Start Manufacturing Business in Dubai UAE 

Start Manufacturing Business in Dubai, UAE – Is it the best time to Setup? 

Historically, the UAE, especially Dubai, was known as the location for global trading activities. Currently, however, Dubai's focus has transitioned away from simply trading goods to producing them. Therefore, the inquiry now is not only how to establish a manufacturing enterprise, but also "Is now an appropriate time to begin?"

Yes, the short answer is Yes! The excellent infrastructure that has been developed within the UAE, combined with the aggressive, innovative policies of the Government, allows for a totally unique opportunity to start a new manufacturing business setup in Dubai.

Why Now is the Best Time – The Strategic Push

The development of a manufacturing industry in the UAE is fully endorsed by the Government through its clear vision and is also supported by international market trends.

1. Operation 300bn and Dubai Industrial Strategy 2030

The manufacturing sector in the UAE has been identified through the UAE federal government's initiative called Operation 300bn which will ultimately assist in achieving the target of having the manufacturing sector account for 300 billion AED by 2031, therefore there is a strong focus on the manufacturing sector within Dubai, as evidenced through Dubai's Industrial Strategy which identifies five key commercial objectives and six key priority sub-sectors; these sub-sectors will generate the highest return on investment for new investors within Manufacturing. The following sub-sectors have been identified as providing the highest opportunity for new manufacturing investors –

• Aerospace

• Maritime

• Aluminum and Fabricated Metals

• Pharmaceuticals and Medical Devices

• Food and Beverage

• Machinery and Equipment

In addition, if your business is in one of these areas, you will have the benefit of receiving government assistance and incentives, whilst being part of a tailored regulatory environment.

2. Global Supply Chain Resilience

The recent global challenges have highlighted the vulnerabilities that accompany long global supply chains. Organizations around the world are looking to either produce “onshore” or “nearshore” to strengthen production locations and reduce transportation and other operating costs associated with the long-distance transportation of goods.

Due to its geographic location at the intersection of Europe, Asia, and Africa, Dubai is well-positioned to provide the necessary capabilities and require fewer resources in order to produce goods closer to the areas where they are needed. Therefore, as a manufacturing/re-export hub, Dubai can provide the security, stability, and rapid access necessary for shipping products to the world’s largest consumer markets.

3. World-Class Infrastructure and Logistics

Dubai has the best-in-class infrastructure required for all facets of a successful manufacturing enterprise. The following are reasons why –

• Ports & Airports – The Jebel Ali Port (the largest in the world) and Al Maktoum International Airport provide efficient and effective customs processing (including through the use of free zones).

• Energy & Utilities – Dubai provides both low-energy costs and high-quality utilities required for the production of heavy industrial products, including but not limited to furniture, machinery, and food.

• Talent Pool – Dubai has an attractive environment to attract and retain a highly-skilled workforce from around the world and has the flexibility to allow for the issuance of various kinds of residency visas.

Choosing Your Base – Mainland vs. Freezone

Selecting your jurisdiction - Dubai mainland company (DED) or freezone - is one of the key decisions you will need to make when establishing a business setup Services in Dubai. This decision will affect how you will access markets as well as how much money you can make.

1. The Export Business Model is the Freezone Business Set Up

Free zones are designated areas within the United Arab Emirates that were established to promote foreign investment and develop manufacturing industries within the region. Therefore, Freezones are primarily utilized as locations for manufacturers to set up operations and solely focus on manufacturing and exporting goods produced in the freezone.

• 100% Foreign Ownership – under the new regulations, you are permitted to own 100 per cent of your business without requiring a local partner. Many businesses in the Mainland Business Steup In Dubai (DED) can also take advantage of this new legislation.

• Zero Tax Benefits – Freezones provide tax exemptions on all qualifying income; therefore, businesses will not have to pay corporate income taxes, and do not have to pay personal income taxes.

• Customs Duty Waivers – There are many advantages of setting up manufacturing operations within Freezones, including the fact that many times when businesses import goods into Freezones, they are not required to pay customs duties.

• Limited Market Access – Businesses that set up within Freezones are restricted from selling their finished goods within the UAE market. Therefore, they must either sell finished goods manufactured within Freezones outside of the UAE, or must sell within the Dubai Mainland through a local distributor, which may result in import duties paid.

2. Dubai Mainland Company Formation (The Local Market Model)

To register your business on the Mainland, you must apply to the Dubai Department of Economy and Tourism (formerly known as DED) to obtain a business license in Dubai.

• Unrestricted Market Access – As a Mainland Business, you can do business with anyone in the Dubai UAE Market; therefore, you have the ability to open offices or branch locations in any location in the UAE.

• Government Contracts – Businesses that qualify as a Mainland Business are generally the ones preferred to bid on larger Government/Semi-Government Tender Opportunities.

• Physical Presence – You are required to secure an industrial facility, such as a warehouse or factory, in approved regions like Dubai Industrial City or Jebel Ali Industrial Area.

Your target audience is mainly the large, affluent industrial/Consumer Base located within the UAE.

The Core Requirements – Getting Your Industrial License

To begin a manufacturing company, you need a detailed kind of business license Dubai: the Industrial License.

1. Key Steps for an Industrial License

A. Establish Your Manufacturing Activities – You must clearly state the specific manufacturing activities you intend to do. These manufacturing activities will be recorded as your appropriate Trading Code.

B. Location of Operations – Depending on your market strategy, select either a Free Zone location or a location within the mainland.

C. Facilities – In order to manufacture, a physical factory or warehouse must be obtained. You will need to rent a property and obtain an attested tenancy contract (Ejari for mainland operations). All physical premises must meet strict health, safety, and environmental standards (HSE).

D. Initial and External Regulatory Approvals –

• Ministry of Industry and Advanced Technology (MoIAT) – An Industrial Production Certificate is issued by the Ministry of Industry and Advanced Technology (MoIAT) for industrial production establishments. An IPR Certificate is required for accessing various benefits associated with industrial production.

• Dubai Municipality – The Dubai Municipality has regulatory authority over the Environmental, Waste Management, and Zoning approvals for all manufacturing operations.

• Civil Defense – Civil Defense requires regulatory approval in relation to Fire Safety/Emergency Systems.

E. Minimum Capital and Workforce – Most Malaysian mainland industrial applications require industrial applicants to have a minimum of AED 250,000 worth of registered capital and have a minimum number of employees working for them to provide credibility that the establishment is capable of operating on an Industrial scale.

2. The Cost Factor (The Industrial License)

An Industrial Business Licensing process begins with a relatively low cost compared to general Business Licenses and Professional Business Licenses. The Industrial Business Licence has very high capital costs upfront because of the industrial requirements for facilities, building, and environment, plus multiple Government entities approve licences.

• Costs of Licensing – The costs of licensing vary from one jurisdiction to another, with initial fees ranging from approximately AED 15,000 to AED 30,000, depending on the size of the business, excluding other government licencing fees.

• Cost of Facility – Leases for Industrial warehouses and/or Industrial land will generally constitute the largest variable expense associated with obtaining an Industrial licence.

• Identification of required Approvals – You should plan for costs related to MoUFACT, Municipal Authority, and Civil Defense approvals.

It is highly recommended that individuals who wish to undertake this process engage with a business setup consultants in UAE. Business set-up consultants can help streamline the very complex licensing approval process by providing support through the entire licensing process, as well as save significant time and potential penalties.

The Strategic Advantage – Beyond the License

Your manufacturing success in Dubai relies on leveraging its outstanding position.

1. Leveraging Offshore Company Formation in Dubai (JAFZA Offshore)

Dubai (JAFZA Offshore) is unable to manufacture products; however, it can still be useful for holding purposes and will provide a holding company structure for future manufacturing activities. 

• The offshore company can protect the intellectual property (IP), trademarks, and patents of manufactured products by acting as the holder of those rights.

• The offshore structure allows an offshore company to segregate its earning assets, which reduces the risk of operational failure in the manufacturing environment and provides an added level of financial and legal protection.

2. Sustainability and Technology

Sustainability has become a focus for the UAE Government, and the country is also implementing the fourth industrial revolution through automation, AI, and IoT (the "Internet of Things") in manufacturing and producing "green" manufacturing-based products. New factories that are obtaining funding and using advanced technology and sustainable practices may receive preferential treatment by receiving subsidies, grants, and easier access to funding than traditional factories. Therefore, it is essential that modern manufacturers begin to implement these methods in their manufacturing business plans as early as possible.

Conclusion

Today represents a true moment of change within the manufacturing industry in Dubai. With the support of the Government's commitment to building a self-sufficient and Diversified Industry through its initiative called Operation 300bn, along with world-class logistics and an array of attractive Tax and Ownership incentives designed specifically for creating a Manufacturing business setup in Dubai today, it provides you with an unparalleled opportunity at this point in time.

Although there is a higher level of complexity compared to other types of businesses because of the various physical requirements that are required to operate as a Manufacturing Business and also the need to obtain numerous Government approvals at the beginning stages, the strategic benefits of establishing a business in Dubai far outweigh these potential drawbacks, as well as having the opportunity to earn long-term profits.