The United Arab Emirates (UAE), with Dubai at its heart, is rapidly emerging as a global epicenter for commodities trading. Situated at the crossroads of Europe, Asia, and Africa, Dubai’s strategic location, state-of-the-art infrastructure and supportive government policies have created a thriving ecosystem that attracts traders, investors, and businesses from across the globe.
According to the World Trade Organisation, (WTO), the UAE is now 11th place globally in exports, with its goods trade valued at USD 599 billion. Much of this success can be attributed to Dubai’s unique blend of advantages. The city boasts a comprehensive ecosystem for commodities trading that includes world-class ports, airports, and logistics facilities, an array of free trade zones offering incentives such as 100% foreign ownership, tax exemptions, and zero import and export duties, and renowned commodities exchanges like The Dubai Gold & Commodities Exchange (DGCX) and the Dubai Mercantile Exchange (DME).
This article looks at the opportunities in Dubai’s growing commodities market as well as practical steps and strategies on how to lay the foundations for a successful commodity trading business in the emirate.
Which commodities to trade in
Dubai’s commodities trading landscape offers a diverse array of lucrative options, with certain commodities standing out due to their unique supply and demand dynamics, price trends, and global factors. Crude oil, given Dubai’s proximity to major oil-producing regions, remains a cornerstone of the market. However, price trends in these commodities are often influenced by geopolitical events, global economic health, and shifts in energy consumption patterns, making them a riskier investment option. Precious metals, such as gold and silver, are also in high demand, with The Dubai Gold & Commodities Exchange (DGCX), based in DMCC free zone, providing a well-regulated, and globally recognised trading platform. Agricultural commodities like coffee and tea are also among the most widely traded commodities, with a market value of close to USD 50 billion and global demand continuing to rise.
Sustainability is another growing industry in Dubai, supported by ambitious initiatives like the Dubai Clean Energy Strategy 2050, which aims to have 75% of the city’s energy generated from clean sources by 2050. This drive presents significant opportunities in renewable energy commodities, such as solar panels, wind turbines, and battery storage solutions, making them attractive options for investors and businesses looking to align with the emirate’s sustainable future.
Ultimately, the most lucrative commodities to trade in Dubai will depend on your market analysis, risk tolerance, and ability to stay updated on the dynamic global factors shaping these markets. Diversification is often a key element, spreading risk across different commodities or asset classes to mitigate volatility. Additionally, a comprehensive risk assessment is crucial.
Mainland or free zone
There are two main jurisdictions where you can set up a commodities trading company in Dubai: On the mainland or in a free zone. Setting up onshore allows unrestricted access to the entire UAE market and overseas and also allows you to bid for local UAE government contracts. Mainland companies can also engage in a broader range of business activities beyond commodities trading, which can be advantageous if you plan to diversify your business interests.
Free zones, on the other hand, have less operational scope than mainland companies since they are not permitted to trade outside the free zone’s jurisdiction and can only do so through a licensed distributor or agent. However, they can trade internationally, making them ideal for import/export ventures and they also offer a host of other compelling advantages that make them highly suitable for commodities trading companies.
They typically offer turnkey solutions with streamlined setup processes and administrative support, making it easier to establish your business. They also offer tax exemptions, an absence of import or export duties and the allowance of full repatriation of all capital and profits.
Where to set up a commodities trading company
There are several free zone options available: Jebel Ali Free Zone (JAFZA) is one notable example. It is situated near the Jebel Ali Port, one of the largest and busiest ports in the region and a major hub for maritime transportation. This proximity offers connectivity to a vast network of global shipping routes and simplifies customs clearance and documentation procedures. It also means reduced transport costs, shorter transit times, and lower storage expenses. JAFZA also provides easy access to a wide range of trade-related services, including freight forwarding, customs brokers, inspection agencies, and shipping companies.
Dubai Commerce City, a specialised e-commerce free zone is another good option. It offers advanced infrastructure and proximity to Dubai International Airport, making it a potential choice for commodities trading businesses with an online or digital component. However, its primary focus is on e-commerce, so traditional offline commodities trading companies may find better-suited alternatives.
Perhaps the best fit is Dubai Multi Commodities Centre (DMCC). Its specialised infrastructure and services are tailored to the unique needs of commodities traders with easy access to financial institutions, marketplaces, and other service providers.
DMCC also hosts the Dubai Gold & Commodities Exchange (DGCX), which is one of the key commodities exchanges in the region and is known for trading a variety of commodities, including precious metals like gold and silver, as well as energy products, currencies, and agricultural commodities.
How to set up a commodities trading company
- Select your trading activity
To establish a commodities trading company, you’ll need a general trading licence. It’s one of the most flexible licences available and allows companies to trade in multiple trading categories from import and export to wholesale and retail and online sales.
- Choose a jurisdiction
Consider your required trading scope and what kind of support services your company needs as outlined above.
- Select a Trade Name
Choose a unique and appropriate trade name for your business. Ensure that the name is not already registered and that it complies with UAE naming conventions.
- Secure Premises and Office Space
Depending on your business location (mainland or free zone), you may need to lease office space or warehouse facilities. Ensure that the premises meet the requirements of the relevant authorities.
- Customs requirements
If you are planning to trade internationally, you’ll have to obtain an import code from the Federal Customs Authority (FCA). You’ll need to have already secured your trade licence and will have to submit the following documents via the FCA’s online portal.
- Valid trade licence and a copy
- Passport copies of the business owner or authorised representatives
- Emirates ID copies of the business owner or authorised representatives
- A copy of the company’s Memorandum of Association (MOA)
- Proof of address (e.g., tenancy contract or utility bill)
- Obtain Visas
If you plan to hire foreign employees, they will require employment visas. You must issue an employment offer letter and sign an employment contract with each foreign employee. For mainland companies, you’ll need to submit the required documents to the Ministry of Human Resources and Emiratisation (MOHRE). If your company is located in a free zone, the respective free zone authority or the General Directorate of Residency and Foreigners Affairs (GDRFA) of the emirate handle visa applications. After receiving the necessary approvals, the entry permits and visas are stamped in the employees’ passports. Employees must then undergo medical tests and obtain Emirates ID cards.
Once you have your trade license and import code, you can now begin operating your company and importing goods into Dubai and the wider UAE. Ensure that you comply with all customs regulations and requirements.
How can The Knightsbridge Group help?
The Knightsbridge Group has over 20 years of experience in the domain of corporate structuring and wealth management. We have unparalleled knowledge of business practices and legal requirements in the UAE as well as an international network of contacts and a deep understanding of the needs of modern-day high net worth clients and international businesses.
We can help you to set up a commodities trading company in Dubai. We can advise you on the appropriate jurisdiction, trading activity and business structure for your company. We can also assist with visa applications and bank account opening, liaising with government departments and other authorities on your behalf.
If you need help with this or any other immigration, financial or corporate structuring issue, please don’t hesitate to contact us on info@kbgroup.ae and we will be happy to help.
