DAFZA's non-oil foreign trade reaches AED 146 billion in 2018
- HH Sheikh Ahmed Bin Saeed Al Maktoum: DAFZA affirms its role in achieving 2018 goals in strengthening the economy and attracting foreign direct investment
- HE Mohammed Al Zarooni: DAFZA’s foreign trade growth in 2018 has proven once again the effectiveness of its strategic approach
- 11 % is DAFZA’s contribution to Dubai’s non-oil foreign trade
- DAFZA reports total revenue growth of 8%
- Net profit has increased by 5% whilst EBID has increased by 4%
- Increase in total assets by 3%
- 22% of growth has been recorded in the number of registered companies at DAFZA
03 March 2019, Dubai, UAE: The Dubai Airport Freezone Authority (DAFZA) has announced that its 2019 budget has increased significantly to AED 1 billion. This increase is a reflection of DAFZA unwavering commitment to continuously increase its contribution to Dubai non-oil trade.
DAFZA’s investment in new expansion projects is estimated to be around AED 780 million representing 78% which comes in support to its commitment to increasing its contribution to Dubai non-oil trade.
DAFZA's non-oil foreign trade in 2018 grew AED 55.8 billion to reach AED146 billion representing an increase of 62% versus 2017, while its contribution to Dubai's non-oil foreign trade in 2018 reached 11% versus 7% in 2017.
DAFZA has shown resilience and steady growth with 2018 results reaching unprecedented performance with 5% growth in net profit, a 4% increase in EBID, an 8% increase in total revenue, as well as an increase of 3% in total assets versus 2017. Following the free zone's decision in mid-2018 to reduce its set up costs by 65%, the zone witnessed a clear 22% increase in registered companies versus last year.
His Highness Sheikh Ahmed Bin Saeed Al Maktoum, Chairman of Dubai Airport Freezone Authority, said that trade is one of the key sectors driving Dubai’s growth, supported by the Emirate’s long standing of being a gateway for global trade. DAFZA’s results achieved in 2018 are a direct reflection of Dubai’s strong economic growth and in line with the path taken by Dubai’s leadership for revenue diversification.
His Highness Sheikh Ahmed Bin Saeed Al Maktoum added that the results confirm DAFZA continues to play a vital role in achieving the strategic goals of strengthening Dubai's non-oil economy, with foreign direct investment through attracting global capital and major multinational organizations. This also encourages investors to establish their business within a stable economic environment and to expand their investments operating locally in the UAE and regionally through DAFZA. The zone’s unique value proposition encourages investors to set up their businesses in DAFZA where they benefit from the competitive environment on offer and the high flexibility in the midst of global economic fluctuations.
His Highness Sheikh Ahmed said that these carefully-laid plans and ambitious strategic initiatives support the strategy of economic diversification in line with the Dubai 2021 Plan. The government’s plans to move to the post-oil era have played a major role in achieving these results, as well as the continuous efforts of all those who develop and implement these initiatives.
For his part, His Excellency Dr. Mohammed Al Zarooni, Director General of DAFZA, said DAFZA’s non-oil foreign trade growth in 2018 is a clear indication that we are adopting the right strategies. DAFZA’s competitiveness has appealed to a wide spectrum of companies from around the world which seek to take advantage of Dubai’s position as regional and international trading hub.
He also highlighted the importance of strategic targeted marketing campaigns implemented during the past year, which has proven DAFZA’s ability to attract businesses, retain them and act as a catalyst for their growth.
HE Dr. Al Zarooni pointed out that during the past year, DAFZA has sought to strengthen its presence among private sector companies regionally and globally by developing major initiatives and joint projects between the private and government sectors. This is in line with the governmental objectives set for stimulating the growth of the private sector and multinationals in general, as well as small and medium-sized enterprises (SMEs) In particular. The increase in the number of these companies that have made the free zone their home showcases the success of these initiatives.
Contribution to the economy
DAFZA’s non-oil foreign trade volume climbed 62% in 2018 to reach AED 146 billion. This is largely due to the strong growth in exports and re-exports which stood at AED 83.3 billion in 2018, an increase of AED 39.5 billion, a 90% growth versus 2017, while imports increased by 35% from 2017 to reach AED 62.5 billion.
This resulted in a significant surplus in DAFZA’s trade with AED 21 billion in 2018. This has confirmed once again the quality of DAFZA’s world-class services, and the positive impact of the initiatives and incentives provided by the free zone to foreign investors.
DAFZA’s data revealed that non-Arab Asian countries accounted for 46% of Dubai’s non-oil trade in 2018 amounting to AED 66.5 billion.
Arab countries ranked right behind at 27% with a value of AED 39.5 billion, where GCC countries comprised 62% at a value of AED 24.5 billion. The European countries came in at third place with 22% of trade valued at AED 32 billion.
As per DAFZA’s top countries rank in non-oil foreign trade, India ranked first with a value of AED 24.1 billion, accounting for 16.5%, followed by China with a value of AED 24 billion accounting for 16.4%, and Switzerland came in third place with AED 23 billion accounting for 15.6%.
In 2018, under the Harmonized System Classification Sections, DAFZA was home to a wide range of goods form various industries where machinery and electrical equipment valued at AED 79 billion ranked first with 54%, followed by pearls, precious stones, metals and jewelry, which made up 38% at a value of 56 billion dirhams. Optical, medical and scientific equipment, as well as watches and audio and visual materials represented 4% at a value of 5 billion dirhams. Finally, the group of chemical products and related industries made up 2% at a value of 2.4 billion AED and others at 2% with value of AED 3.6billion.
A home for leading international companies
In terms of MNCs, DAFZA in 2018 increased by 6% the number of international companies that form 35% of total registered companies in the free zone.
DAFZA has always been the preferred home for major global fortune 500 brands, including the Richemont Group and leading aviation corporations such as Airbus, Boeing, GE Aviation, Rolls Royce and Panasonic Avionics. Adding to this prestigious list of valued multinational investors, is Bentley, Audi and Volkswagen from the automotive sector, Estee Lauder, Abbott, Johnson & Johnson and Natura Bessé from the cosmetic and pharmaceutical sectors as well as other major brands including Richard Mill, Roche, Nike, Yamaha, Metlife Alico, Alcatel, Red Bull, Heinz and Hershey’s and other leading ICT, Logistics and manufacturing companies from Japan.
On the SME’s front, they represent 65% of our total investors where DAFZA has focused on providing a range of incentives to help them develop and sustain their operations and capabilities, as open up new markets.
Companies in the ICT sectors represent 29%, the highest percentage amongst all our investors, followed by consumer products (9%), engineering and construction materials (8%), shipping and logistics (8%), Aerospace and aviation sectors (8%), and investment and business development sectors (7%).
Helping our clients grow
In line with its vision to enhance the local economy in the UAE and Dubai in particular, DAFZA seeks to continuously attract key regional and international investors who are looking to invest and expand their operations in the region.
During the year, DAFZA launched a range of initiatives aimed at optimizing our investors operations within the zone. Be it our 65% reduction in set up costs or the newly designed packages that provide choices and suit every need.
To accommodate our investor’s needs and to provide choices in the set up options, we introduced novelty office packages namely the Premium Package, the Premium Plus Package and the Smart Desk Package.
One of our major milestones is the introduction of a dual FZ /DED license in agreement with Dubai’s Department of Economic Development to grant companies the option to trade regionally and locally in Dubai, without the need of a physical office in Dubai.
Al these unique initiatives, were aimed at increasing DAFZA’s regional competitiveness and stimulate growth in a number of key sectors.
DAFZA also launched a restructuring process of free zone licenses and related fees. This has enhanced the setup and operational experience of our investors who wish to set up in the free zone by offering them greater flexibility in choosing the business and service activities that best correspond to the nature of their work. The numbers of economic activities covered are over 2,000 across 18 major sectors, and the new license structure is in line with ISIC Rev 4, the UN benchmark for classification of economic activities.
Key marketing campaigns and international presence
During 2018, DAFZA organized a series of campaigns and marketing projects under the theme ‘Gateway to Growth’ in a number of countries around the world, including India, Spain, Germany, Switzerland, South Korea, Japan, the United States, and Britain, as well as a number of Chinese provinces including Shenzhen and Guangzhou. These campaigns were successful in attracting more foreign investment and to showcase the opportunities, benefits, advanced facilities, and world-class infrastructure provided by the free zone.
DAFZA signed a series of agreements and memorandums of understanding to help facilitate the entry of many international companies into the free zone to launch their operations. These included a strategic memorandum of understanding with the Chinese Liaoning Chamber of Commerce in UAE to define a framework for cooperation in promoting trade and creating joint investment and trade opportunities between DAFZA and the northeastern Chinese province. This was in addition to another MoU with the Nansha Area of Guangzhou (Nansha FTZ), where the two sides aim to work to expand trade exchange, promote mutually beneficial investments, and enhance strategic partnerships and joint cooperation in IT, e-commerce, shipping, logistics, and other fields.
DAFZA signed a strategic cooperation agreement with the South Korean Daegu Gyeongbuk Free Economic Zone Authority in order to cooperate and expand bilateral trade, thereby enhancing and strengthening trade relations between the UAE and South Korea.
In 2018, DAFZA contributed to some of the biggest international expos specialized in a range of industries, either as a participant or a sponsor, including Seamless Middle East, Arab Health, Gulfood, GITEX, Automechanika Dubai, and SIL in Barcelona, International ICT Expo in Hong Kong, in addition to the 20th edition of the International Transport and Logistics Fair and Conference organized by the Spanish government.
Boosting growth in e-commerce
In 2018, DAFZA continued its support for the government’s efforts in making Dubai a regional center for e-commerce through the development of Dubai CommerCity, the joint venture project between the Dubai Airport Freezone Authority (DAFZA) and Wasl Asset Management Group. This JV invested close to AED 3.2 billion. Dubai Commercity is comprised of the business, logistics and social clusters.
Dubai CommerCity announced the launch of the ‘MENASA e-commerce landscape report (B2C Products Edition). The report assists global companies and startups in evaluating the opportunities within the regional e-commerce market and highlights the high growth potential in the MENASA region.
The report, which will be issued annually in Arabic and English, provides a comprehensive and global overview of the e-commerce sector alongside the role of technology and how it will shape this sector over the next twenty years. The report offers a regional view on 22 countries of the opportunities available in this sector, current and future trends, and the expected developments over the next ten years. The report sheds light on factors that have strategic impact on the region’s e-commerce industry, including free zones and the logistics sector.
The report, which can be downloaded online through DAFZA’s website, represents a roadmap for international companies, entrepreneurs, and investors and in addition to showing expectations around future growth levels in light of the initiatives and projects launched. The report reflects investment opportunities and prospects, emphasizing Dubai’s growing role as a regional hub for e-commerce.
Exceptional support for the Islamic Economy
DAFZA has continued its support for Islamic Economy as a key focus sector in 2018, in line with its Strategy for Islamic Economy, which consists of three main directions and 20 strategic initiatives that will be implemented within the coming five years to increase foreign direct investment.
Last year DAFZA in cooperation with the Dubai Islamic Economy Development Centre has launched the first of its kind Halal Trade and Marketing Centre, which is a global business development centre focused on the Halal economy opportunities for manufacturers, suppliers, and distributors of Halal economy products and services. It is hosted at DAFZA, and is supported by key partners across the Halal economy ecosystem. This will be achieved by facilitating services in three key categories; market intelligence, halal compliance, and growth support services. The launch of the Centre included the announcement of strategic partners and service providers from federal and local government bodies and institutions as well as international banks and organizations.
DAFZA also launched Goodforce Lab, an innovative start up incubator focused on transforming ethical start-ups in the fields of Islamic Economy and Halal industries into global success stories. The incubator will work to revitalize the ethical Islamic Economy utilizing a deep venture building platform. This is being achieved by selecting a group of start-ups and small and medium enterprises and supporting them towards achieving USD 50 million in annual revenues and measurable social impact.
The incubator seeks to help start-ups and corporate entrepreneurs in starting, managing, and developing their businesses into global, socially impactful companies. Goodforce Labs also provides services for companies seeking to start and develop their businesses, including design, marketing, operations management, and providing the latest technologies, all in order to achieve the goals of financial growth and positive social impact.
DAFZA participated in the World Food and Beverage Exhibition, which was held at the Gran Via Center in Barcelona, Spain. DAFZA participated with a dedicated pavilion and sponsorship of the Halal products pavilion. DAFZA launched the Spanish version of its first-of-a-kind halal guidebook titled Dubai: The Global Gateway to Halal Industry and the Portuguese version after receiving significant support from senior officials from the Arab Brazilian Chamber of Commerce and the Consulate General of the United Arab Emirates in Sao Paulo.
Strategic initiatives drive innovation and leadership in artificial intelligence
DAFZA secured the support of Dubai Free Zones Council for Dubai Blink, the world's first B2B smart commerce platform. One of the approved Dubai 10X initiatives, the project comes in support of Dubai and the UAE's vision to create smarter digital economies driven by innovation and technology.
Dubai Blink will transform the future of global supply chains by creating a new trade platform for regional and global companies. By leveraging new and disruptive technologies, such as blockchain, artificial intelligence and virtual identities, the project will offer a revolutionary experience for companies along their trade journey. It promises to drive innovation within supply chains, placing Dubai and the UAE at the heart of emerging global digital economies.
DAFZA continued its efforts in developing the Free Zone Securities Platform. This project aims to facilitate access for free zones companies to the equity financial markets in Dubai and to provide them with an alternative way to help them expand their businesses. FZCOs will also be able to raise capital to develop their projects in the region without the need to return to the country of origin.
This will have a positive impact on the economic life cycle in Dubai which will lead to growth and attract more foreign investment to the country.
The initiative will enable free zone companies that meet the listing criteria to access the platform, which will provide them with the benefits of the financial environment and legal framework that has been developed in the UAE. The aim is to cover 45 UAE free zones (22 free zones in Dubai and 31,000 companies).
DAFZA signed a Memorandum of Understanding (MoU) with the Dubai Financial Market (DFM), Securities and Commodities Authority (SCA), and the Supreme Legislation Committee in Dubai (SLC) to work on the establishment of the Free Zone Securities Platform.
DAFZA is the sponsor of the platform. DFM will be the operator of the platform. SCA will be the regulator. The Supreme Legislation Committee will assist in the preparation and passing of any relevant legislation. The stakeholders have met with banks, accountants and law firms for feedback in respect of this platform and are in the process of finalizing the listing and offering rules. The implementation phase will continue throughout 2018, with a marketing and education phase set to commence in April / May 2018 and with the launch 2019.
Continuing digital transformation
In early 2018, His Highness Sheikh Ahmed Bin Saeed Al Maktoum approved the new DAFZA plan for digital intelligence for 2018-2020, which is in line with the digital transformation initiatives, including the Internet of Things strategy, PAPERLESS Government, BlockChain and the UAE AI strategy, which is the first giant project for the UAE Centennial 2071.
The new strategy is based on three main axes: ICT operational model, ICT services, and modernization of the IT platform. In addition, several initiatives have been approved, along with the modernization of the organizational structure of ICT management and the launch of its new identity under the name ‘Digital Intelligence Management’ to enhance internal partnerships, Aligns with future technologies, achieve digital sustainability, and raise operational efficiency. During the year, DAFZA succeeded in finishing the second stage of the digital transformation plan, in addition to achieving its information security strategy.
DAFZA unveiled the DAFZA Cloud platform which provides infrastructure for current and future ICT, raising operation efficiency, speeding up all tech services, providing more broadband for client services and high-performance storage technology, which succeeded in carrying out more than 60,000 trade transactions for launching business via cloud computing and automation.
A safe free zone
As part of its efforts to provide the highest level of customer service, DAFZA in 2018 enhanced the security and safety of its numerous facilities and buildings, successfully analyzing security risks and threats in all commercial buildings in order to monitor, detect, and measure threats to facilities and make appropriate recommendations to reduce vulnerabilities in the free zone.
The DAFZA Security Department has launched the GuardTek Smart Patrols Solution, a unique and integrated platform for the management of emergency messages, investigations and monitoring of site incidents. This enables security personnel to respond, report and analyze security activities immediately. DAFZA also launched new electric powered patrol vehicles to increase the number of security and safety patrols, ensuring a rapid security response to all incidents and emergencies in all facilities.
400 staff members from clients and companies based in the free zone were given Dubai Civil Defense certified fire safety training to further enhance the freezone’s emergency preparedness capabilities. Additionally, all security personnel have completed training for first aid, fire safety and ways to support people of determination during emergencies. All this has resulted in the re-accreditation of the ISO 28000 certification for supply chain security management systems, and the re-accreditation of OHSAS 18001 occupational health and safety assessment series specifications and standards.
Customer and employee happiness remains a priority
DAFZA launched a new cutting edge solution entitled CONNECT, which comes as part of its commitment to drive its 'Customer Happiness Index' by supporting them in finding the brightest and best talent for the latest work opportunities on offer. It’s a part of several other initiatives adopted by DAFZA to increase its customer happiness level, which reached 82% in 2018. A recent survey also confirmed that 85% of DAFZA based companies feel proud to be part of the free zone.
The vision behind CONNECT is to invest in human capital to create an inspiring and developmental environment for employees to achieve their professional ambitions. This will help drive operational efficiency and enhance customer happiness and satisfaction.
Using state of the art technologies, CONNECT will elevate the current services provided by DAFZA by focusing on four fundamental areas. The first provides unique knowledge development opportunities for staff that will enhance their capabilities and sharpen their expertise. The second service is the Assessment Center, which offers tailored valuations through advanced tools that will revolutionize hiring, training and development processes at DAFZA. The third area involves new integrated methods for recruitment that aim to find the brightest and best talent for the latest work opportunities on offer.
Customers will now also be able to use the newly launched 'Learning Bridge' which includes brainstorming facilities, evaluation rooms, as well as a special lecture hall equipped with forward-looking technology that creates a motivational environment for both employees and customers.
DAFZA also successfully organized a workshop entitled the 'Happiness Forum' which is aimed towards exploring employee happiness. The workshop forms part of DAFZA's Happiness Plan 2017-2021, which complements and supports the UAE's National Program for Happiness and Positivity. This includes a range of initiatives and programs that have been designed and developed to provide innovative environments for employees while also instilling values and optimism as a lifestyle in the UAE community.
The 'Happiness Forum' served as a strategic platform to showcase ideas, talents and emotions, in order to improve and enhance employee happiness. The event also helped discover their interests and reinforce communication for added productivity and increased business interest. Participants were also able to share their stories, experiences and their designs with other group mates, allowing them to work closely in an ideal setting that creates a model for a happy and positive working environment for employees.
DAFZA has placed happiness as one of its top priorities, which is included in the national goals in support of Dubai's transformation to being one of the world's smartest cities, creating optimistic and happy environments for all its employees and establishes positive values in all departments and divisions. DAFZA’s Happiness Plan, which reaffirmed DAFZA's commitment to CSR, delighting employees and customers, and creating a practical environment for employee comfort and satisfaction, in line with leadership directives. The Plan includes eight key initiatives, each with a specific goal, mission and application mechanism that combines the employee's and the team's happiness, as well as enhancing communication and cordiality.
These initiatives received positive feedback from DAFZA employees. As a result, the Employees Happiness index has reached 81% compared to 71% in 2017. The 2018 index has surpassed the targeted figure by 4%, with several indicators within the index achieving more than 90%, showcasing DAFZA’s strengths in this area.
DAFZA remains committed to protecting the environment while ensuring sustainable development and operational safety. As such it has created plans and initiatives that have resulted in energy savings of 5% per square meter of built-up area in 2018 compared to last year’s results of 95 kW per square meters annually, reducing its electricity consumption by 1.91% and water consumption rate by 1% from 24.8 million to 24.5 million. Imperial Gallons .This has also meant a reduction of 369 tons in carbon dioxide emissions as well as a decrease in electricity and water costs estimated at AED 690,000 compared to the same period last year, and has included recycling of more than 1,125 tons of waste. DAFZA initiatives have contributed to reducing the general waste by 8% from 4,500 tons to 4100 tons and increase in the recycled waste from 736 tons to 1150 tons, an increase by 57%.
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