Introduction to the Manufacturing Sector in UAE

INTRODUCTION TO THE MANUFACTURING SECTOR IN UAE

The Oil & Gas sector currently accounts for about 40% of UAE’s GDP, but the industry is facing shrinking prospects for investments as alternate energies are becoming more popular. The UAE Government is taking steps to move the focus of its economic development to different segments, and manufacturing is one of the most important among them.

The country aims to become one of the leading manufacturing hubs, not just in the region, but globally. According to the Department of Economic Development, the manufacturing sector currently accounts for more than half of UAE’s non-oil exports, making it the second-largest contributor to the country’s economy after oil. With more focus in the sector, the regulatory body predicts manufacturing to contribute almost one quarter of the country’s GDP in the next 5 years. In short, Dubai in particular has created to be one of the biggest industrial centres in the UAE to pull manufacturers who are looking to set up new plants.

The major manufacturing sub-sectors in UAE include the following:

• Processed food and beverages
• Plastic & Rubber
• Chemicals and chemical products
• Electrical machinery and equipment

Abu Dhabi, the country’s capital focuses more on the heavy industries due to the availability of low-cost energy while Dubai and Sharjah focus more on service and light industries. As of 2017, there are close to 33000 manufacturing establishments in the UAE generating total employment of more than 760000.

INVESTMENT AND GROWTH IN MANUFACTURING INFRASTRUCTURE

The manufacturing business is getting a significant boost in the UAE, adding to the economy, creating new opportunities and more significantly, promising new investments in the UAE. The UAE’s total investment in the manufacturing sector is on the rise and reached AED30.7 billion in 2018. The industry’s commitment to the UAE’s non-oil GDP became 2.5% to AED122 billion income in 2018 from AED120 billion income in 2017. The manufacturing industry has kept up consistent growth in recent years, with its gross yield growing at almost 5% annually. The government is continuously putting in effort to attract investments that would boost manufacturing activities across the UAE and create more jobs.

GROWTH OF MANUFACTURING SECTOR IN UAE

The past decade saw manufacturing sector grow steadily in the country with more international companies entering the market. The manufacturing sector witnessed a growth of 5-6% in 2018-19 and good number of new large-scale industries starting production. The overall investment in this time period exceeded AED 12 Billion and was a major boost the non-oil GDP, according to the DED. These industries established in the emirate (of AUH) were involved in sectors like metals, food, building materials, chemicals and electrical equipment.

The exports from the manufacturing sector in Abu Dhabi and Dubai generated revenue of AED23 billion and AED330 Million respectively in 2017 and has been growing at a steady pace.

LATEST TRENDS IN UAE’s MANUFACTURING SECTOR

The government is implementing a number of initiatives to boost the industrial sector by improving business improvement, reducing operational costs and increasing the demand for local products. As UAE envision itself to be a global manufacturing hub, let us look at some of the important trends in the sector.

The 4th Industrial revolution:

The 4th Industrial revolution is forcing manufacturing sector into a state of transition on a global scale. The UAE’s economic diversification plans, UAE Vision 2021 and Abu Dhabi’s Economic Vision 2030 recognize the industrial sector as a strategic driver of the sustainability of the country’s economy.

The most important aspects of the 4th Industrial Revolution are:

• Achieving high rates of economic, social and humanitarian development thereby reducing the cost of production
• Providing highly efficient services and means of transportation and communication at low prices.

The aim of the UAE strategy for the fourth industrial revolution is to achieve the future goal of government services by providing interactive and intelligent government service round the clock. As a result, achieving customer satisfaction and UAE as a model for interactive cities using the latest technology (AI, IoT) to achieve sustainability.

3D Printing:

The country has always encouraged latest innovations and technologies. One among them, the 3D printing technology is given high priority along with the traditional manufacturing techniques. Dubai has its 3D printing strategy in place which aims to use this technology extensively for the service of people. It also targets to advance the status of Dubai and UAE as the main hub for 3D printing innovation continuously in 2030.

Sustainability in Manufacturing:

As a part of the implementation of the UAE’s Green Agenda 2030, UAE has developed a National Sustainable consumption and production plan framework which aims to:

• Achieve sustainable management and efficient use of natural resources by supporting the transition to a circular economy
• Support private sector to shift to cleaner production methods and use cleaner production techniques in industries
• Promote sustainable production and consumption patterns that reduce environmental stress and meet basic needs

SOME OF THE PRIVATE SECTOR INITIATIVES

• Nestlé Water, the bottled water division of the Nestlé Group made an investment of AED 100 million for the development of a bottle factory in Abu Dhabi.
• Ashok Leyland, a leading manufacturer of buses and trucks has invested close to $10 million for the expansion of its plant in Ras Al Khaimah emirate in the UAE. The company promises to support the customer’s success through superior vehicle production, customer service and efficiency.
• Unilever & its suppliers have made an investment of around AED1 Billion for the development of its personal care products manufacturing plant in Dubai Industrial City.
• State owned ADNOC and its partners plans to invest AED165 billion for the development of the industrial park at Ruwais. This investment expects to boost the production of high-value chemical products such as flooring, packaging materials, automotive components etc

The next decade will set the direction for UAE’s economic diversification and boosting the manufacturing sector is one of the key aspects of it. The Royal Alliance Business group is a team of widely experienced business consultants in UAE providing solutions to business aspirants seeking opportunities to kick start a company in the UAE. Contact us +971 52 384 442 or write to: info@ragroup.ae to know how we can support you with this.