Dubai ranks first among global Islamic-economy enabling free zone cities
Dubai Silicon Oasis Authority (DSOA), the regulatory body for Dubai Silicon Oasis (DSO), the integrated free zone technology park, announced the findings of the Free Zones Outlook Report, developed in collaboration with Thomson Reuters.
The report, launched at a joint press conference held at Dubai Technology Entrepreneur Centre (DTEC), a wholly owned technology incubation centre by DSOA, identifies cities where free zones are best positioned to drive the growth of Islamic economy sectors and ranks Dubai as the world’s leading Islamic economy-enabling free zone city, followed by Kuala Lumpur and Johor Bahru in Malaysia, and Manama in Bahrain.
The report estimates that in 2015 free zones contributed $55 billion to the Islamic economy, valued at $1.9 trillion, and projections suggest this number will increase to $117 billion by 2021. Meanwhile, free zone contribution to the Halal food sector amounted to $34 billion and is expected to hit $74 billion by 2021, while the $7 billion contribution to the modest fashion sector is projected to double by the same period.
In the Islamic economy arena, free zones are a relatively new phenomenon and largely focus on Halal food. According to the report, Malaysia was one of the first nations to develop the concept, creating dedicated free zone “hubs” across the country. At present, 30 free zones across 18 cities worldwide support Islamic economy activities.
Of the 30 identified hubs identified around the world, 11 are situated in Malaysia. Mustafa Ali, Head of Islamic Finance, Thompson Reuters explained that the country came second in the ranking, despite this high number, because in Kuala Lumpur none of the free zones that had Halal hub activity were FDI or BMI award winning free zones which factored against them, and brought their overall score down. FDI and BMI are the international bodies that rank free zones around the world.
“The Free Zone Report is a ready reference on niche economies that drive the growth of Islamic economy sectors. It outlines the contribution of free zones to the various sectors of the Islamic economy based on their attractiveness to companies and entrepreneurs working in this domain. In line with the Dubai: ‘Capital of Islamic Economy’ initiative launched by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, DSOA actively participates in boosting the growth of the emirate’s Islamic economy sector,” said Dr Mohammed Alzarooni, Vice Chairman and CEO, of DSOA.
He added that through DTEC, start-ups are supported in the fields of technology, digital Islamic economy, online Arabic content and smart city initiatives and the DSOA’s ultimate aim is to contribute to shaping the UAE’s post-oil economy.
“Free zones represent ideal platforms to grow the key sectors of Islamic economy. Even though the facilities free zones provide may differ around the globe, their value proposition is essentially the same–they enable local and foreign investors alike to operate, network and expand. However, the benefits are mutual–today and in the near future, Islamic economy can offer real added value to free zones,” said Abdulla Mohammed Al Awar, Chief Executive Officer of the Dubai Islamic Economy Development Centre (DIEDC).
Al Awar added that The Free Zones Outlook Report 2017 highlighted the issues facing each of the Islamic economy sectors that free zones can address. Along with its partners and stakeholders, the Dubai Islamic Economy Development Centre has been working relentlessly to turn challenges into opportunities to advance the growth of Islamic economy.
Nadim Najjar, Managing Director of Thomson Reuters in the Middle East and North Africa, said, “Free zones allow constituents to maintain superior quality of products and services and adhere to best practices. There are ample opportunities for free zones to create significant economic value across all pillars of the Islamic economy. Our report projects that the value of Islamic free zone exports will more than double over the next five years.”
Maximising free zone use across all sectors of the Islamic economy has the potential to spearhead significant growth of the SME segment in the UAE. These sectors can go a long way towards achieving the goals of the UAE Vision 2021, including raising SME contribution to non-oil GDP to 70 per cent and increasing non-oil sector contribution to the total GDP to 80 per cent.