ABU DHABI (AFP) – Abu Dhabi launched the region’s largest industrial free zone, where foreign companies will be able to set up wholly owned operations, organisers announced on Saturday.
“The Abu Dhabi government has granted status for (Khalifa Industrial Zone Abu Dhabi) Kizad whereby you can have 100 percent foreign ownership … That is a first for Abu Dhabi,” Abu Dhabi Port Co (ADCP) chief executive Tony Douglas told AFP.
Kizad, located halfway between Abu Dhabi and Dubai, has both a free zone and an international investment zone status, in a bid to diversify the country’s economy.
Khaled Salmeen, executive vice president of Industrial Zones at ADPC, said “the investment zone status allows us to grant long-term contracts up to 50 years renewable.”
But not all the foreign companies establishing in the zone will be allowed 100 percent ownership.
“The management will have to decide what will be beneficial in the long-term to the Abu Dhabi economy,” said Sultan al-Jaber, ADPC chairman.
“There will have to be a free zone status granted to some specific companies, industries or manufacturers,” provided that their business plan clearly reflects government economic and strategic values, he told reporters.
About 26.5 billion dirhams (7.2 billion dollars/5.2 billion euros) were invested on the first phase of Kizad, which includes the new Khalifa port.
With its 417 square kilometre (161 square mile) industrial zone, the emirate is trying to move one step beyond a purely carbon-based economy.
By 2030, Kizad will represent a contribution of up to 15 percent of Abu Dhabi’s non-oil GDP, and between 60 and 80 percent of goods manufactured at Kizad will be exported, Salmeen said.
The project also aims to boost confidence in Abu Dhabi’s markets.
“The economic impact is minor in the short-term but what’s more important is the psychological impact,” said Sebastien Henin, portfolio manager at The National Investor bank.
“It is a sign of openness given to foreign investors to come and do business in Abu Dhabi.”
The industrial sector currently contributes to no more than 15 percent and with Kizad, the United Arab Emirates hopes to increase this percentage, Jaber said.
Abu Dhabi, which was less affected than Dubai by the global financial crisis, sits on some 95 percent of the UAE’s oil wealth — with a total of 98.2 billion barrels.
It is also home to the world’s largest sovereign wealth fund — Abu Dhabi Investment Authority.
Additionally, it aims to be a center for renewable energy with its planned Masdar City, which aims to be the world’s first powered solely by renewable energy.