Ras Al Khaimah - commonly referred to as RAK - is the fourth largest Emirate of the United Arab Emirates, and is located in the northern part of the country bordering Oman on the Persian Gulf. Only a 45 minutes drive from Dubai, RAK is viewed by locals and foreigners alike as an escape from the hustle and bustle of its much busier neighbor. Famous for its long stretches of white sandy beaches, lovely mountains, and vast untouched deserts this Emirate also holds a historical and archeological importance. Based on several studies, humans are believed to have inhabited these lands several millennia ago. Its population is now close to 250,000 and while foreigners form the majority of residents across the country, Emirati nationals form more than half of RAK's inhabitants.
Boasting the second longest coastline in the UAE federation, and due to its geographical location, Ras Al Khaimah took on an early role as a center for shipbuilding and trade in the past. Since its oil and gas reserves are minimal, the local government has more recently adopted a model of economic expansion and diversification which follows that of Dubai. Focusing on manufacturing, real estate & construction, tourism, and services, RAK has been successful in attracting businesses operating in very diverse sectors. It is also rapidly becoming one of the most prominent offshore centers in the Middle East.
Diversifying an industry driven economy.
Since the 1970s and 80s, this northern Emirate created a base for the world-class manufacturing exposure it possesses today, especially in the production of building materials. It houses the world's largest ceramic manufacturer, RAK Ceramics, whose annual global sales regularly reach $1 billion. It sells to 150 countries across five continents, while its advanced production plants are based in China, Sudan, Bangladesh, India and Iran. Ras Al Khaimah is also one of the largest cement producers in the Gulf region and within the country. Both the ceramic and cement industries in RAK grew steadily to complement the rest of the UAE's massive construction development.
The Emirate's manufacturing oriented economy is not limited to the construction sector, Gulf Pharmaceuticals is an internationally leading pharmaceutical company and medical supplies provider based in RAK with seven production plants. It was founded as the first such company in the Gulf region, and now exports to over 50 countries as its products meet the thorough regulations of the US Food & Drug Administration and the European Commission.
Ras Al Khaimah's natural beauty served the local officials well as they aimed to decrease their economy's dependence on manufacturing and boost tourism returns for the Emirate. In a much wider and probably more beneficial initiative, the RAK government implemented a host of taxation and offshore business formation laws that encourage international firms to set up their offices there.
An offshore center in the desert.
Ras Al Khaimah channels its global support to international firms through two separate governmental organizations: The RAK Free Trade Zone and the RAK Investment Authority. At the beginning of 2007, the Investment Authority introduced the concept of an International Business Company (IBC), having formed its corresponding laws and regulations a year earlier. One of the key benefits of setting up an offshore office in RAK is the complete privacy and confidentiality its beneficiaries will enjoy. Information on the IBC's owners and their assets are confidential by law. As an Emirate of the UAE, RAK is part of what is often referred to as a "real" country with a "real" economy in the industry lingo - as opposed to other offshore centers that are basically "overseas territories" dependant on other countries and their economies. This grants it a more stable and locally controlled regulatory system with a self-governing business investment environment. It can also benefit from the large network of Double Taxation Agreements (52) which the UAE federation has in place.
A foreign business can form a RAK Offshore IBC with full 100 percent ownership, eliminating the need for an Emirati national shareholder or sponsor. The Emirate's investment encouraging taxation system exempts offshore companies from corporate and income taxes, import or export taxes, capital taxes, withholding taxes and the VAT. Additionally, it allows for full repatriation of company capital and profits. As is generally administered in offshore centers, such a company is prohibited from conducting extensive business operations within the country. It can, however, own and hold real estate in RAK. There are no physical office requirements, provided that the business registers through a chartered company formation agent.
Ras Al Khaimah's free trade zone (FTZ) and offshore center has witnessed an impressive rise in the number of new company registrations during 2010. The RAK FTZ authority reported that 3,239 new companies registered with its facilities last year, representing an increase of almost 15 percent compared to 2009. Some 1,500 of those newly registered businesses were part of its offshore international company division. The Emirate as a whole, recorded an impressive 4,500 new registrations in all its free trade zones.
Specialty and outlook.
With its highly rated offshore facilities, RAK has been successful in getting on the radars of varied types of businesses in many countries around the world. The Emirate is well connected to the rest of the UAE and neighboring countries through the RAK international airport (one of six such airports in the country) and the Saqr port which is one of the biggest bulk handling ports in the region. Its main focus has been to attract the small and medium enterprises (SME) to its shores. The IBC structure is being currently utilized by international trading companies, consultancies, holding companies, investment firms and intermediary brokerages as well as those with activities in real estate and financial services.
The local government is constantly improving infrastructure to ensure that individual and corporate investors remain in an especially productive business setting. As it expands and develops new trading zones and business projects, some experts have questioned whether it would face problems in maintaining sufficient levels of electricity for the immediate construction needs and subsequent operational ones of these latest expansions. While it is unlikely that such a scenario materializes, it will definitely be imperative to RAK's success that the local government does not spread its resources too thin and expand too quickly. So as it continues to develop its special investment areas and free trade zones in a progressive and healthy manner, Ras Al Khaimah will continue to provide services that can compete not just with the rest of United Arab Emirates but also with other worldwide offshore centers.
