(November 30, 2022 / JNS) More than 250 Israeli businessmen and entrepreneurs gathered for the Dubai Multi Commodities Center (DMCC) “Made for Trade” fair at the Tel Aviv Stock Exchange on Tuesday. Following the signing in May of a free trade agreement between Israel and the United Arab Emirates, the Emiratis want to attract Israeli companies to set up in their DMCC free zone.
The Dubai Free Zone opened 20 years ago as a commodity exchange. It has since expanded to include high-tech and other industries. Comprised of more than 87 towers, both business and residential, in the heart of Dubai, it has 22,000 businesses.
Two hundred and fifty new companies are incorporated every month, said Marwan Saleh, director of sales and business development at DMCC. He detailed the free zone’s many benefits, including zero corporate and income tax, a 10-year visa program, access to talent, financial support and little regulation. “You can open a business in five to 14 days,” he said.
He also noted the quality of life in the free zone, describing metro stations, daycares, hotels, parks, a health clinic (coincidentally staffed by Israelis), shopping and a safe overall environment. “So it’s a good place, an amazing place to live, work and play.”
UK based business magazine fDi Intelligence ranked the best DMCC overall among global free zones for the eighth consecutive year in 2022.
Seventy-eight Israeli companies have already arrived in the Dubai Free Zone since the signing of the Abraham Accords in September 2020. Dubai is an extremely attractive business prospect given its role as an international transit hub, offering Israel access not only to the UAE market but also to others as well.
Trade between Israel and the UAE (excluding software) reached $1.4 billion in the first seven months of 2022. Amir Hayek, Israel’s ambassador to the UAE, said in September that it is expected that the figure reaches 2.2 billion by the end of the year. Diamonds account for about half of the trade.
While Israel’s high-tech industry has most often been identified as the UAE’s primary interest, DMCC Chairman and CEO Ahmed Bin Sulayem spoke about commodities. Dubai, which has operated a tea center for 17 years, re-exporting about 70% of the world’s teas, opened a coffee center about five years ago, realizing that “80% of the countries that produce tea also produce coffee “, he said.
Sulayem said he had come to learn about Israel’s coffee culture and met with Uri Federman, CEO of Landwer Cafe. “Their brand of coffee has been around since the early 1900s, so there was a lot to learn from that,” he said.
Landwer Coffee was originally established in 1919 in Germany.
Sulayem revealed that a 2020 meeting at Israel’s foreign ministry convinced him to launch a water center, which the DMCC opened a few months ago. The idea was that once water is listed as a commodity, like gold, diamonds or soybeans, no one will waste it. “Maybe in the near future you will see a list of … water futures, water options, water contracts.”
Sulayem also discussed the gaming hub and crypto hub of Dubai, which accounts for 40% of the crypto blockchain business in the UAE. The crypto center offers state-of-the-art facilities and various operating licenses. “We had no problem with anyone buying and selling bitcoin as long as it was their own money. Once they were using other people’s money, we had a concern. We want it to be regulated. We want all the controls to be on them place,” he said.
During a panel discussion, Igal Nevo, former CEO of the Israel Blockchain Forum and currently an entrepreneur in a new gaming company, explained why the DMCC is so valuable to Israeli startups.
He had opened the Blockchain Forum to convince the Israeli government of the industry’s potential, but closed it two years ago when he gave up hope of overcoming Israel’s regulatory hurdles and the government authority’s risk-averse mindset . He said the UAE, through its DMCC free zone, offers the confidence and infrastructure that startups need. For a company looking to expand, Dubai is the place, he said.
After the conference, Nevo told JNS that Israel should look to the Dubai Free Zone as a model, a place where a company can test its proof of concept (POC), finding out if its idea works in the real world. . “Israel is very good at innovation technology in all fields. We are the tipping point for any new industry. But ultimately, we need a place to do our POC. We don’t really have a place to test our technology,” he said.
Businesses need regulatory relief and infrastructure for growth, something the UAE understands. “If Israel doesn’t provide that, it will remain a new nation. It will never be a growing nation,” he said. “We will always be in first or second gear. In third gear, we will move the company abroad.”
Nevo said Israeli officials understand the situation but live in a culture that fears mistakes. “The goal is for nothing to go wrong, but if nothing goes wrong, nothing can go right,” he said, noting that venture capitalists invest in companies with the understanding that nine out of 10 will fail.
He said the Abraham deals could have an unforeseen benefit. They have paved the way for Israeli companies to play in the Dubai sandbox, to test their concepts. “We may have to make this little detour for Israeli officials to see what regulation works.”
“Israeli officials are smart, intelligent, up-to-date, but they have no incentive to change. It will take time,” he said. “But innovation is catching on, like a pandemic. Once you start thinking about innovation, you always think about it. Finally, in five to ten years, Israeli technology will be part of the thinking of the Israeli government.”
Meanwhile, Nevo hasn’t decided where to take his gaming company. “It will be Dubai or the United States,” he confided.