Start-ups lament lack of consistency in UAE free zones

Free Zones: Setting up a new business in a free zone isn't always as easy it seems, but authorities are trying a number of tactics to make the process as smooth as possible.

(R) Dana Abdelhadi, Owner of Expose Communications, a boutique PR firm pose during the interview at her office in Dubai. ( Satish Kumar / The National )
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As Dana Abdelhadi prepared to launch her boutique public relations company in Dubai this spring, she decided to take the advice of a family friend, Issam Dahmash, and open in a free zone.

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Mr Dahmash opened a furniture shop in the Dubai International Financial Centre (DIFC) free zone a few years ago and had only good things to say about the process.

Mr Dahmash, who is British, completed all of his start-up paperwork in-house at DIFC and maintains full control of his business.

The procedure was so fast and easy, he says, that he even created another company in a free zone in Ras Al Khaimah.

"It took me a couple of hours to set up," he says.

But Ms Abdelhadi's journey in starting up her venture, Expose Communications, in the nearby free zone of Jumeirah Lakes Towers (JLT) has been a much bumpier ride.

First, her co-founder, Hind Dahmash - Mr Dahmash's daughter - started a sister office in London, taking just 20 minutes to register the business, and at a cost of £90 (Dh530).

In contrast, Ms Abdelhadi says she had to wait more than two months despite being told the process would take only about 10 days. It also cost Dh32,000 to obtain her business licence, she says.

"They told me I have to have an office to rent out before I got my licence, and so I was paying rent for two months before I could start working in it," adds Ms Abdelhadi, a Jordanian-born Canadian.

While Ms Abdelhadi is quick to note that she is quite content now that her business has been up and running for a couple of months, complaints such as hers are spurring some free zones, including JLT, to take action.

Some are making marketing claims that could capture the attention of people who are shopping around for a free zone where paperwork can be fast-tracked.

ZonesCorp, for instance, oversees five industrial cities in Abu Dhabi and promises business owners that they can "set up their operations in the shortest time possible", though it stops short of stating a specific period.

Other free zones among the 30 or so operating in the UAE are overhauling aspects of how they go about helping new companies to start up, such as eliminating unnecessary documentation.

The Dubai Technology and Media Free Zone Authority last month revamped its website so that information about establishing or operating a business could be easily reached through a single portal instead of multiple sites.

It may have been a simple act of consolidation, but it is the kind of convenience that business owners such as Ms Abdelhadi are looking for. In fact, Dubai Outsource Zoneemphasises its "one-stop-shop of support services" for start-ups.

A similar one-stop centre has opened on the second floor of Almas Tower in Dubai. That is where aspiring business owners who are looking to move into one of the 61 buildings within the JLT free zone now congregate.

The space was designed after JLT executives mapped out the different floors and buildings that their clients would have to visit in order to get start-up assistance, as well as to figure out who, exactly, the clients spoke with and why.

During a recent visit to this new centre, some business people were tracking the progress of their employees' work-visa approvals on a computer monitor.

Most were patiently sitting with folders of paperwork, waiting for staff to help with questions about business licences, registering companies or securing office space. "We would like to see an environment where our customers have one touch point," says Malcolm Wall Morris, the chief executive of the Dubai Multi Commodities Centre, which oversees JLT.

"They could be a commodity trader [or] a retailer. That's their business," he adds.

"Their business isn't having to go through an administrative hurdle of setting up a business."

Ms Abdelhadi, who runs just one of the thousands of businesses in JLT, did not have the chance to test this new administrative centre when she opened her office earlier this year.

Yet Mr Morris responded to her complaint over the lengthy set-up time she encountered by saying: "We constantly strive to make the process logical and expedited. There is always going to be potential issues somewhere, but we continue to try for that service improvement."

James Bernard, the director for business development and client management at JLT, also notes that it takes businesses an average of two weeks to set up shop in the free zone.

"We're continuously working on our processes, and we serve to make it as quick as possible, but there are certain [administrative] things we have to do," he says.

Busy entrepreneurs who want to outsource parts of this start-up process now have that option, too. Consultancies in Dubai and the capital are more than ready to compare the pros and cons of different free zones, provide a full breakdown of licensing options, then shuttle around paperwork on behalf of aspiring business owners.

The help all comes at a price, of course.

"It truly does become a one-stop shop," says Prajit Arora, the managing director of Sentinel Business Centres, a consultancy that helps businesses to get started in Dubai.