Officials from Ajman are hoping that investors can be convinced that size does matter when it comes to setting up shop and are taking the message to overseas markets that small and medium-sized enterprises (SMEs) can be a good fit for the Ajman Free Zone (AFZ).
Established in 1988 and given autonomous status in 1996, the AFZ has expanded steadily and now has some 7000 companies registered. With an area of 1m sq meters, the zone has the space to allow for expansion, though most of the companies operating out of the AFZ are relatively small scale, such as office-based service sector firms, light industry, logistics and technical services. This matter of size is by design, as the zone’s management have targeted smaller businesses that may not comfortably fit into larger trade zones.
The AFZ has recently stepped up efforts to encourage more SMEs to take up space in the zone. According to Nader Eldesouky, the deputy general manager of the AFZ, the SME segment has the potential to become a driving force in the local economy.
“World over, the SME sector forms a major chunk of any economy, ranging from 30% to 40%, contributing a significant share to national GDPs,” Eldesouky said on December 4. “In the UAE, 90% of the businesses fall in the SME range, and at the AFZ, we are convinced that this sector has robust potential to expand.”
That conviction recently took representatives of the AFZ to Asia, where they showcased the zone’s potential at the recent Hong Kong World SME Expo, held in early December. Mahmood Al Hashemi, the general manager of the AFZ, said his delegation was looking to attract Asian entrepreneurs wishing to tap the growing markets of the Gulf region.
“Our participation in the HK SME expo is in line with the free zone’s commitment and dedicated focus on the SMEs that are looking at a tax-free and flexible investment platform in the UAE,” Al Hashemi said.
Ajman does of course have competition for the SME market: fellow emirate Sharjah was also represented at the Hong Kong event, and the Ras Al Khaimah Free Trade Zone offers similar advantages to those of the AFZ, such as long-term leases, low energy costs and tax and duties exemptions. Ongoing construction and development work at the AFZ may also put companies off initially, but this expansion is the result of a recent wave of new business registrations.
Like many of the other free trade zones in the UAE, the AFZ was affected by the global economic crisis, with the number of new companies being registered dipping from a high of 687 in 2008, to a low of 428 in 2010. However, the region’s economic recovery over the past few years, coupled with a promotional drive, has seen registrations on the rise again, with 610 companies signing on with the AFZ in 2011.
Ajman’s location, just up the coast from Sharjah and Dubai, means that the AFZ is close to the well-equipped ports of those two emirates, and less than a 30-minute drive from the UAE’s main aviation centers. Ajman does have its own maritime cargo-handling facility, and the emirate’s port has terminals for containers, general cargo and roll-on/roll-off vessels.
The port is not served by as many shipping lines as other maritime centers in the UAE, though it is linked to Dubai’s Jebal Ali port by two trans-shipment feeder services, making for quicker cargo transfer. As it is less busy, the smaller port could also offer businesses a number of advantages, such as less congestion and shorter waiting times.
Indeed, these inherent advantages and Ajman’s continued promotional efforts to sell itself as an SME solution could see the emirate become a premier location for smaller businesses looking for specialized infrastructure and facilities.
Oxford Business Group
18 December
