The author is group CEO of Ras Al Khaimah Economic Zone

In today’s rapidly shifting investment landscape — marked by technological advancements, demographic changes and geopolitical uncertainties — the need for business ecosystems that are flexible, cost-effective and, most importantly, stable is more pressing than ever. These environments are crucial for providing the sustainable foundation that companies require to navigate and flourish amid the complexities of the modern world.

This is where free zones come into play. They are increasingly attracting FDI, thanks in large part to their business advantages including tax breaks, streamlined regulations and proximity to transit hubs.

However, these headline benefits have led to a perception that free zones can be a ‘quick fix’ for modern-day business success, promising everything from improved sustainability performance to greater digitisation on an accelerated timetable. This quick-fix attitude undervalues the long-term benefits of investing in free zones to unlock sustainable business growth.

More than just tax breaks

Free zones offer a holistic business ecosystem that leverages the power of strategic partnerships and provides long-term operational, and in some cases financial, support from seed to scale-up stages and beyond. Their operators should actively promote the full breadth of their benefits, while businesses should explore those features that facilitate long-term growth.

While tax advantages and streamlined regulations often get new customers through the door, they merely scratch the surface of what free zones offer. And it takes much more to create a sense of belonging. 

For example, Dubai-headquartered manufacturing company Hira Group, one of our customers at the Ras Al Khaimah Economic Zone (Rakez) in the UAE, has used the zone’s state-of-the-art facilities, logistics support, access to infrastructure such as the Saqr Port and surrounding skilled workforce to expand its operations and embed itself in target markets. Since arriving in Rakez in 2008 with 50 employees, Hira Group has steadily grown to now employ more than 1500 people.

Power of partnerships

At the core of how free zones operate is their role as a hub for partnerships. Free zones are not fenced-off areas. They are based on collaboration which takes three main forms: industry clusters, business matching services and government liaison.

Free zones create industry clusters by carving out space for specific sectors, which foster the collaboration and healthy competition that drives business growth. Just as Silicon Valley drives technological innovation with its ecosystem of start-ups and venture capital providers, free zone customers inspire each other to push the boundaries of their respective industries.

This doesn’t mean free zones should simply place customers in close proximity and leave them be. Matchmaking services are vital for connecting businesses to potential partners and suppliers from within the free zone and beyond.

Government liaison services are also vital. Again, while favourable regulatory landscapes can attract customers, it is the ongoing support with navigating local regulations and accessing government incentives that truly helps — and retains — them.

At Rakez, Dubai-headquartered construction firm Fala Group has capitalised on every opportunity to connect with government partners in Ras Al Khaimah and the wider UAE. The strong bond between free zone and customer has helped the latter build lasting relationships with authorities including the ministries of presidential affairs and infrastructure, and UAE GHQ Armed Forces. Indeed, free zones facilitate these partnerships with an eye on the long term and are at their best when providing enduring support for customers.

More on free zones:

• Opinion | Five traits of sustainable SEZs
• Certifying free zones in a complex world
• How free zones help Foxconn to invest

Long-term journey

Collaboration requires businesses to be adaptable to change. Indeed, change — in the form of development and growth — is many businesses’ main priority. Free zones’ flexibility makes them ideally equipped to support this journey. 

One company to have started small but successfully scaled their operations in Rakez is local chemicals manufacturer Fine Industries. Since 2007, it has grown from a 5000 sq m plot into a footprint of 40,000 sq m which includes manufacturing, packing and a research and development lab. This was supported by Rakez’s cost-effectiveness, business support and proximity to raw materials essential to its production processes.

It’s a remarkable achievement but by no means the end of the company’s story. Businesses must understand that growth is not an event but a never-ending process. And free zones empower customers to keep building on previous success to deliver truly sustainable success.

Free zones should commit to realising their immense potential for fostering a supportive and collaborative environment for customers of all sizes. Businesses, meanwhile, should explore and seize every opportunity for long-term growth within these communities. It is this, not quick fixes, that embodies the real power of free zones.

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