Dafza wants to upend the way Dubai’s government does business

Radical suggestions for innovation that the Dubai Airport Freezone Authority has put together in a white paper include moving to Dubai in just four days and setting up a virtual residency or even a trial business.

The Dubai Airport Free Zone accounts for almost 10 per cent of the emirate's non-oil trade. Courtesy Dafza

Imagine you could freely trade onshore in Dubai from a free zone or complete your move to the emirate in just four days – or even set up a virtual residency or a trial business.

These are some of the radical suggestions for innovation that the Dubai Airport Freezone Authority (Dafza) has put together in a white paper, after working with different departments of the Dubai government for several months on what it has dubbed the “Big Conversation”.

The Big Conversation is a “disruptive programme” challenging the way the Dubai Government does business and putting the client, customer and resident at “the heart of everything we do”, says its lead proponent, Anthony Denatale, the head of Dafza’s innovation unit.

“Government departments tend to work in silos,” says Mr Denatale, who spoke on the subject at the Innovation Arabia conference last month.

“We knocked them down, so there was no hiding. This was the first time looking outside of the silo.”

Since September, Dafza has been running workshops and interviews with eight Dubai government entities, such as Dubai Customs, Dubai Economic Department, Dubai Police and Smart Dubai, and 50 Dafza businesses. Those include the courier FedEx, the energy drink brand Red Bull, the cosmetics firm Estee Lauder, the car group Audi Volkswagen, the luxury goods holding company Richemont and the local travel holding The Emirates Group.

The 20-year-old free zone was originally set up to support Dubai’s economic diversification and accounts for almost 10 per cent of Dubai’s non-oil foreign trade– Dh110 billion out of a total Dh1.3 trillion in 2015, according to Dafza. It is host to over 1,600 companies from more than 20 business sectors.

Many of the suggestions mooted in the Big Conversation were “incremental” and would only require involvement from a single government entity, says Aman Merchant, the co-founder and chief executive of the business incubator and innovation lab Impact Hub Dubai, which worked with Dafza to facilitate the programme.

But what Dafza was looking for, he says, was entire “system change”, for free zones to become “sand boxes for future growth”. In software development, a sand box is a testing space where experimentation can happen safely and isolated from the live production.

About 32 recommendations have made it into Dafza’s white “futures” paper and are being discussed with their government partners.

They include free zones becoming incubators for their customers to do business onshore, or expanding the customs corridor to centralising all data so that the same information and identity papers do not have to be submitted repeatedly at different government departments.

In one example Mr Merchant gives, an investor had to provide 500 physical photocopies of his passport and ID when setting up five years ago.

In another, it took four months for a multinational client to bring a new employee in from Switzerland and get them and their family fully settled. A real challenge would be to bring that down to four days, he says.

Dafza and its government partners are also now investigating free zone memberships, where foreign businesses can easily try a local branch for a few months, and “e-residency”, which Estonia already offers to virtual entrepreneurs globally.

Although it has reached the top 30 for the first time, the UAE still only stands at No 26 in the World Bank’s Ease of Doing Business rankings for 2017, with particularly low ratings for resolving insolvency, getting credit and trading across borders. Estonia currently sits at No 12.

Earlier this year it was announced that all Dubai government departments must now come up with three innovative ideas annually that can be implemented within a decade, under the new 10X initiative.

“System innovation is risky,” says Mr Merchant, who also spoke at the Innovation Arabia conference. If one company experiments with innovation and gets it wrong, they can “get away with it” but system innovation “has a ripple effect.”

“If one government entity sneezes, another entity gets the effect as well,” Mr Merchant says. “When we look at how we drive true disruptive change, it cannot just happen by way of one entity doing it by itself.”

Dafza played the unusual role of a “servant leader” for the project, he says. “someone who does not lead from the front but who is there to facilitate”.

He adds, “It was an investment in courage, an investment in a project that was not just designed for Dafza but for the future of Dubai itself.”

So what next for the project? Mr Denatale says it could take two to four years for some of the results to be fully realised. Meanwhile he is happy with the biggest outcome – getting government departments to talk to stakeholders face to face.

The next Big Conversation will kick off at the end of the year, on a new topic – possibly on free zones and the halal and Islamic economy.

“Dubai is going to be the leader in innovation, there’s no doubt about it,” says Mr Denatale.

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