Johnson M. George, General Manager of the Umm Al Quwain (UAQ) Free Trade Zone, explains to podcast host Maria Botros the benefits of setting up a company in the UAQ Free Trade Zone on this week’s episode of Tell Me Why.
Our first location, which is near the port, gives business owners the opportunity to use the port for their operations, says Johnson
Johnson: We allow up to 50 shareholders in a company
We have more than 2,000 permitted business activities currently operating in UAQ Free Trade Zone, says Johnson
Johnson: We provide in-house business advisors that assist entrepreneurs with setting up their companies in our free zone
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Our first location, which is near the port, gives business owners the opportunity to use the port for their operations, says Johnson
Johnson: We allow up to 50 shareholders in a company
We have more than 2,000 permitted business activities currently operating in UAQ Free Trade Zone, says Johnson
Johnson: We provide in-house business advisors that assist entrepreneurs with setting up their companies in our free zone
Read the full story here:
See more videos at https://gulfnews.com/videos
Read more Gulf News stories here: https://bit.ly/2HLJ2km
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NewsTranscript
00:00Umalkwain Free Zone, we are always in the process of innovation and development.
00:06We focus mostly on industrial companies and technology-based companies.
00:14Our dream or our vision forward is to attract more industrial and technology-related companies,
00:21which will bring a lot of job opportunities to the emirate as such and the country as such.
00:30So we try to kind of all these tasks when I retire.
00:40Welcome back. Welcome back. It's Tell Me Why. And I know that I've always gotten, you know,
00:47people from startups or entrepreneurs or businessmen or businesswomen on the show to
00:54talk about their companies and the journey of setting up a company. But today we're going to
00:59take it from a different angle. We're going to talk about where you can set up the company.
01:03And with me in the studio is Johnson M. George, who's the general manager of Umalkwain Free Trade
01:09Zone. How are you? I'm good. I'm good, Maria. All right. So are you ready? We're going to ask
01:16you so many questions. I mean, I'm going to act as if I'm a person who's about to, you know,
01:22set up a company and is looking for a place to set it up in. And I'm going to ask you all the
01:27questions I need to be able to do that. So before we get started, tell us a bit more about the
01:33Umalkwain Free Trade Zone. When was it established? Where is it located? Obviously, we know that it's
01:39in Umalkwain, but where exactly and what kind of activities do you include? First of all,
01:45thank you for having me here. My name is Johnson M. George. I'm heading the Umalkwain Free Trade
01:53Zone Authority. Umalkwain Free Zone is located in one among the emirate in the northern part of
02:01United Arab Emirates. And it's about, let's say, 40 minutes drive from Dubai International Airport
02:10and 30 minutes drive from Sharjah Airport. So Umalkwain Free Zone was established in the year
02:181987. Okay. This is one among the oldest free zone. But initially it was known as Ahmed bin
02:26Rashid Port and Free Zone Authority. Okay. Later in the year 2014, it was renamed to Umalkwain
02:36Free Trade Zone Authority. The free zone is in two different locations. One is attached to the port
02:46and a new location which is attached to the state highway, Mohammed bin Saeed Road, E311.
02:53Can you tell us the advantages of the location? I mean, what sort of advantages do people have
03:01from that location of the free trade zone?
03:05The first location which is attached to the port, they have access to the port and
03:10they can use the port for their operations. And the second location is beside the Mohammed bin
03:17Saeed Road. So they have easy access to the state highway. And as I said earlier, it's close to all
03:25the airports, close to the seaports, and location is a very good advantage. And it's always against
03:31the traffic. Getting into the details of it, who can set up a business in the free trade zone?
03:38Who can set up a business in Umalkwain Free Trade Zone?
03:42Anyone, any natural person with a clean history about the age of 18 can set up a company with
03:51Umalkwain Free Trade Zone. Also, corporates, companies, they can be a partner, they can
03:57establish a company in Umalkwain Free Trade Zone. In Umalkwain Free Trade Zone, we allow up to 50
04:05shareholders in a company. And do you actually have companies that have up to 50 shareholders?
04:12Not really, but we we do have companies with multiple corporate shareholder layers. Okay.
04:18In several layers of corporates, like the companies, where if you put all together,
04:24there will be even more than 50. Amazing. Okay. And which business activities are permitted
04:30to set up, you know, their companies in Umalkwain Free Trade Zone? And what are
04:35some of the business activities that you have there? Actually, we do issue different types of
04:42licenses. For example, a commercial license for the traders. Okay. And a consultancy or service
04:50license for the service sectors. Industry license for the manufacturers. Even we issue freelance
04:58permit for the talented people, like professionals. We do have more than 2000 activities
05:08permitted from Umalkwain Free Trade Zone. And people, we are a diversified free zone. We are
05:14not a free zone for segregated activities. Like there are several free zones, they are meant only
05:21for, let's say, media or, you know. Yes. We are not like that. We are a diversified free zone. We
05:27can accommodate all types of activities. So can you name a few of the types of businesses that
05:33have set up like media companies? Can you name a few of the industries that are included?
05:38Let's say if you're talking about the traders, there is foodstuff trading, building materials,
05:44construction materials, electrical, electronic items, garments, textiles, chemicals. These all
05:50are in the trading sector. In the consultancy sector, there are like management consultancies,
05:58business advisors, corporate service providers, architectural, interior, engineering consultancies,
06:04and various types of consultancies. Also manufacturing sectors. We do have food
06:10manufacturing related sectors, building materials manufacturing related sectors,
06:15vehicle, armored vehicle manufacturing sectors. So there are several sectors. As I said,
06:20there are more than 2000 different types of activities. For freelancers, there are like
06:25musicians, artists, designers, painters, this kind of like talented people. We are issuing the
06:31licenses. I think it's crucial to have the freelancers licenses as well, because a lot of
06:37people are moving towards that direction at the moment, especially as you mentioned, ones coming
06:42from an art background and a media background. A lot of them are opting for that option. And it's
06:47great that you offer it because then it makes it easier. It facilitates opportunities for these
06:52people across the country. Can you tell us how long it takes to set up a business in Umalkoin
06:59free trade zone? And how does the process work? How smooth is it? How simple is it?
07:06Do people have to wait for a long time? Or do they get their licenses in a matter of days?
07:12See, this all depends on both the people, you know, like a free zone authority and the client.
07:19Initially, when a client comes to us, they are inquiring about the possibility of opening a
07:24company or their project there. So they have to submit the project. Then our team, let's say,
07:31let's take the case of industrial project, because we are more concentrating on the
07:35industrial segment. So the client will submit the industrial application form to us.
07:42Our operation and engineering department, they assess the project. If there is something
07:49related to the environmental impact related, we will assist them to get an environment study
07:56report. Once it is done, then we will ask them to submit the KYC documents such as their passport
08:04and their proof of residence and that sort of thing. Then they identify the location which
08:10they want. They want a land or they want to take a warehouse from us. They identify this.
08:15After that, when they're ready to go, we assist them. Like we have our in-house business advisors.
08:21We assist them starting from filling the application form till preparing all the
08:28corporate documents required for the company formations. Once it is done, payment is done,
08:34within, I would say, within 24 hours, we will issue the license. But to reach to that stage
08:41depends upon how fast the client reciprocate to us. Amazing. But all throughout the process,
08:49you are offering assistance to these potential business owners or startups. You're offering
08:56them advisors. You're offering them the necessary approvals that they need to seek. You give them
09:02full list of requirements. So, in a way, you are with them step by step. Yes, very much. It's not
09:09just for the company formation. Everybody boast about the company formation, but we believe that
09:16company formation is just a start of a relationship. So, if a client approaches,
09:23we advise them from their project. From the start, we guide them through the application processes.
09:31We guide them through all the requirement of the facilities. Once the company is formed,
09:38we didn't, we don't stop there. We have a separate section called value-added services,
09:45where we assist the client for opening the bank account, getting their resident visas,
09:51finding employees, sourcing the employees, then registering for a VAT, registering for
09:59corporate taxes, even supporting them for finding auditors for doing the audit works.
10:07Maybe some of the factories, they might need some engineering support. We have listed
10:14contractors and consultants. And again, somebody needs family visa, also insurances.
10:23We have a lot of services in the value-added service section.
10:29Fantastic. And that's crucial for business owners to have. I mean, the relationship between them and
10:35Omelcoin Free Trade Zone doesn't end when they set up the company. It continues for as long as
10:41they exist in the zone. Yes. That's fantastic. And it is not just the company formation.
10:48It's very smooth, even for the operation as well. Let's say a client formed the company.
10:56Maybe after some time, they want to change their business activity.
11:00They can do it seamlessly. Or they want to add on partners. They want to increase the
11:06share capital. They want to change the name of the company. It's all as easy as forming the company.
11:13Okay. So, we provide all the support, even if they want to wind up the company,
11:20they get the same speed. Fantastic. Okay. So, I'm going to
11:27take the flip side. Why would business owners consider Omelcoin Free Trade Zone
11:33as a zone to set up their company? Why should I choose it? If today I'm looking at different zones,
11:39why should I pick Omelcoin Free Trade Zone? There are several reasons. First one, as I said
11:46earlier, it's a diversified free zone. So, the clients can find the clients within the zone.
11:55It's not a segregated free zone. It's a diversified free zone. Okay. The second one is
12:03easiness of company formation and also the operation. The third one is the transparency.
12:13What we say, it is very transparent about our processes, about our documents required,
12:21about the cost. Everything is transparent. Fourth one is the approachability. We want to
12:30make or behave like a boutique free zone. We have an open door policy. Let it be a
12:37small company. Let it be a big company. We directly involve to resolve their issues.
12:45And then the next advantage is the incentives which we give.
12:50We are comparatively cost effective. I wouldn't say we are cheap, but we are cost effective
12:58because of the transparency. Our cost may be little on a higher end for a kind of small time
13:08flexi companies like that. But otherwise, we are cost effective and we are giving a lot of
13:16incentives to our clients, even through the port, through the customs department.
13:24And further, ours is a designated free zone, means it's a bounded free zone.
13:31The designated free zone have many advantages related to the taxes.
13:39Then, as we said earlier, location is an advantage. Also, we are always striving,
13:47we are always learning to improve. We will listen to the clients.
13:52These are the reasons they should come to us. Fantastic. Those are more than enough reasons
13:57for someone to consider a Milkoin free trade zone. So you mentioned that there are existing
14:03at the moment 2000 plus business activities existing. Do you know, do you have a number
14:10of how many businesses you have so far? I mean, in terms of companies, their sizes,
14:15are they small to medium and nationalities? You were mentioning that they are diverse.
14:22We have more than 11,000 companies registered with us. But most of them are micro companies,
14:30then small companies, and medium companies. Micro companies are, let's say, 1 to 10 employees.
14:39Okay. And medium companies are having about
14:44400, 500 plus employees. But it's growing. We are getting good traction, good inquiries on the land
14:52lease, so that the clients can build the factories with more number of employees and
14:58those sort of thing. And we have our clients from more than 150 countries registered with us.
15:06Wow. Yeah, that goes back to the diversity of the nature of a Milkoin free trade zone.
15:14Johnson, I actually have an interesting question. And I think a lot of people will have this
15:18the same question. As a business owner, if I set up in a Milkoin free trade zone,
15:23am I 100% the owner of this company? Or do I need a partner?
15:29The attraction of the free zone itself is that an expatriate can own 100% shares in the company.
15:38Whereas in the mainland, outside the free zone, there is a requirement of having an
15:46Emirati national as a partner. I would say there was, because since past two years,
15:52the government have removed in certain activities, a foreigner can own 100% company in certain
15:59activities. Right. But in the free zone, all the companies can be 100% owned by a foreign national.
16:07Okay, follow up on that. So what's the difference between mainland and a free zone? And how do I
16:12know the difference as a business owner or as a potential business owner, someone who's looking
16:18to set up a company? A good question. Now, when the UAE was coming up,
16:27they were attracting a lot of foreign companies. But the requirement of having a local partner
16:37for the purpose of a partner, many foreign companies, they were not willing to come to this
16:47to come to this region. Then the government have wisely decided to have designated areas,
16:55which they name it as free zones. Inside the free zone, a foreign company can establish their own
17:02entity assets like a branch or a subsidiary 100% owned by the foreign company. Right. But there
17:10is a catch or there is one restrictions restriction to that. That is a free zone company
17:16cannot do business directly to the local market. You need to have a need to have a distributor
17:26or a local partner company or an agent to do business means you cannot do B2C businesses,
17:34you can do only B2B business. You can sell your products or services through a local company,
17:42local agent. That's the difference between a free zone and a non-free zone. That's the only
17:46difference. What are some of the goals you want to achieve with Umalkoin's free trade zone?
17:54Umalkoin free zone, we are always in the process of innovation and development.
18:01We focus mostly on industrial companies and technology based companies. Our dream or our
18:10vision forward is to attract more industrial and technology related companies, which will bring
18:17a lot of job opportunities to the emirate as such and the country as such. So you're willing to
18:26so you're willing to expand that part specifically? We are concentrating on that part.
18:34Okay. I mean, we are not ignoring the other part. No, of course. Yeah. But our main goal is to
18:39attract industrial companies and technology based companies. Okay. And where does Umalkoin free trade
18:46zone see itself in the future as a business hub? I'm very positive about the future of Umalkoin
18:53free zone because the free zones like Umalkoin, it's not just only tax benefits or
19:04easiness alone. We are creating a platform for the businesses to adopt technologies.
19:14They can connect to the world. So this is a platform we are creating, which attracts
19:20businesses to us to make this or convert this as a global business hub. How will, in your opinion,
19:28Umalkoin free trade zone, how will it contribute to the growth of the country's economy?
19:33Yeah, when we attract more industrial based companies and technology based companies,
19:40it will create job opportunities. And naturally, it will bring economic advantage to the emirate
19:46and the UAE as such. You've answered everything very smoothly. But my last one is more on the
19:53sentimental side. What's your advice for someone who's looking to set up a company and is still
20:00quite flustered with all the details that it involves, all the logistics it involves?
20:06What's your advice for the person who's looking to set up a company today?
20:10See, UAE is a land of opportunity. Everyone here, they have a dream of doing some sort of
20:17business sometime. Yes. They might try. There are a lot of like opportunities where you can even
20:26take chance by spending small money, like maybe a trader or maybe a consultant. And okay,
20:33I will try. Maybe I might lose. For them, let them keep going. But
20:41the people with a clear vision, clear project, then they have to do a clear study, thorough study
20:49on all the free zones. They have to clearly understand what are the benefits offered by
20:59each free zone. There are segregated free zones like for segregated activities.
21:06They can look details into that free zone, what the benefit they're offering.
21:11And they have to identify themselves. They have to do the homework by themselves.
21:16There are I would recommend, I would say not to carry away with the social media advertisements
21:23or those kind of advertisements which shows cheap packages or no cost effective business
21:29packages and all. Don't go for that. You have to understand whether this package suits me.
21:35It should be tailor made. It should suit me not just somebody is offering a package and go there,
21:42they will give you free advice. There is no free lunch. If they are giving you free advice,
21:47they are getting some benefit from somewhere else. So you have to do your homework properly.
21:52You have to carefully consider a consultant who doesn't have any vested interest. He will advise
22:00you professionally. Of course, you need to pay for that. It will not be free. Again, you need
22:05to have a clear project. The projects, you have to see how much the project can be flexible because
22:14the world is changing in a very fast pace. And the team you have it, you have the financials,
22:22you have the marketing plans in place. So you should have a plan A and plan B and also
22:29a clear plan for exit if it goes bad. I'm a corporate lawyer by profession. So when I say
22:37that the easiness of doing business or easiness of accepting the business into the free zone,
22:43one thing we have to make sure that we don't compromise on the compliances. Let it be company
22:47formation, let it be cancellation, anything, we don't compromise on the compliances.
22:52And that's another reason I'm telling the budding entrepreneurs or the upcoming
22:59entrepreneurs to be very careful in choosing the location and don't get carried away from a third
23:06party source of go there or register in this free zone or that free zone or something like that. So
23:12they have to do their homework and they have to carefully choose the location.