Image credit: DIEZ/ Supplied
Dubai’s strategic location, coupled with its world-class infrastructure, business-friendly policies, and stable economy, has made it a highly attractive destination for global investors. Its tax-advantaged environment and proximity to both Eastern and Western markets offer numerous advantages.
The global hub for business and tourism unveiled an ambitious $8.7tn (Dhs32tn) economic plan in January. Dubbed the Dubai Economic Agenda (D33), the initiative seeks to solidify the emirate’s status as a strategic economic gateway by doubling foreign trade and investment over the next decade.
Dubai, home to more than 28 economic free zones, has embarked on reforms to enhance economic competitiveness, GDP growth, and stability while promoting economic diversity.
The economic free zones have significantly contributed to growth and entrepreneurship by creating a favourable business environment. To strengthen Dubai’s position as a global economic hub and attract more investments, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, created the Dubai Integrated Economic Zones Authority (DIEZ) in 2021, consolidating and integrating the products and services of Dubai Airport Free Zone (DAFZ), Dubai Silicon Oasis (DSO), and Dubai CommerCity, a joint venture between DIEZ and Al Wasl Properties.
His excellency Dr Mohammed Al Zarooni, executive chairman of DIEZ, emphasises that the three economic free zones play a crucial role in diversifying the economy, fostering innovation, and boosting growth, which aligns with the D33 initiative.
“The DIEZ plays a strategic role in the realisation of the D33, which aims to double the size of Dubai’s economy over the next decade. DIEZ’s three integrated economic zones – Dubai Airport Freezone, Dubai Silicon Oasis, and Dubai CommerCity – are key contributors toward this agenda and play a unique role in consolidating Dubai’s position among the top three economic cities in the world,” says Al Zarooni.
While DAFZ offers seamless global connectivity, thanks to its strategic location adjacent to Dubai International Airport (DXB), DSO has been instrumental in driving innovation in the emirate as the Dubai CommerCity is positioning the city as a global hub for digital commerce and supporting the region’s growing e-commerce market.
“Since its establishment in 2021, DIEZ has significantly evolved to align with the Dubai Economic Agenda. We have launched several initiatives, including Oraseya Capital, which is our venture capital arm, to support startups and SMEs,” explains Al Zarooni.
“Our focus has expanded to include the integration of AI and smart city solutions, further enhancing operational efficiency and sustainability. These efforts have solidified DIEZ’s role as a key player in Dubai’s economic landscape, driving innovation, economic diversification, and sustainable growth.”
A model of modern economy
Historically, oil exploration and production have been the cornerstones of GCC economies. However, the region is now actively diversifying its economy and exploring new growth avenues beyond its traditional reliance on fossil fuels.
Among the GCC region’s oil-producing states, Dubai stands out as the most successful in diversifying its economy. Since the 1970s, the emirate has made significant strides in transforming itself into a thriving global hub with a promising economic future. “By fostering a business-friendly ecosystem and continuously improving our services, we ensure that Dubai remains an attractive destination for global investors, thereby boosting the emirate’s investment attractiveness,” says Al Zarooni.
He emphasises that DIEZ is advancing Dubai’s global competitiveness through a unique approach. “Our strategic pillars “excel, grow, and enrich” are designed to create a delightful experience for customers and investors,” Al Zarooni reveals.
Through its three economic zones, the authority offers a range of incentives, including tax exemptions, 100 per cent foreign ownership, and streamlined business setup processes. These factors make it easier for international businesses to establish a presence in Dubai.
DIEZ’s supportive regulatory environment, sustainable business practices, and state-of-the-art infrastructure attract foreign direct investment (FDI). DIEZ also plays a major role in contributing to Dubai’s non-oil trade — in 2023 it registered Dhs282bn, marking a 33 per cent growth compared to 2022.
Dubai’s allure as a global investment destination has surged, attracting a remarkable 1,070 Greenfield FDI projects in 2023. This represents a threefold increase in its global share of such projects over the past three years, climbing from 1.7 per cent in 2019 to a record 6 per cent last year.
Meanwhile, DIEZ registered an 18 per cent growth in half-year net profit, 12 per cent in revenue, and 7 per cent in operating profit in the first half of 2024, amid a 4 per cent increase in the number of companies operating in its free zones. These companies now employ more than 78,000 specialised employees, reflecting a 12 per cent growth from the previous year.
“DAFZ enhances Dubai’s non-oil economy by attracting global businesses and facilitating international trade, making it a hub for logistics and commerce. DSO, as a science and technology hub that drives innovation under the Dubai 2040 Urban Master Plan, fosters innovation and serves as a testbed that supports startups and tech companies in further advancing the implementation of smart city solutions.
Dubai CommerCity is the first dedicated digital commerce-free zone in the region. It boosts the digital economy by providing tailored digital commerce enablement services for online commerce,” says a proud Al Zarooni.
“These zones drive economic diversification, innovation, and growth, aligning perfectly with the D33 agenda,” he adds.
Earlier in 2024, the authority unveiled its new strategy, which aims to solidify Dubai’s position as a leading regional and global investment hub across all sectors. Al Zarooni says the strategy revolves around three strategic pillars: “excel, grow, and enrich”.
The fourth cohort of SANDBOX, an accelerator programme focused on supporting the growth of tech startups, recently concluded with seven startups securing investments from Oraseya Capital. Each of these startups received $150,000 (Dhs570,000) following their impressive performance in the program, which attracted a significant pool of over 1,500 applicants.
In September, Oraseya Capital led a Series A funding round for Podeo, the world’s largest podcast distribution platform, where the platform raised $5.4m to support podcasters in overcoming the discoverability challenge.
“Oraseya Capital is a key contributor to the UAE’s goal of nurturing 20 unicorns by 2031. With a venture capital fund of Dhs500m ($136m), Oraseya Capital provides crucial financial support to tech startups from the pre-seed to Series B stages,” explains Al Zarooni.
“Our involvement goes beyond funding. We offer guidance and resources to help startups navigate their growth journey. Oraseya aims to create a collaborative environment where entrepreneurs can exchange ideas and access resources.”
A thriving business ecosystem
The success of Dubai’s economic free zones has been instrumental in the city’s transformation into a global hub for business and tourism. The specialised economic zones offer incentives and benefits that attract foreign investment, foster a diverse range of industries, and contribute to the emirate’s overall sustainable growth.
“Through its three dynamic economic zones, DIEZ has established itself as a global hub for innovation and business, attracting key international collaborations, particularly in sectors such as e-commerce, logistics, and technology,” shares Al Zarooni.
“DIEZ also collaborates with global businesses across various sectors to drive innovation and economic growth.”
Dubai’s free zones have become a cornerstone of the UAE’s thriving business ecosystem, attracting companies from around the world. Offering 100 per cent foreign ownership and full repatriation of profits, these zones provide international investors with unmatched freedom and flexibility.
Setting up a business in a free zone is streamlined and efficient. Through “one-stop-shop” services, entrepreneurs can easily navigate the registration and licensing process. This simplified entry, combined with tailored packages for small to medium enterprises (SMEs) and startups, has led to a boom in innovation and entrepreneurship in Dubai and across the UAE.
The sector-specific focus of many free zones is another key factor in the success of DIEZ’s free zones.
In addition to a supportive business environment, free zones offer world-class infrastructure. Whether it is the strategic location, world-class logistics support, and seamless connectivity in DAFZ, the high-tech facilities in DSO or the warehousing solutions in Dubai CommerCity, businesses have access to the tools they need to scale quickly. DIEZ and Aramex commenced pilot testing of Aramex’s autonomous robot delivery system at Dubai Silicon Oasis in June as part of the authority’s broader ecosystem designed to foster innovation and entrepreneurship.
Al Zarooni notes that the authority collaborates with global and local businesses to co-create solutions that address critical challenges. He notes that the DIEZ is involved in the MIT DesignX Dubai Accelerator, MIT’s inaugural accelerator programme in the Middle East that seeks to support the creation of innovative enterprises, and the AI Smart Pedestrian Crossing System across DSO with Derq.
Al Zarooni emphasised that collaborations across the e-commerce, logistics, and tech sectors highlight DIEZ’s role as a key enabler of global business expansion. “This provides a strategic base for companies to access new markets, innovate, and scale their operations.”
Moreover, economic zones such as DAFZ have transformed the city into one of the world’s leading trading hubs. Founded in 1996, DAFZ’s prime location adjacent to DXB offers businesses seamless access to global markets, making it ideal for companies involved in logistics, aviation, and international trade.
“DAFZ has partnered with the 2024 edition of Red Bull Basement, aligning with the free zone’s commitment to elevating UAE innovators on a global stage,” says Al Zarooni. “DAFZ will directly support teams participating in the event by awarding the first – and second–place winners membership in its innovative startup program, Scality, which will enable them to establish and grow their businesses in the region.”
DSO is providing a tech-friendly environment for startups and established tech giants alike, fostering a vibrant, innovative environment.
“We work closely with agencies such as the Roads and Transport Authority in Dubai to host the tests for the Industry Leaders category under the Dubai World Congress for Self-Driving Transport, the first event of its kind in the Middle East,” says Al Zarooni.
“These partnerships and initiatives play an important role in driving the city’s transformation into a model smart city and a global hub of technological excellence while encouraging a vibrant startup ecosystem.”
Strategically located near airports and other major transport hubs, Dubai’s free zones provide businesses with unparalleled access to regional and international markets.
With a strong emphasis on sustainability, talent attraction, and regulatory flexibility, Dubai’s free zones have not only contributed to the UAE’s economic growth but have positioned it as a global business leader for the future.
Establishing Dubai’s global presence
Though special economic zones have been a global feature since the 1950s, the GCC region is witnessing a renewed emphasis on free zones, with many undergoing significant updates to their mandates, positioning, and value propositions to drive economic diversification.
The GCC states remain relatively insulated from the slowing global economy, and continued government investments in line with the economic diversification goals are fueling growth.
“Emerging trends such as the integration of AI in various industries, the rise of e-commerce, and the focus on sustainability will secure Dubai’s position as a premier regional and global investment destination,” says a confident Al Zarooni.
Dubai’s ambition is limitless, and its success story will continue to serve as a model for cities aiming to create a bright future for their future generations. Many emerging market countries are increasingly adopting the UAE’s economic model, especially Dubai.
“Other countries can adopt several best practices from DIEZ to enhance their economic ecosystems. Creating specialised economic zones can attract diverse industries and drive economic growth,” Al Zarooni says, adding that streamlining business setup and regulatory frameworks will make it easier for businesses to establish themselves and operate.
He believes strategic initiatives and global collaborations will further enhance Dubai’s attractiveness to investors, ensuring continued economic growth and development.
Moving forward, Al Zarooni emphasises that DIEZ remains committed to integrating sustainable practices and smart city solutions into its operations and future developments. “Our sustainability goals not only enhance our operational efficiency but contribute to a sustainable future for Dubai, aligning with the city’s vision of becoming the world’s most future-ready city.”
