Abu Dhabi Offers Full Ownership to Foreign Companies Investing in $7.2 Billion Khalafi Industrial Zone

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Researched by Industrial Info Resources (Sugar Land, Texas)--For the first time in Abu Dhabi, foreign companies will be allowed to hold full ownership in new industries. However, the change in rules applies only to companies investing in the Khalafi Industrial Zone Abu Dhabi (KIZAD), which is under construction midway between Abu Dhabi and Dubai in the United Arab Emirates (UAE).

Further, to qualify for full ownership, foreign companies must demonstrate that their business plan "clearly reflects government economic and strategic values," according to Sultan Al-Jaber, the chairman of the government-owned Abu Dhabi Ports Company (ADPC).

The KIZAD will be operated by the ADPC with a dual structure, containing a mix of fully foreign-owned companies and joint ventures with local companies. The mix will include capital and energy-intensive industries, in sectors such as aluminum, steel, pharmaceuticals and petrochemicals.

The ADPC is investing $7.2 billion in the first phase of the project, including the offshore Khalafi Port, which will cover an area of 51 square kilometers. The first phase will be operational in 2012, while the second phase of the KAZID is expected to begin the following year.

The complex is situated about 35 kilometers from Abu Dhabi International Airport and 85 kilometers from Dubai International Airport, and is scheduled to be fully integrated into the pan-Arabian rail network, which links Yemen, Oman and Saudi Arabia with Russia and the European Union (EU).

KIZAD also will have excellent road connections. The so-called Modular Path has been designed to allow large-scale equipment and machinery to be transported directly between Khalifa Port and individual sites in the complex. It will be fully integrated with the dual four-lane highways of international standard that are built around the site.

A specifically designed hot-metal road is also planned, which will enable molten aluminum to be transported from smelters to downstream manufacturers. Emirates Aluminum (EMAL) (Abu Dhabi) has been established on a six-square-kilometer site at the KIZAD and has been functional from the beginning of the year. The company is already planning to increase production from the current 750,000 tons to 1.5 million tons of aluminum per year.

When completed, the KIZAD will extend to an area of 417 square kilometers and will become one of the world's largest greenfield port and industrial zone developments. The complex will be divided into several key areas, such as high-impact industrial, light industrial and clean areas, which are specifically designed for technological centers, commercial areas, including recreation and leisure facilities, and a hotel and residential areas.

The KAZID development is in line with the Abu Dhabi Economic Vision 2030, which is aimed at utilizing the wealth obtained from the emirate's oil riches to diversify its economy from one based on the hydrocarbon industry into one based on tourism, real estate and infrastructure.

By 2030, it is expected that the KAZID will be contributing about 15% of Abu Dhabi's non-oil gross domestic profit and, according to Khaled Salmeen, the executive vice president of Industrial Zones for ADPC, between 60% and 80% of goods manufactured in the KAZID will be destined for export.

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