Company formation specialist

IBM is among 50 leading companies in detailed discussions with the Dubai free zone TechnoPark to set up a research and development (R&D) centre in a landmark initiative that could help transform the emirate into a knowledge-based economy.

“We are in strong, deep discussions with IBM,” said Samir Hamrouni, the senior adviser for science and technology at TechnoPark. “But what we are planing is not just IBM. It’s 50 more [companies] like this for R&D purposes.”

TechnoPark is the science and technology free zone owned by Economic Zones World, a unit of Dubai World, and is located near the Jebel Ali Port. The free zone is being built across 2,100 hectares of land and plans to house 60,000 permanent residents and employ more than 133,000 people.

IBM, the world’s largest computer-services company, is looking to expand its R&D operations across the world and Dubai is on its shortlist. The emirate is also the only Middle East city where IBM is considering building a new research laboratory, sources have said.

“We are in discussions,” said a senior IBM employee, who declined to give his name because the discussions with TechnoPark are ongoing. “There are various steps on the way and we haven’t got close to the finish line.”
IBM, which earned its reputation as a computer company, was founded in 1896. It now specialises in semiconductor design and manufacturing, business software applications and information technology consulting.

The company is one of the world’s largest spenders on R&D, budgeting US$6.33 billion (Dh23.25bn) for developing new products and services. It has a cash balance of $11.5bn, which provides it with “financial flexibility to drive investments in the IBM business”, Mark Loughridge, the chief financial officer of IBM, in October.

IBM, along with notable technology companies such as Microsoft and Cisco Systems, operates offices in the Dubai Internet City free zone area, although the services the firms provide are largely through sales and marketing departments with minimal research development.

The impact of an influx of R&D facilities in the Emirates would be profound in its educational development for Emiratis and improving the amount of intellectual property, a key plank the Government has recently emphasised, said Aarti Ajay, the director for the Centre for Innovation, Excellence and Growth.

“This is part of Dubai’s vision for 2015 to not just have it as a trading hub, but make it more of a viable, original area for entrepreneurs to do business,” Ms Ajay said. “The infrastructure that this country offers has for R&D facilities to set up here are top class.”

Still, Ms Ajay had some reservations about the amount it will cost for companies to create new research laboratories in the Middle East. Many multinational companies have opted to build R&D departments in emerging markets such as India, where investing is more cost-effective and the talent pool is already full.

“The good thing about Dubai is the ability to attract staff because of the financial structure that it offers,” she said. That includes “tax-free income, [a] good standard of living, you can earn a lot of money in a short period of time. It will definitely attract a lot of good talent into this part of the world.”