The North America and England

Name:
Student No:

Logistic Hub
in Free
Trade Zone

Contents
Introduction...........................................................................................................................................3
Analysis..................................................................................................................................................3
Dubai.................................................................................................................................................3
United Arab Emirates........................................................................................................................4
Saudi Arabia.......................................................................................................................................5
Oman.................................................................................................................................................7
References.............................................................................................................................................9

Assignment on setting up logistic zone in Free Trade Zone
Introduction
GTS group is an international distribution group marking its presence in America and
Europe. The group manages its own supermarkets and has set a network of franchises at
different locations namely Americas, North America and England. The company does not
have any manufacturing set up and mostly procures good from local market and import other
requirement. The company is thinking of setting up a logistic hub and is exploring possible
Free Trade Zone for the same. In this regard, the trade zone of following countries have been
explored on the basis of various parameter:
(a) United Arab Emirates (UAE);
(b) Dubai;
(c) Saudi Arabia;
(d) Oman
Further, the term Free Trade Zone is a class of Special Economic Zone where goods are
manufacture, reconfigured, handled and exported without levy of any customs duty. They are
mainly organised in and around major seaports, airports (international) and national frontiers.
Analysis
The four Countries that have been chosen for analysis includes Dubai, United Arab Emirates,
Saudi Arabia and Oman. A preliminary screening of the countries have been carried out to
understand the best country to establish the free trade zone along with the characteristics.
All the above four countries have lots of free trade zone set up in their countries and each free
trade zone has its own uniqueness and characteristics. A brief overview of free trade zone of
the above mentioned countries along with detailed analysis of Free Trade Zone of King
Abdullah Economic City located in Saudi Arabia, being the most feasible location is
presented as under:
Dubai
Dubai World Central (DWC) is the World’s first purpose built acropolis. The said
construction is an initiative of Government of Dubai and places Dubai as the world’s leading
trade centre. The project is located near Jebel Ali Sea Port. (UaeFreeZones.com, 2019)The
DWC is multimodal with following unique capabilities. The Al Maktoum International
Airport is the world’s largest airport with an annual capacity of 12 million tonnes of cargo
and 160 million passengers.
Logistic district under DWC
The logistic district has been set up to bridge the gap in global supply chain and paves way
for fast logistic cycle with operational predictability. The location of Dubai is central and
connects the rest of world with ease and at cheap cost. The key advantages of operating in
DWC encompass the following:
(a) Better global connectivity as DWC is at centre of world;
(b) Better proximity to sea, land and air transport;
(c) Minimised capital cost;

(d) Short Product Life Cycles;
(e) Highly equipped technology and manpower availability;
(f) Tax free zones;
United Arab Emirates
There have been various free trade zones in United Arab Emirates ranging from Abu Dhabi,
Dubai, Sharjah, Fujairah, Ajman, Ras al-Khaimah and Umm al-Quwain. The free trade zones
having the following benefits:
(a) 100% foreign ownership is permitted;
(b) 100% import and export tax exemption is permitted;
(c) 100% repatriation of capital and profits;
(d) Corporate tax exemption up to 50 years;
(e) No personal income taxes;
(f) State of Art Facilities;
(g) Assistance with labour recruitment, support services such as housing and sponsorship;
(h) Easy procurement of license and operational efficiency; ( UAE Freezone, 2019)
Oman
There have been various free trade zones in Oman ranging from Al Muznah, Sohar, Salalah
and Duqm SEZ. The free trade zones having the following benefits:
(a) 100% foreign ownership is permitted;
(b) Tax exemption for a period of 10 years.
(c) Requirement of lower quota for the Omani workers.
(d) Zero Custom duties.
(e) Industrial estates offer advantages which includes low rental and energy prices,
exemption in custom duties and an exemption with respect to corporate tax.
(f) This Oman free zone is also suitable for companies who intend to use Oman as a
regional manufacturing and base of distribution hub. The main purpose to set up the
free zone is to easily permit import and export operation.
The following are the locations available for setting up business at the Free trade Zone of
Oman:
(a) Al Mazunah
(b) Salalah
(c) Soar
(d) Duqm SEZ
Saudi Arabia- Best Country and Best FTZ
In order to diversify the business in Saudi Arabia there has been two types of free trade zones
that has the main objective to attract the foreign investors in order to develop the industrial

activities in the country i.e. in the industrial cities and the economic cities. Since, we are not
going to set up an industry for the production of goods and services, we are not going to
explore economic cities for the purpose of setting up logistic hub.
Economic Cities
As per Organisation for Economic Cooperation and development, there are 6 location of
economic cities in Saudi. These are mega initiatives, new concept and integrated cities. The
locations are Tabouk, Hail, Medinah, Rabigh, Jazan and Eastern Province. The key Design of
economic city are as under:
(a) Development which is based on globally competitive advantage;
(b) State of the art hard and soft infrastructure;
(c) Creation of opportunities for the private sector;
(d) Attracting core jobs;
(e) Business Friendly environment;
The most famous economic cities which has been considered for setting up the logistic hub of
GTS Group is King Abdullah Economic City. Some of the salient features of this economic
city is presented as under:
King Abdullah Economic City
(a) Located at the pristine spot off the Red Sea North of Jeddah
(b) It covers an area around 168 million square kilometre and is the biggest economic city.
(c) Size of investment is US $ 27 Billion;
(d) The main industry cover port and logistic industry, it also covers light industry and
provide services.
(e) This particular city is also expected to provide 1 million jobs to people and to hold at
least two million people of the country Saudi Arab;
(f) State of art transport facilities
Major components
(a) Modern world Class –Seaport;
(b) Industrial District;
(c) Financial Island;
(d) Education Zone;
(e) Resorts;
(f) Residential Area
The King Abdullah Economic City homes the following logistic business in its shelter:
(a) Aramex;
(b) Globe;
(c) CIMC;
(d) Wared;
(e) Sigm
(f) Others
Further, King Abdullah Economic City offers following advantages for doing business in the
city:

Regulatory
(a) Full ownership is permitted for companies, plant, equipment, projects and property;
(b) Accelerated business registration and process set up;
(c) No minimum paid up capital requirement for various sectors;
(d) There are 38 bilateral trade agreements with various partners which give strong foreign
investor rights;
(e) There exists Double Taxation Avoidance Agreements with various countries across the
globe thereby giving equal treatment to both domestic and foreign investors;
(f) There is flexibility in transferring/allocation of shares of companies;
(g) There is 100% allowance for foreign investors for sponsoring foreign employees.
Fiscal
(a) Corporate tax of 20% for foreign companies and there is provision for carry over of
losses for an indefinite period;
(b) There is no VAT, GST, land or property tax along with personal income tax;
(c) The kingdom has been ranked as third best tax environment in global world;
(d) There is tax deduction for Research and Development expenses and training
expenditure. Further, there are special incentives for investing in lesser developed
regions in the kingdom;
(e) One time tax credit of 15%;
(f) There is 50% tax credit on training of Saudi employees and 10% on their payroll.
Financial
(a) There is access to soft funds from Saudi Industrial Development Fund and Public
Investment Fund;
(b) There is a Human Development Fund which provides aid and support activities in
relation to qualifying, training and recruitment of Saudi Labour. There is also a
mechanism to share 50% of cost of the cost of training of employees along with payroll
for a period of one to two years.
(c) There are two Research and Development Endowment which facilitates research and
development in the region;
(d) There is no fees for registering the real estate property;
(e) Generous and optimal locations for setting up logistic base;
(f) There is access to regional and international financial programs and incubations
encompassing Arab Fund, Arab Monetary Fund, Arab Trade Finance Program, Inter-
Arab Investment Guarantee Corporation and Islamic Development Bank. (Saudi Arabia
General Investment Authority, n.d.)
Further, under King Abdullah Economic City there is only one regulator, with a 100%
foreign ownership permission, bonded zone regulations, no cap on visa of employees and
first implementation of mortgage law. Thus, all the above facilities make King Abdullah
Economic City, the best option for setting up the logistic hub for the company. (Abdullah,
2015)

References
UAE Freezone, 2019. Company Setup in Dubai World Central (DWC) Freezone. [Online]
Available at: https://www.uaefreezonesetup.com/dubai-world-central-freezone
[Accessed 30 March 2020].
Abdullah, K., 2015. Investor Relations Presentation. [Online]
Available at: https://www.kaec.net/wp-content/themes/roots/assets/pdf/investor-presentation/
EEC-2015-Q3-PRESENTATION-En.pdf
[Accessed 9 April 2019].
Health Consultants Group PLC, 2019. Saudi Arabia Free Zones. [Online]
Available at: https://www.healyconsultants.com/saudi-arabia-company-registration/free-zones/
[Accessed 30 March 2020].
Healthy Consultants Group PLC, 2019. Oman Free Zones. [Online]
Available at: https://www.healyconsultants.com/oman-company-registration/free-zones/
[Accessed 30 March 2020].
Saudi Arabia General Investment Authority, n.d. Saudi Arabia’s Economic Cities. [Online]
Available at: https://www.oecd.org/mena/competitiveness/38906206.pdf
[Accessed 9 April 2020].
UaeFreeZones.com, 2019. Dubai World Central. [Online]
Available at: http://www.uaefreezones.com/fz_dubai_logistics_city.html
[Accessed 30 March 2020].