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Jafza: growing despite challenges

Jafza: growing despite challenges



Jafza reaffirms top position

Jafza is the leading hub for trade and logistics in the region, offering investors a highly efficient base for their trading, manufacturing units, export operations and related activities

November 2019

Jebel Ali Free Zone (Jafza), a subsidiary of Dubai-based ports operator DP World, has reaffirmed its leadership position in global logistics when it was named ‘Global Free Zone of the Year for Large Tenants’ at the fDi Middle East Free Zones of the Year Awards 2019.

The fDi Magazine Awards, part of the Financial Times Group, cited Jafza for its innovative initiatives to support large companies, its continued focus on upgrading infrastructure and for building an eco-system that encouraged companies of any size to expand their operations in the free zone.

The magazine chose the winner from over 85 free zone competitors from across the world this year, with one of the highest concentrations being from the Middle East.

The award was judged by the Financial Times Specialist editorial team and a panel of independent judges from the region.

Jafza and DMCC officials after signing the warehousing solutions agreement

Jafza and DMCC officials after signing the warehousing solutions agreement

“The rapid growth in the number of large tenants in Jafza is a clear indication that our strategy to promote Dubai as a destination for manufacturing and industrial investments is paying off,” said Mohammed Al Muallem, CEO and managing director of DP World UAE Region and CEO of Jafza.

“This is in line with the Dubai Industrial Strategy 2030 laid out by the Government of Dubai.”

“Our infrastructure is tailor-made to support the multi-modal requirements of businesses using Jafza as the base for their regional operations. We are proud of winning the prestigious fDi Magazine award again, which recognises the world-class exceptional efficiency we deliver to our customers,” he added.

 

CHALLENGING TIMES

Jafza, Dubai’s oldest port and free zone, was created in 1985 to promote trade and support container throughput at the Jebel Ali Port. Today it is one of the largest free zones globally and the region’s most efficient logistics hub.

Linked by a customs free corridor to Al Maktoum International Airport, Jafza processed trade worth $93 billion in 2018, up from $83 billion in 2017.

The free zone contributes 23.8 per cent of Dubai’s GDP and sustains the employment of more than 150,000 people in the UAE. It is home to more than 7,500 businesses originating from over 100 countries, and attracting an estimated 24 per cent of the UAE’s FDI.

The inflow of FDI to Jafza-based companies added up to Dh3.2 billion ($871.23 million), 23.9 per cent of total inflow into Dubai in 2017 and Dh3.1 billion ($844.006 million) of the UAE’s FDI inflow of Dh33 billion ($8.98 billion) in 2016.

As the leading business hub between Asia, Europe and Africa, the fastest growing producing and consumer markets globally, with over 30 years’ experience, Jafza focuses on long-term customer relationships. Jafza builds alliances with global investors by providing them with world-class infrastructure and support.

 

WAREHOUSING PARTNERSHIP

Among its various initiatives, the free zone recently signed an agreement with the leading free zone Dubai Multi Commodities Centre (DMCC) that will bring warehousing solutions and logistic services to member companies registered in the DMCC Free Zone.

Ahmed Bin Sulayem, executive chairman and chief executive officer, DMCC, said: “Since its establishment almost thirty-five years ago, Jafza has played a crucial role in making Dubai the global centre for trade it is today.

Jafza is home to more than 7,500 businesses originating from over 100 countries

Jafza is home to more than 7,500 businesses originating from over 100 countries

“Under our agreement, DMCC member companies will gain access to all of Jafza’s state-of-the-art warehousing and logistical services at no extra charge through a single point of contact. This collaborative agreement provides a strong incentive for DMCC-based companies to leverage the facilities available at Jafza, while streamlining our business processes to support our customers.”

The agreement sees Jafza offer DMCC member companies the full use of their warehousing solutions and logistics services in Jebel Ali Free Zone, to encourage trading through the emirate. Furthermore, DMCC member companies will be exempt from registration and licensing fees related to this new service.

Al Muallem said: “Collaboration is an essential part of growing together for our nation’s economy. Jebel Ali Free Zone is pleased to be offering a new benefit which will increase commercial activities through our facilities.”

He added: “We have excellent multimodal connectivity which will be a boon for member companies at DMCC wanting to import and export goods in and through Dubai. This, in turn, plays a key role in Dubai’s growth and both organisations show a strong commitment to reinforcing the UAE’s economic and commercial strength.”

Jafza and Jebel Ali Port constitute a world-class trade and logistics ecosystem that delivers integrated solutions to global companies doing business across a region of more than 3.5 billion people. As the leading business hub, Jafza and Jebel Ali Port contributed 33.4 per cent of Dubai’s GDP in 2017.

With the two free zones being in close proximity from one another, this collaboration will provide multiple advantages for DMCC member companies. Logistically, DMCC members will be able to trade under a free zone customs code that exempts them from any customs duties and VAT schemes.

In 2018 alone, DMCC welcomed 1,868 new companies to its Free Zone, marking a 12 per cent growth compared to 2017. DMCC hosts more than 15,000 companies and contributes over 10 per cent to Dubai’s GDP.

 

INDIAN INVESTORS INTEREST

Earlier, DP World, UAE Region and Jafza attracted keen interest from small and medium enterprises (SMEs) and micro, small and medium enterprises (MSMEs) at the recently held 16th CII Global SME Business Summit in New Delhi.

As a part of the India – UAE Bridge initiative, the team engaged with Indian SME and MSME companies looking to expand their business outside India and presented a range of strategic solutions, including plug-and-play platforms, end-to-end supply chain solutions, value-added services, and an investment platform.

The proposed Pyrotek plant in Jafza

The proposed Pyrotek plant in Jafza

Supporting the initiative is the first Indian Traders’ Incubation Centre for SMEs and MSMEs anywhere in the world which aims, to nurture them for the first three years through the extensive experience and expertise of DP World, UAE Region and Jafza. The Incubation Centre is a custom-made platform for talented Indian entrepreneurs seeking business collaboration with potential partners in the Middle East, Africa, South Asia and Central Asia.

Al Muallem said: “During his recent visit to the UAE, the Prime Minister of India, Narendra Modi, described the UAE as ‘a valuable partner in realising the objective to reach a $5 trillion economy through a mutually beneficial partnership’. We strongly believe that the India-UAE Bridge is an initiative to support this vision, and as the region’s leading trade enabler, DP World, UAE Region is keen to sustain and build on our excellent partnership in an environment that has allowed both our countries to prosper.”

Jafza is designed to enable SMEs and MSMEs to explore, identify and leverage business opportunities across a region of 3.5 billion consumers. The investors and entrepreneurs benefit from the state-of-the-art infrastructure, networking and 360-degree logistics support from DP World’s flagship facilities Jebel Ali Port and Jafza that are well-positioned to integrate a multitude of trade assets, providing the best-in-class support to Indian companies interested in engaging with demand-driven markets.

 

PYROTEK TO OPEN NEW PLANT

Meanwhile, global industrial majors continue to invest in the free zone despite a challenging economic situation. Pyrotek, one of the world’s leading suppliers to the aluminium industry based in Washington, is set to open a major manufacturing plant within the Jebel Ali Free Zone in Dubai.

Designed by Dubai-based Pax-Kent International, the new plant is set for launch this month and is scheduled for occupancy in January next year.

The facility, which boasts 66,000 sq ft of floor space, will supply critical equipment, parts, and supplies to major companies like Emirates Global Aluminium (EGA), said the statement from US industrial group.

A major company, Pyrotek designs and produces everything from large capital equipment to consumable parts.

To support the growing aluminium industry in the GCC, Pyrotek has been in Dubai for 20 years. It currently operates a sales and warehousing facility in the Jebel Ali Free Zone that serves the UAE, Oman, Jordan, Egypt, Lebanon and Northern Africa.

In addition to this facility, Pyrotek currently operates two plants in Bahrain at Askar and Hidd areas of the kingdom besides Al Khobar region in Saudi Arabia.

“This plant will grow our footprint in the heart of one of the major global aluminium smelting regions,” remarked Nigel Clear, the regional general manager for Pyrotek.

“It’s also very close to EGA, the biggest aluminium producer in the Gulf region that operates aluminium smelters in both Dubai and Abu Dhabi. It also has an alumina refinery in Abu Dhabi,” he added.

Pyrotek said there is enough land at the site, located within the Jebel Ali Free Zone in western Dubai, to allow for an eventual doubling of the plant footprint.

The new Pyrotek plant will focus on manufacturing several major product lines and provide faster delivery of specific customized products in the region.

“It’s all about improving our service and shortening delivery times–prototyping and then supplying custom products fast,” stated Clear.

According to him, the Jafza site is ideal because of the ease of doing business there and the convenience of the Jebel Ali Port. “It is a very central logistics hub for the Middle East as many of the vessels and much of the container traffic coming into the Middle East moves through the Jebel Ali Port,” he added.

Pyrotek said the plant will have an in-house design and engineering department. “That engineering team will be built up and developed with specific training over time. Along with providing products to companies in the aluminium industry, the existing facility supplies glass, steel, and noise control industry customers,” he added.

 

HUNTSMAN HOUSE

Huntsman Corporation has also opened its new polyurethanes systems house at Jafza in Dubai. The unit comprises a production area with manufacturing equipment plus blenders, reactors, filling stations, control room, offices and quality control laboratories. It will manufacture polyurethane foams for construction, insulation, appliances, bedding and furniture applications. It will also produce systems for the footwear industry; and prepolymers for coatings, adhesives, sealants and elastomers applications.

The site will also serve as the regional base for Huntsman’s Demilec spray polyurethane foam (SPF) business. The new systems house is equipped with a dedicated spray foam application and training centre and will provide customers in the region with local technical and training assistance, fully supported by the global Demilec organisation.

“This investment is the latest step in the expansion of our worldwide systems house capabilities, which underpin our downstream growth strategy. Constructing the new systems house at Jafza brings us closer to our customers and gives us everything we need to expand our business in the Middle East and North Africa, including manufacturing competitiveness, infrastructure links and speed of response,” said Tony Hankins, President of Huntsman’s Polyurethanes division.

Huntsman’s other downstream businesses in the Middle East include Huntsman EMA, a systems house in Turkey, and Huntsman Arab Polyols Company in Saudi Arabia, a joint venture with the BCI Group of Companies, in which Huntsman is the majority shareholder.

 

CHINA STEELMAKER MASTEEL

Maanshan Iron and Steel Company (Masteel), a leading Chinese steel manufacturer, has also announced the formal establishment of Masteel Middle East in Jafza.

Qian Haifan, general manager of Masteel, and Ahmad Al Haddad, chief operating officer, Parks and Zones, DP World, UAE Region, jointly inaugurated the facility, said a company statement.

Masteel Middle East is a wholly owned subsidiary of Masteel, mainly engaged in the export of all kinds of steel products of Masteel in the Middle East and North Africa (Mena).

Recognising the dynamic characteristics of the Middle East market, and combining the advantages of its diverse high quality products, Masteel Middle East is expanding the export market mainly for hot rolled steel, section steel and cold rolled steel, and PPGI (pre-painted galvanised iron) and GI (galvanised iron) products, as well as the shafts market, it said.

Al Muallem said: “On behalf of DP World, we congratulate our valued partner Masteel on its success. We look forward to this exciting chapter that will build stronger trade ties between our two countries for mutual prosperity for our people.”

“The inauguration of this new facility is a testament to Jafza’s value proposition for large companies and reflects our position as a leading driver of economic diversification,” he added.

Qian Haifan, general manager of Masteel, said: “In recent years by taking inspiration from the Belt and Road initiative and Globalisation of China, we have focused on promoting the progress of its international operations.”

“On the one hand, we are systematically optimising the layout of the global market. It has established branches in the US, Germany, Korea and Australia, having formed the overseas market and business distribution covering Asia, Europe, Oceania and America,” he said.

“On the other hand, while strengthening the export of steel products by integrating Masteel overseas resources and operations, we have promoted our overseas business including import and export of steel and raw materials, deep processing and financing, and much more,” he added.

As its next step, Masteel Middle East plans to integrate into the local market as soon as possible to implement the requirements of customers, actively responding to the important measures advocated in the Belt and Road Initiative (BRI) of China, servicing BRI projects in the UAE and the Middle East market, facilitating Masteel products to grow deep roots in the regional market, and acting as the “bridgehead” for promoting Masteel’s international development
strategies.

 

‘TRADERS MARKET’ IN JAFZA

Jafza is home to Traders Market, a 20 million sq ft facility that will serve as the primary logistics hub linking the GCC with the BRI project. With its mega-logistics infrastructure, it will offer customers a range of options to meet the requirements of today’s on-demand logistics landscape. A partnership between DP World and Zhejiang China Commodity City Group Company (CCC), the ‘Traders Market’ project in Jafza will span approximately 800,000 sq m, with Phase 1 development covering about 220,000 sq m. Phase 1 capex is estimated at $150 million, with construction expected to start in 4Q 2019 and take 24 months to complete, it said.

The Traders Market will create the first smart Freezone market place in the Middle-East for the retail and wholesale industries and aims to serve the wider region with a population base of over 2 billion.

The market will allow traders to benefit from lower supply chain costs by using the world-class multi-modal infrastructure available in Jebel Ali and Dubai. International traders will be able to procure bulk products in Dubai at wholesale prices with the shortest delivery times and will be able to service demand more efficiently.

These marketplaces span an area of some five miles with approximately 75,000 traders and tenants. The footfall to the markets exceeds 200,000 visitors per day and attracts over 500,000 international traders annually. 

Bin Sulayem said: “We are delighted that CCC has chosen Jebel Ali Freezone as its exclusive investment in the region, highlighting DP World’s ability to attract trade through its best-in-class infrastructure and emphasising Dubai’s position as the regions premier trading hub.”

“When we acquired Jebel Ali Freezone in 2015, our vision was to attract clients that will not only provide lease income but also bring significant origin and destination cargo, promoting Dubai as a trading hub. This transaction helps us achieves this vision. We believe we have found the right partner in CCC, with the relevant expertise and experience to make this project a success. We look forward to a strong and enduring partnership,” he added.

Zhao Wenge, group chairman, CCC Group, said: “The Middle-East Africa region is critical for the Belt and Road Initiative (BRI), and we aim to serve this high-growth market through the Traders Market in Jebel Ali, Dubai.”

“We have chosen Jebel Ali for its efficient infrastructure, business-friendly environment and significant trade with China. The CCC group has a wealth of experience and a strong reputation for developing and operating efficient large-scale trading marketplaces. Together with DP World we are confident this venture will be a success,” Wenge added.




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