Industry in the UAE
Industry is the economic backbone of a nation. The UAE has been clear about its intentions to diversify the economy and develop sectors that contribute to the higher end of the value chain. The industrial sector is key to the UAE’s ambitions to develop a diversified, sustainable economy.
My belief is that governments, by what they do, can make all the difference in allowing the business community to either develop or go away.
Industrial Sector's Contribution to GDP
In 2010, industry contributed $71.6bn or approximately 40% of total non-oil GDP. Industrial contribution by segment came from construction at $34.66bn, manufacturing at $28.93bn, electricity, gas, and water at $7.62bn, and quarrying at $390.9m. The leadership plans to further reduce the rate of contribution of the energy sector to approximately 20% in the next 15 years through growth and development of other sectors.
Access to Energy
One of the key enablers of industry in the UAE, and a true incentive to industrialists, is access to energy. The availability of reliable and relatively cheap energy makes the emirates a very appealing place for industrial installations. Furthermore, many of the industrial zones offer energy-based incentives to potential tenants.
Energy production in the UAE has increased from 150,801 kT (kilotons of oil equivalent) in 1998 to 180,549 kT in 2008. This corresponds to an increase from 33.39bn kilowatt hours to 53.42bn kilowatt-hours. Electrical power consumption rose from 31.60bn kilowatt hours to 48.95bn kilowatt-hours over the same period. Electrical consumption per capita rose only marginally over the same period.
Industrial Zones & Free Zones
As industrial development requires a carefully orchestrated infrastructure, the UAE has focused on developing a number of industrial areas and free zones where all the necessary support facilities are provided, processes and procedures are streamlined, and where clustering of production creates time and cost saving synergies. These zones can be found in each of the emirates.
The development of the free zones has played a very important and major role in the country’s economy. Very simply, there are a few factors that free zone companies have contributed. One is the infrastructure such as ports, airports, thus increasing movements of cargo. Free zones have also increased the amount of manpower, the value of imports and exports, and the movement of the banks.
In addition to the development of these specialized clusters, the UAE is developing the necessary transportation infrastructure. In Abu Dhabi, ZonesCorp, the Higher Corporation for Specialized Economic Zones, is charged with promoting industrial growth and has established ICAD I, II, and III, and Al Ain Industrial City I and II. Future developments include ICAD IV and V, Construction and Building Materials Zone, and Workers’ Residential Cities.
In any industrial zone, the most important element to attract investors is the availability of infrastructure, which we have; the availability of services, which we have; transparency, which we have; the availability of utilities and gas, which we have; and the most important thing is feedstock.
Industrial Development in Dubai
In Dubai, over the last 15 years, industrial development has been driven in large part by the facilities offered through the Jebel Ali Free Zone (JAFZA), one of the world’s fastest growing freezones. JAFZA is currently home to over 6400 companies, including over 120 Fortune Global 500 enterprises. Jebel Ali is also home to the Port of Jebel Ali, which is the world's largest man-made harbor, the biggest port in the Middle East, and the flagship of international port operator DP World. Total industrial activity already contributes nearly 8% to the GDP of Dubai. To continue the drive towards industrialization, Dubai has also launched Dubai Industrial City in an effort to bolster light and heavy manufacturing.
Industrial Development in Abu Dhabi
Another key development is Abu Dhabi’s KIZAD, a massive industrial zone spanning 417 sq. kilometers. By 2030, Kizad is expected to contribute 15% of Abu Dhabi’s non-oil GDP. The zone has been designed for global business to locate large-scale primary and downstream manufacturing facilities. The government forecasts that between 60% and 80% of the goods manufactured within KIZAD will be exported, adding further value to the nation’s economy.
In every field there is an opportunity because the UAE’s population, and the Gulf’s population, is growing. Here, investors and people setting up industrial projects here can export to a population of 2 billion within a 3-hour flight.
Today, the latest technologies and state-of-the-art facilities are now part of the country’s industrial base, which includes, food and beverage; chemicals; up and downstream metals; minerals; cement; quarrying; ceramics; textiles and clothing; pharmaceuticals; and gold and jewelry. Significant investment has been made into industrial projects in recent years with more planned in the pipeline.