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(November 30, 2022 / JNS) More than 250 Israeli businessmen and entrepreneurs gathered at the Tel Aviv Stock Exchange on Tuesday for the “Born for Trade” roadshow at the Dubai Multi Commodities Center (DMCC). The UAE hopes to attract Israeli companies to set up shop in its DMCC free zone following the signing of a free trade agreement between Israel and the UAE in May.
Dubai’s free zone opened 20 years ago as a commodity exchange. It has since expanded to include high-tech and other industries. It consists of more than 87 commercial and residential towers and is located in the heart of Dubai, housing 22,000 companies.
DMCC’s director of sales and business development, Marwan Saleh, said 250 new companies join every month. He detailed the many advantages of the free zone, including zero corporate and income taxes, a 10-year visa scheme, talent acquisition, financial support and low regulation. “You can open a business in five to 14 days,” he said.
He also mentioned the quality of life in the Free Zone, describing the subway station, nursery, hotels, parks, health clinic (which happens to be Israeli), shopping and the overall safe environment. “So it’s a great place, a great place to live and work and play.”
british business journal fDi Intelligence DMCC ranks best among global free zones for the eighth consecutive year in 2022.
Since the signing of the Abraham Accords in September 2020, 78 Israeli companies have come to Dubai’s free zones. Dubai’s attractive business prospects as an international transit hub provide Israel with access not only to the UAE market, but also to the UAE market. The same goes for everyone else.
In the first seven months of 2022, Israel-UAE trade (excluding software) will amount to $1.4 billion. That figure is expected to reach $2.2 billion by the end of the year, Israel’s ambassador to the UAE, Amir Hayek, said in September. Diamonds account for about half of the trade.
While Israel’s high-tech industry is most often cited as a major interest for the UAE, DMCC Chairman and CEO Ahmed Bin Sulayem spoke of commodities. Dubai, which has been running a tea center for 17 years and re-exports about 70 percent of the world’s tea, opened a coffee center about five years ago, realizing that “80 percent of the countries that produce tea also produce coffee,” he said.
Sulayem said he came to Israel to learn about coffee culture and to meet Landwer Cafe CEO Uri Federman. “Their coffee brand has been around since the early 1900s, so there’s a lot to learn from that,” he says.
Landwer Coffee was originally established in Germany in 1919.
Sulayem revealed that a meeting in 2020 at the Israeli Foreign Ministry convinced him to start a water supply centre, which the DMCC had opened a few months earlier. The idea is that once water is classified as a commodity, like gold, diamonds or soybeans, no one will waste it. “Maybe in the near future, you’ll see a series of … water futures, water options, water spot contracts.”
Sulayem also spoke about the video game hub and crypto hub in Dubai, which accounts for 40% of crypto blockchain business in the UAE. The cryptocurrency center offers state-of-the-art facilities and various operating licenses. “We don’t have a problem with anyone buying or selling bitcoin, as long as it’s their own money. Once it takes someone else’s money, we have concerns. We want it to be regulated. We want all the checks in place,” he said .
During the panel discussion, Igal Nevo, former CEO of the Israel Blockchain Forum and now entrepreneur of a new gaming company, explained why the DMCC is so important for Israeli startups.
He started the blockchain forum to convince the Israeli government of the industry’s potential, but shut it down two years ago when he gave up hope of overcoming Israel’s regulatory hurdles and government officials’ risk-free mentality. He said the UAE, through its DMCC free zone, provides the trust and infrastructure needed for start-ups. For a company looking to expand, Dubai is the best choice, he said.
Panel discussion at the DMCC Roadshow on November 29, 2022 at the Tel Aviv Stock Exchange. Photography: David Isaac.
After the meeting, Nevo told JNS that Israel needs to follow the example of Dubai’s free zones — where companies can test their proofs of concept (POCs) to see if their ideas work in the real world. “Israel is very good at innovative technology in every field. We are the tipping point for any new industry. But ultimately, we need a place to do a POC. We don’t have a place to really test our technology,” he said.
Companies need regulatory relief and infrastructure to grow, and the UAE understands this. “If Israel doesn’t deliver, it will always be a startup country. It will never be a growth country,” he said. “We’ll always be in gear one or two. Step three, we’re going to move the company abroad.”
Israeli officials understand the situation but live in a culture of fear of making mistakes, Nevo said. “Our goal is to not go wrong, but if it doesn’t go wrong, it won’t go wrong,” he said, noting that venture capitalists invest in companies knowing that nine times out of ten they will fail.
He said the Abraham Accords could have unintended benefits. They opened the way for Israeli companies to play a role in Dubai’s sandbox to test their concepts. “We may have to make a detour to Israeli officials to see if the regulation works.”
“Israeli officials are smart, intelligent and up to date, but they have no incentive to change. It will take time,” he said. “But innovation is catching on, like an epidemic. Once you start thinking about innovation, you keep thinking about it. Eventually, in five to 10 years, Israeli technology will become part of the thinking of the Israeli government.”
Meanwhile, Nevo has yet to decide where to take his gaming company. “Either in Dubai or in America,” he reveals.
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