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Home , Emirate of Dubai, Jebel Ali, Jebel Ali Free Zone

THE FREE ZONE IN THE OF - A COMMERCIAL ALTERNATIVE AFTER THE GULF CRISIS*

Rolf Meyer-Reumann†

INTRODUCTION

For many months political and military operations in the Gulf occupied worldwide headlines. Naturally, the economy of the Arab Gulf states will be considerably effected by the crisis. However, the United Arab (UAE), and in particular the , started almost from the beginning of the crisis to pay considerable attention to their economy. "Business as usual" became the order of the day and preparations were made for thereafter. Many foreign companies engaged in the Gulf, will have to reconsider their set-up there now the crisis is over. Many companies will focus on Dubai: (1) With its well developed environment for commercial activities; (2) With its good relations to all Arab Gulf Cooperation Council Countries (AGCC Countries), to Iran and even to more remote countries like Pakistan and India; (3) With the high standard of living quality for expatriates including those from western countries. In consideration of the UAE Company-Law, which is presently being implemented and which generally requires a local majority, with the exception of foreign branches, the may be a perfect alternative, where foreign companies enjoy far-going liberty. The Jebel Ali Free Zone is fully accepted by the international community and even after the invasion of Kuwait on 2 August 1990 new registrations are said to have continued on the same level as before. The purpose of this article is to describe the commercial facilities of the Jebel Ali Free Zone in order to help foreign companies set up or reorganize their local presence after the Gulf crisis and to place them on a solid foundation.l I

* Allcopyrights fully reserved. Copyrights: Meyer-Reumann Legal Consultancy, Trade Centre, P.O. Box 9353,Dubai ; Tel: 00971-4-367110;Fax: 00971-4-344 832. t Bornin 1941and admittedto the bar in Hamburg.After a maritimecareer he studiedlaw and began work as a maritimelawyer in Hamburg.Since 1981 he has practisedas a commerciallawyer in Saudi Arabia.He is author of a numberof articlesrelated to commerciallaws in the MiddleEast. In 1989he startedhis own officein Dubaias a legalconsultant, with close co-operation with the LawOffice Osama Yamaniin Jeddahand the LawOffice Abdul Rahman Zahrani in Riyadh. I Accordingto the latestnews Jebel Ali is investigatingwhether it shouldalso allow the newformation of companiesrather than only branches.However, such investigations may take timeand such optionis not availableat the timebeing. 69

THE JEBEL ALI FREE ZONE IN GENERAL

The challenging idea and plans of a Free Zone in the Emirate of Dubai were created by Sheikh Rashid himself, then Ruler of Dubai. The project started in 1975 in an empty, desert-like area about 35 km west of the City of Dubai. 2,5 billion US-dollars had been invested, when in December 1979 the Jebel Ali Port was opened, declared as a free trade zone, and given to the Jebel Ali Port Cooperation (JAPCO). The Jebel Ali Free Zone Authority (JAFZA) was established by a Ruler's Decree of the Ruler of Dubai in 1985. JAFZA is like JAPCO an independent government agency for specific purposes. The management of both agencies is identical. The Jebel Ali Free Zone is based on the following decrees: (1) Federal Law No. I of 1979 providing privileges and exemptions for certain industrial projects;2 (2) Jebel Ali Free Zone Ordinance No. 1 of 1980 of the Ruler of Dubai (6.5.1980); (3) Orders Regarding Demarcation of the Free Zone in Jebel Ali Port of 7.5.1983 by the Crown Prince of Dubai; (4) Establishment of the Free Zone Authority in Jebel Ali Port, Decree No. 1 of 1985 from 9.1.1985 by the Crown Prince of Dubai; and Business Activities in the Free Zone in Ali Law No. 2 of 1986 of (5) Jebel' Port, the Emirate Dubai (28.12.1986); (6) Management and Maintenance of Jebel Ali Port Company (JAPCO), Law No. 2 of 1990 of the Emirate of Dubai, issued 7.1.1990, published in the Official Gazette of Dubai No. 179 of 27.2.1990. The Jebel Ali Free Zone includes an area of about 100 km2 including large port-basins with a water-depth of up to 20 m, most modern port facilities, storage facilities for various cargo including, but not limited to, special cargo-like containers, liquids, bulk, reefer-cargo, etc. Even container-vessels of the newest generation will fmd all of the facilities that they need for quick handling. The International Airport of Dubai is about 35 km away and the international airports of and are within a reasonable distance. Within the area of Jebel Ali Port an area of about 45 km2 has been separated for national or foreign companies to perform a wide range of activities in favorable conditions. They are released from many obstacles and burdens, which they may face at home, in other countries, or even within the United Arab Emirates. At the same time a suitable commercial environment and a labor-force at a low cost level are available. The infrastructure is fully developed and improved continuously. Jebel Ali is inclined to benefit from its strategic location, mid-way between Europe and the Far East, and from the reputation of Dubai as a commercial centre for the . entire area. The advantages include in particular:33 (1) Foreign companies may establish in Jebel Ali a 100 per cent foreign owned subsidiary, an opportunity not available in any other AGCC Countrv. Even I - "Reportof the US Embassyof AbuDhabi", MEER December 1989, pp. 18-20. 3 Seealso "Jebel Ali Free Zone Invites Foreign Business", Meer, August 1985, pp. 8, 23.