What Was the Ras Al Khaimah Investment Authority (RAKIA)?
The term Ras Al Khaimah Investment Authority (RAKIA) refers to a licensing and promotional organization that promoted the economic development of and investment in Ras Al Khaimah (RAK) in the United Arab Emirates.
The organization was established by a decree issued by the region's ruler in 2005. Its vision was to become the leading authority in making sound investments in RAK and partner with other parties, including international companies, to create a sustainable and growing economy. RAKIA became part of the RAK Economic Zone (RAKEZ) in April 2017.
- Ras Al Khaimah Investment Authority was a licensing and promotional organization in the Ras Al Khaimah region of the United Arab Emirates.
- RAKIA promoted the economic development of and investment in the emirate by working with other parties, including international companies.
- The organization was established in 2005 under a royal decree by Sheikh Saqr Bin Muhammad Al Qasimi.
- RAKIA was not a sovereign wealth fund but was loaned money raised by the government through financial markets.
- Authorities merged RAKIA and the Ras Al Khaimah Free Trade Zone in April 2017 to form the RAK Economic Zone.
Understanding the Ras Al Khaimah Investment Authority (RAKIA)
Ras Al Khaimah is an emirate in the northern part of the UAE, located less than an hour's drive from Dubai. The region is known for its historic sites, mosques, and forts.
As mentioned above, the Ras Al Khaimah Investment Authority was launched in 2005 following a decree by Sheikh Saqr Bin Muhammad Al Qasimi. His intent was to establish "a business and industrial arena offering competitive free zone and non-free zone facilities" in the region. RAKIA was made up of two industrial parks with an area of more than 300 million square feet and housed more than 500 manufacturers and small- to mid-sized enterprises.
The organization, also known as the RAK Investment Authority, allowed the royal family to meet its objective of making the emirate a regional hub for manufacturing, service, and tourism while building a strong economy with sustainable growth in the emirate.
Businesses set up in the region's free trade zones enjoy several advantages such as complete exemption from all taxes, total repatriation of capital and profits, and land leases at highly concessional rates.
The United Arab Emirates has more than 40 free zones, which are economic areas that have special tax treatment on goods and services, and where companies are allowed to have 100% foreign ownership.
Despite what the name implies, RAKIA was not a sovereign wealth fund (SWF). Instead, the government raised money through the financial markets and loaned this capital to RAKIA.
SWFs, on the other hand, are state-owned investment funds that use money generated by the government through surpluses. Surpluses come from a variety of sources, including oil and gas revenue, trade revenue, transfer payments, and bank reserves, to name a few. SWFs are to fund different programs, such as saving for future generations or funding infrastructure projects.
In April 2017, the RAK government announced the merger of both RAKIA and Ras Al Khaimah Free Trade Zone (RAK FTZ) into a single entity called the Ras Al Khaimah Economic Zone (RAKEZ). RAK FTZ was established in 2000 as a free trade zone in the UAE with investments in more than 100 countries. The consolidation made it one of the biggest economic zones in the region.
As of May 3, 2021, RAKEZ works with more than 14,000 companies in over 100 countries in 50 different industries. It aims to RAK a prominent place for investment through strategic infrastructure and business solutions. RAKEZ provides a number of benefits to investors, including the formation of free and nonfree zone entities, complete foreign ownership, and access to Middle Eastern, Northern African, European, and Asian markets.