAK, 45 minutes away, and provide their services from here."
Perhaps ironically, the ongoing global economic crisis could undermine some of RAK's cost advantage over its rival. With property prices in Dubai having dropped 4% in October according to a study by HSBC, and new projects coming on line to boost office and industrial space, rental costs are likely to fall, adding to the lure of the emirate.
A positive help to the FTZ is the government's future plans to build four new power stations amounting to over 500 megawatt, all due to be operational within three years, which will supply RAK FTZ's future needs. RAK FTZ is also looking for temporary and alternative power to make sure that their current clients and projects will have uninterrupted electricity supply.
Despite these difficulties and competition, RAK's FTZ has established itself as a popular alternative to Dubai, with around 1500 new companies having based themselves in the zone in the past year, according to the FTZA. If it can maintain this pace, Ras Al Khaimah could well achieve its target of being right in the zone.