Abu Dhabi’s dual freezone license plans could benefit e-com logistics
The Abu Dhabi Department of Economic Development is rolling out dual licences allowing companies in free zones to establish an onshore branch as the emirate seeks to attract foreign investment and stimulate the economy.
The first phase of the initiative is open to companies headquartered in Abu Dhabi and based in one of its freezones, the department said in a statement on Saturday.
It is also working on the second phase that will allow more companies to qualify for a dual licence.
"In its first phase, the initiative will offer companies more opportunities to do business and grow, such as allowing them to work and partner with other government entities," Saif Al Hajeri, chairman of Abu Dhabi's Ded, said. "Dual licensing is the latest in a series of initiatives we have launched to support entrepreneurs, SMEs and the private sector, which are all key engines of the economy."
In the logistics sector, the move is most likely to have the greatest impact on e-commerce logistics. E-com platforms face the unique challenge that they handle large quantities of SKUs at very small individual volumes, making freezone operations a challenge.
“And yet in order to operate cross-border, a freezone presence is very important,” says Awok.com CEO Ulugbek Yuldashev. “Before the end of the year we’ll be expanding into new GCC markets, so we’ll need to consider a presence in a freezone to handle cross-border operations,” he adds.
For a company like Awok.com, that has the bulk of its logistics operations on-shore, a duel license would be very convenient.
The dual licences are one of 10 strategic initiatives linked to a three-year Dh50 billion stimulus package for the emirate, first unveiled in June.
The package is designed to reduce the emirate's reliance on oil by diversifying the economy and making it easier for companies to do business in turn bolstering growth, attracting more foreign direct investment and creating jobs.
The duel-license initiative, however, is more aimed at companies that are already established within a freezone, so could prove beneficial to 3PLs with an eye to expanding their e-commerce solutions on-shore.
Companies eligible for a dual licence must present a no-objection certificate from their free zone, an undertaking that states no ownership of branches located outside the free zone, and a photocopy of the parent company's free-zone licence, according to the department.