Jebel Ali Free Zone's strategic location in Dubai boosts business

29 November 2010

Situated between the world’s seventh largest seaport and Dubai’s new cargo airport, Jebel Ali Free Zone (Jafza) handles more than a third of the emirate’s total trade and almost half of its exports

In numbers

18 per cent: Rise in value of Dubai’s trade*

AED32.8bn: Value of the emirate’s exports*

20 per cent: Growth in re-exports

*=First half of 2010. Source: Dubai Statistics Centre

Jafza supported Dubai’s overall non-oil trade with an impressive contribution of $88.65bn in 2008, with $49.7bn in imports and $38.9bn in exports, according to Dubai World Statistics Department.

The free zone lists almost 700 general traders among its 6,000-plus firms, and many of the largest manufacturers in the free zone started out as trading companies there. Some 77 per cent of the free zone’s occupants are trading companies of various descriptions, involved in the import and re-export of goods from Dubai.

Easy access to Jebel Ali Free Zone

Situated between Jebel Ali Port, the world’s seventh largest seaport, and the planned Al-Maktoum International Airport, which is to become the world’s largest cargo airport, Jafza is the only free zone in the world to be located between the two major logistic enablers. These represent core attractions for import and export-focused firms based in Dubai.

All the cargo in our trade moves in containers and hence it is beneficial to be close to the port

Sanjay Sethi, Dubai Tea Trading Centre

With a six-lane highway, Jafza can facilitate the transport of goods from sea to air in just 20 minutes. The free zone can grant its partners the fastest possible access to a market of more than 2 billion people in South and West Asia, the Commonwealth of Independent States (CIS) and Africa.

The investment climate is another incentive for traders. Jafza has kept red tape to a minimum, while offering a strong range of incentives to trading companies to set up shop. Holding a Jafza trade licence means firms do not require licences from the economic department or any other authority. Furthermore, ownership of the company’s capital can be up to 100 per cent foreign.

The Jafza general trading licence allows the holder to import, distribute and store all items as per its rules and regulations, while the trading licence allows the holder to import, export, distribute and store items specified on the license. Jafza offers additional options to its clients on trade licence classifications, allowing them to combine a number of activities under the same licence. A company in Jafza can choose to opt for a total of seven activities under a similar business activity group, up to 12 activities under two different business activity groups, or up to 17 activities under three different business activity groups. This is an advantage for traders looking to operate across different sectors.

Building materials traders are among the most active of Jafza’s expanding community of traders

The Jafza authorities have also introduced new technology to facilitate trade, with a comprehensive online customs clearing system that allows traders to complete clearance electronically around the clock. The newly established Mirsal 2 system allows electronic declarations to be made remotely 24/7 with an electronic signature and without the need to provide hard copies to the customs authorities. This means pre-clearance of goods, enabling service delivery times and ability to amend and cancel declarations online. Customs no longer requires the documentation to be submitted in order to process a declaration.

In August 2010, Jafza introduced the e-licence – the free zone’s latest value-added service, which simplifies all licence-related processes to a quick-response online transaction. Free zone licences will be processed only online in the future. The scheme, facilitated through the Dubai Trade Portal, will enable customers to renew their licence or get a new one without having to physically visit Jafza.

For traders operating out of Jafza, the free zone’s attractions go beyond the ease of doing business. The proximity to key import and export entry points has supported its development as a centre of trade over the past 25 years.

The Dubai Tea Trading Centre (DTTC), part of the Dubai Multi Commodities Centre, moved its main operational centre to Jafza in 2009. The 23,731-square-metre facility opened in January 2009, allowing DTTC to offer new services to its tea trading membership. The centre comprises a 6,000 sq m racked warehouse, offering a dedicated storage facility to tea manufacturers and traders; a temperature-controlled blending, packaging and tea-tasting facility; and a dedicated office block, providing office facilities to its members. 

Increased volumes for Dubai Tea Trading Centre

“Apart from substantial storage space, we also now offer blending and packing services. These factors have resulted in DTTC volumes increasing,” says DTTC director Sanjay Sethi. “All the cargo in our trade moves in containers and hence it is beneficial to be close to the port. [This proximity] assists in reducing trucking time and costs. Jafza is also an efficient free zone with clear guidelines and hence very suitable for industries like ourselves,” says Sethi.

The Middle East and adjacent regions account for approximately 25 per cent of global tea imports and Dubai has already established itself as a key regional centre for tea value adding and trans-shipment. The DTTC was conceived as a vehicle to facilitate the strengthening of Dubai as a focal point for this trade, as rival trading hubs attempt to copy Dubai’s template and open up to competition.

The DTTC recorded impressive growth for the first half of this year, suggesting that the Jafza location has helped it to expand tea trade volumes since moving there in 2009. It recorded 26 per cent growth in tea trading during the first half of 2010, announcing a record 6.2 million kilogrammes of tea transacted from January to June. Overall, tea trade through Dubai in the first half of the year increased by 11.3 per cent to 64.2 million kg.

Tea trading in Dubai

Historically, Dubai has been among the biggest tea hubs for the tea industry. “Having a comparatively small population, large volumes of teas are stocked and traded through Dubai to other GCC countries, the Middle East, CIS countries, Pakistan and Afghanistan,” says Sethi. “We definitely see this growing further in the future, due to the ideal location of Dubai, ease of business, excellent port facilities/infrastructure and good transport routes to all the above regions with short transit times.”

Sethi anticipates increased demand as it attempts to strengthen its position as a centre for tea trade. “We definitely will increase both our membership as well as volume of tea traded through the DTTC as we are offering what the industry requires.”

Auto spare parts is another key growth area for Jafza-based traders. Trade in car parts grew 34 per cent in 2009 over the previous year, with the value of automotive parts exceeding AED29bn, according to DP World figures. Spare parts and accessories represent 52 per cent of Dubai’s auto import and re-export market, and the bulk of the trade is centered on Jafza where about 200 auto components traders are based.

Jafza-based Zafco, a leading tyre dealer, has plans to triple its sales by 2012, with 65 outlets set to open across the region. From its Jafza base, it aims to offer a more convenient service by establishing mobile units that will take its services to customers’ doorsteps. The stock would come from the inventory of more than one million tyres at the company’s 43,100 sq m storage facilities, which make Zafco the biggest importer and exporter in its field.

Steel storage in Dubai

Building materials traders are among the most active of Jafza’s expanding community of traders. Al-Nimr Steel, one of the region’s largest steel traders, has its headquarters and a vast stockyard inside the free zone with a storage area in excess of 321,000 square feet.

The company, which started as the steel-trading arm of the group, has emerged as the largest stockist and trader of structural steel in the UAE and Mena region. The large storage area at Jafza is an advantage as the company maintains stocks of the complete range of steel products required. The storage facilities and infrastructure allow it to hold steel inventories in excess of 50,000 tonnes.

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