Setting up a factory in Hamriyah Free Zone (HFZ) offers numerous advantages, including 100% foreign ownership, full repatriation of capital and profits, and tax exemptions. However, navigating the regulatory landscape is crucial for a smooth setup. The documentation and other requirements are at a constant flux therefore it is important to contact Hamriyah free zone Authority directly or check their website at https://hfza.ae/ before making any decisions. The information in this blog is only accurate to the knowledge of the author and may not cover everything.

Here are the key regulatory hurdles and considerations for establishing a manufacturing facility in Hamriyah Free Zone:

  1. Licensing and Legal Structure:
  • Industrial License: To engage in manufacturing activities, you are required to obtain an “Industrial License.” This license permits the import of raw materials, processing, assembly, packaging, and export of finished products.
  • Legal Entity Type: You must choose an appropriate legal structure, such as a Free Zone Establishment (FZE) for a single owner or a Free Zone Company (FZC) for multiple shareholders. Establishing a branch of an existing local or international company is also an option.
  • Minimum Capital Requirement: A minimum capital requirement, typically AED 150,000 for FZE/FZC, is in place.
  • Business Plan: For certain manufacturing activities, a comprehensive business plan detailing your operations may be required for approval.
  1. Facility and Infrastructure:
  • Lease Agreement: A valid lease agreement for your manufacturing facility or warehouse is mandatory. HFZ provides both pre-built warehouses and industrial land plots (starting from 2,500 sq m) where you can construct custom facilities.
  • Facility Compliance: Your facility must adhere to local authority standards for health, safety, and environmental protection, including sufficient space for equipment, storage, and production.
  • Power Load: The facility must have adequate electrical loads to support your machinery. HFZ warehouses generally offer various power load capacities.
  • Construction and Utility Connections: To construct a new factory, you must appoint a Free Zone registered contractor. For civil and mechanical construction, companies like Midas Building Contracting and Midas Metal Industries are recognized. For electrical works and firefighting/fire alarm systems, it is essential to appoint a registered contractor like Midas Electromechanical Contracting. This is particularly important for navigating the complex regulatory requirements of Sharjah Electricity and Water Authority (SEWA), as MEC is a Grade 1 contracting companies, have the necessary expertise and approvals to obtain unrestricted power supply from SEWA. All electrical and water works must be in accordance with SEWA rules, regulations, instructions, and guidelines. You will need to submit an application to initiate the SEWA electricity connection, along with technical plans detailing the electrical layout and authorization for an approved contractor to perform the electrical work as per SEWA’s standards.
  1. Approvals and Permits:
  • Security Approval: You will need to apply for security approval and an establishment card.
  • Ministry of Industry and Advanced Technology (MoIAT) Approval: Depending on the nature of your manufacturing activities, additional approvals from MoIAT may be necessary.
  • Civil Defence and Environmental Protection and Development Authority (EPDA): Compliance with fire safety certificates and environmental regulations, including potential Environmental Impact Assessments (EIAs), is critical. The EPDA is responsible for issuing environmental clearances. HFZ operates a waste disposal permitting system in collaboration with Bee’ah Or ENS.
  • Technical Safety Standards (TSS): Industries handling hazardous materials or complex processes may require TSS approval to ensure the facility meets specific technical requirements.
  • ESMA Certification: If your manufactured products will be sold within the UAE or exported, certification from the Emirates Authority for Standardization and Metrology (ESMA) may be required to ensure adherence to national quality and safety standards.
  • Operation Permit: An Operation Permit (OP) or Provisional Operation Permit (POP), along with an Operation Manual and Risk Assessment, is required before commencing operations.
  1. Customs and Trade Regulations:
  • Customs Duties: While goods imported into the free zone from a foreign country are generally exempt from customs duties, these duties become payable if the goods are moved out of the free zone into the UAE mainland.
  • Prohibited Goods: Be aware of merchandise explicitly prohibited from import, storage, or transport within free zones (e.g., narcotics, unpermitted weapons, goods infringing intellectual property rights).
  • Mainland Trade Restrictions: Free zone companies are typically restricted from direct trade within the UAE mainland without utilizing a local distributor. If you intend to sell on the mainland, you must use a registered local distributor or pay applicable customs duties.
  1. Labor and Immigration:
  • UAE Labour Law: While free zones have their own employment regulations, the broader UAE Labour Law generally applies, though specific procedures may vary.
  • Visa Process: The free zone authority facilitates the visa processing for investors and employees, including medical examinations, Emirates ID processing, and visa stamping. The number of visas usually correlates with the size of your leased facility.
  • NOC (No Objection Certificate): If shareholders or managers hold a valid UAE visa and are currently sponsored by another entity, an NOC from their current sponsor may be required.
  • Economic Substance Regulations (ESR): Companies undertaking “Relevant Activities” (which can include manufacturing) must comply with ESR. This involves demonstrating genuine economic substance in the UAE through adequate employees, premises, and expenditure, and by conducting core income-generating activities within the UAE. Annual notification and reporting are mandatory.
  1. Documentation: You will need to prepare and submit a comprehensive set of documents, including:
  • Passport copies and visa copies of shareholders and managers.
  • Completed sales inquiry form.
  • Parent company license, incorporation certificate, and board resolution (for branches/subsidiaries).
  • Passport-sized photos.
  • Name and activity approval.
  • Business plan (if required).
  • Memorandum and Articles of Association.
  • Lease agreement.
  • Audited financial reports (for corporate entities) or bank reference letters (for individuals).
  • No Objection Certificate (NOC) from current sponsor (if applicable).

It is important to note that the regulatory requirements for Hamriyah Free Zone are constantly changing. If you are looking to build a new facility in Hamriyah Free Zone, appointing a contractor such as Midas Building Contracting, Midas Metal Industries, and Midas Electromechanical Contracting will help you get your facility running in the stipulated time. As turnkey contractors with decades of experience, they have successfully constructed many factories, lube oil blending plants, refineries, and terminals within the free zone.