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RAKIA Free Zone – Investor Sustainability an Alien Term?

(06/08/2012, Dubai) It's already since longer time a medium sized imposition, to deal with RAK Investment Authority - at least when it comes to licenses in the Free Trade Zone.

Again and again, absolute standard processes are being counteracted, regulations and processes being changed overnight - or any Mufti had again some flatulence and he needed to be calmed down. Not to speak about the ever-simmering conflict between one of the largest Free Zone Authorities in the country and the responsible immigration directorate of the Federation . . .

RAKIA keeps everything true to the motto - with regard to the specific region: "Every day a new goat is driven through the village."

The latest farce in the serial novel "RAKIA - or how we manage it continuously to destroy our market position" came today via "Automatically generated email - please do not reply".

From: AE-Fm No Reply <noreply@rakinvestmentauthority.com>
Date: Sun, 5 Aug 2012 10:08:17 +0000
Subject: Trade License Renewal Policy

Dear Valued Customer,

Effective from the date hereof, it is hereby instructed that at the time of renewing the licenses of all RAKIA Investors, the following should be mandatorily observed by the investors:

  1. For investors already renting a property, it must be observed that the lease rent for the current lease year shall cover at least three months validity from the renewal of license/s. Otherwise, a post dated cheque shall be issued for payment of the annual lease year for the next contractual year;
  2. Properties not leased from RAKIA or not managed by RAKIA shall be subject to the Authority’s prior approval;
  3. For  Establishments
    a) Investors without lease and with businesses registered as an Establishment, the minimum property lease requirement is flexi desk. Lease for flexi desk shall be entitled to one (1) investor’s visa.
    b) Investors already having one (1) employment visa under an Establishment status are required to upgrade their leased property to a cubicle office. However, the area of the leased property shall depend on the number of visas required by the activity of the business.
  4. For Limited Liability Companies
    a) Minimum property lease requirement is cubicle, the area of which shall depend on the number of visa required and the type of the activity of the business.

The above conditions are subject to change without prior notice. For further enquiries, please contact our sales team.

Sincerely Yours,

RAKIA

This is an automatically generated email, please do not reply.
______________________________________________________

It is to criticise foremost about this procedure, that new regulations are being sent out without any notice period. Thus, although these regulations may overstress the budget of single license holders massively.

But even worse is RAKIA's now for years observed "sales practice", particularly for companies that do not need visas - which takes frequently place at service providers. Employees are spread across the globe and the owner has his residency somewhere else (just as an example):

During the REGISTRATION of a company there is no question about minimum office rental, even not a "Flexi Desk" is required. The nice "awakening" comes with the first license renewal. The deeper sense of different minimum requirements for FZE and FZ-LLC also remains hidden. Both legal forms are corporations with limited liability - the FZE has just only one, the FZ-LLC at least two shareholders. The business operations itself doesn't appear differently.

It remains:

  • RAKIA is and will be on the one hand one of the most cost-effective Free Zones in UAE and has definitely no need to hide itself - e.g. compared to the Free Zones in Hamriya and Ajman - regarding the facility quality.
  • On the other hand, a predictability in terms of "rules" for investors is not given in any way - today this way, tomorrow the other way and day after tomorrow quite different again. And not to mention all visa and residency procedures throughout Ras Al Khaimah, which can't be compared with regards to antiquity and idiocy nowhere else in the country.

Investors who intend to establish a fairly "standard" business operations with similar employment structures should think twice, if a settlement in Dubai is not directly from the start the better way.

Always these two aspects have to be considered:

  1. You can't take your company with you, when you change a Free Zone.
  2. The level of somewhat higher Structural Cost in Dubai, will be achieved in Ras Al Khaimah as well; with analog cost of opportunity - and far more stress and nerves.

Now then . . .

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