Number of special economic zones MENA 2018, by country

The highest number of special economic zones in the Middle East and North Africa (MENA) region was in the United Arab Emirates (UAE) at 47 zones in 2018. Free trade zones facilitate the accessibility of investors to the market and offer an encouraging incentive for foreign direct investments.

 Overview of Special Economic Zones

Special Economic Zones (SEZ) or Free Trade Zones are geographical areas that are under unique regulations, different from their host country’s regulations. Their purpose is to provide an attractive environment for foreign direct investments. It guarantees a supportive infrastructure and policies for businesses and employees starting in a new market and reduces the risks involved. Financial and non-financial incentives are also essential to make an economic zone favorable to investors. In 2018, there were about 5.4 thousand free trade zones worldwide in about 147 different countries . The free trade zones are cost-effective entryways to new markets with the benefit of having a politically neutral zone. It also supports host countries in initiating economic reforms such as developing new industries in the country.

 MENA Special Economic Zones

  Free trade zones have become of increased importance in the Middle East and North Africa region as it has a significant influence on the political and international relations between countries. The value of foreign direct investments in the MENA region almost reached 29 billion U.S. dollars in 2017. SEZs promote infrastructure development, job creation, and heightened investments in the MENA region. To attract foreign investors, free trade zone operators in the MENA region offer ownership rights, tax and duties exemptions, and relaxed labor laws. Dubai Multi Commodities Center (DMCC) in the United Arab Emirates (UAE) was voted as the top free zone globally in 2020 for six years consecutively by fDI Intelligence Magazine. The value of foreign direct investments into the UAE exceeded 13.8 billion U.S. dollars by 2019, with the largest share being in the real estate sector. The zone combines advanced governance, operational results, and marketing strategy. However, free zones sometimes face criticism from locals and policymakers as they fear negative effects on their society. These include the exclusion of local developers or giving foreign investors an advantage over local investors, as well as introducing products and habits that are not permitted in the culture and religion of Middle Eastern countries such as alcohol consumption.