Ras Al Khaimah, (RAK) one of the seven United Arab Emirates (UAE) states, is poised to tap the Indian SME sector offering investors to set up businesses in their free trade zone (FTZ) at very low costs, a way to also get an edge over other 35 FTZs operating across UAE.

Christopher Tomseth, director (marketing and sales), RAK FTZ, said the cost of setting up a business in RAK FTZ could be as low as Rs 4 lakh besides having the advantages of full foreign ownership, cent percent income and corporate tax exemption and repatriating the entire profit and capital to the investor?s country.

?Cost of running a business at the RAK FTZ is half that of the cost of running a business at an FTZs in Dubai but we are not competing with any Dubai FTZs but supplementing the bigger ones in Dubai,? Seikh Faisal Bin Saqr Ali Qassimmi, chairman, RAK FTZ, a prince of RAK?s ruling dynasty and also the finance minister of the province told an Indian media delegation.

In fact, RAK is only 120 kms from Dubai and a 40-50 minutes drive. So RAK FTZ, though operates under the Dubai shadow, it has been able to prevent the spill over effect of Dubai crisis formulating its own policy of diversified economic persuasion and trading on account of manufacturing and service sector promotion, a RAK investment authority official said. He said, RAK, as a matter of policy, is not high on re-export trade, since Dubai controls 85% of Emirates? re-export trade and there was little scope for states like to RAK to compete with Dubai in it. So RAK’s main focus is to generate its economy through the FTZ and bring in investment as much as possible, the official added.

However, Faisal said the RAK government wanted India to encourage its SME sector to invest in overseas free trade zones shedding off its skeptical stand that UAE FTZs are safe havens for money laundering.

Faisal at a recent world FTZ convention at RAK deliberated that the 1,100 FTZs around the world should come together to create a bench mark for financial practice so that it standarises business procedures within FTZs and creates a guard against money laundering. But investment in FTZ, the European Union (EU) deliberated, would soon dry up since the WTO would lead business to a zero duty regime. So providing opportunity to set up businesses at very low cost would become the key to FTZs sustenance.

According to a UAE government report, although UAE has 9% of world?s total oil reserves and 5% of world?s gas reserves, non oil sector contributes 70% to the country?s GDP and accounts for 30% of UAE?s total export. But of the seven states only Abu Dhabi gets the benefit of oil export since it has 95% of UAEs total oil reserves and 92% of UAEs total gas reserves. RAK, whose estimated oil reserves are only around 400 m barrel and gas reserves around 33.96 mcu, would have to depend on industry, trade, tourism and real estate for growth, Biljana Todorvoska, RAK FTZ?s marketing executive said.

?But we are not really looking for any big Indian investor to set up business in RAK FTZ. Our main focus is SMEs of diversified sectors through which trade in RAK can thrive,? Faisal said. ?General trade,? he stressed, ?is our bread and butter and open-ness of our economy with a diversified approach has been our growth drivers,? Faisal said.

Even after the global economic melt down followed by a realty sector crash down in Dubai , RAK?s GDP growth didn?t fall below 4% and that was mostly for a more or less even contribution by all the sectors to the economy, Tomseth said.

Even after the global economic melt down followed by a realty sector crash down in Dubai, RAK?s GDP growth was 11% in 2009 calendar year and that was mostly for a more or less even contribution by all the sectors to the economy, Tomseth said. However, RAK FTZ, which has already given licenses to 7,000 companies ( 4000 are operational) from 106 countries, is looking for 2,000 more companies to get registered by the calendar year 2011. Since 2000 it has attracted investment worth $ 3 billion and is presently betting high on an aviation park, which is envisaged to attract an investment worth $200 million.

Faisal said the aviation park, currently under development, would be designed for manufacturing, maintaining and repairing all types of air crafts and air craft spare parts and a number of companies including the US, Czech and Indian companies have shown interest to invest in it.

?The travel was sponsored by Ras Al Khaimah FTZ