Made in the UAE

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The UAE’s manufacturing sector was the second largest contributor to the UAE’s economy after oil and gas in 2014, representing an impressive 14 per cent of the national output.

The UAE government has been heavily investing in the manufacturing sector over the past few years as it realises the crucial role this sector has in diversifying the economy.Apart from financial investments, the government has also invested brainpower in devising innovative policy initiatives to support the growth of the manufacturing sector. This includes the establishment of numerous successful free zones that have attracted large foreign direct investments and created a whole new economy in the UAE.

A commitment to expand this lucrative and pivotal sector of the economy is demonstrated by investments in industrial plans that amount to more than Dh127 billion. The number of industrial facilities has increased exponentially as well, now totalling more than 6,000 facilities that employ approximately 430,000 employees.The UAE has also bolstered its commitment to becoming a regional and international leader in this sector by agreeing to host The Global Manufacturing and Industrialization Summit which will be held in Abu Dhabi in September next year. It is aimed at fostering the development of international standards for manufacturing and industrial innovation by bringing together representatives and leaders from various sectors and nations.

Local Brands

The UAE has been very successful in achieving international standards of industrial excellence in a relatively short period of time, ranking 12th worldwide in the Global competitiveness report for 2015. This is a major indication that the UAE has the potential to become a significant player in the global manufacturing scene in the near future.

In 2000, UAE-manufactured exports amounted to an impressive Dh30.5 billion according to the Dubai Chamber of Commerce and Industry. Fourteen years later, the Chamber reported over Dh290 billion in exports for 2014, a Dh5bn increase from 2013, and more than an 8 per cent increase from 2012.

An earlier report from the DCCI in 2013 said manufacturing accounted for 53 per cent of the UAE’s total non-oil exports in 2012, and 22 per cent of total exports including oil — with the GCC nations representing the largest export market, predominately Saudi Arabia. Other major export partners include Japan, India, and Iran.

More and more local organisations are becoming increasingly competitive and efficient, enabling local producers to penetrate international markets.  The main local manufacturing industries include food and beverages, tobacco, chemicals, mineral products, paper products, textiles and clothing and wood products. Aluminium, cabling, petrochemicals, steel and marine industry products make up the list of the largest individual manufactured products.

Among the many local success stories is 25 year old RAK Ceramics, which is now posting US$1 billion in global sales annually, and date conglomerate Al Foah ships 80,000 tonnes of their products around the world every year.Other local giants include UAE’s big steel manufacturers Emirates Steel, EMAL, DUBAL, and Conares, and these local brands have made a tremendous contribution to the UAE’s status as the fourth largest aluminium producer in the world.

New and emerging local manufacturing industries are on the rise in the UAE.  A prime example of a successful new entry with a positive future outlook comes in the form of Mubadala in the aerospace sector. Mubadala’s Aerospace & Engineering Services are competently taking the lead in establishing this new local industry with an overarching aim of innovating the sector and becoming a global player in the near future.

The UAE is also at the forefront of a regional push to build up domestic defence manufacturing capability to reduce reliance on imports. The country has established a small defence industry that includes maritime security and defence-related services such as maintenance and repairs. Over the past two decades this industry has now developed into the full scale manufacturing of a range of defence products from armoured vehicles to weapons and satellites, and more.

Strategic Manufacturing Hub

The UAE has successfully played on several factors that make the country an ideal regional and international manufacturing hub. In terms of government policies and political factors, the UAE is seen a safe and easy place to do business, largely due to business friendly government policies that are very supportive. Among these is the development of low cost industrial free zones that are packed with great incentives, including access to state of the art port facilities across the Emirates that give manufacturers access to the world by sea, as well as the provision of relatively low energy and overhead costs.

There are currently 37 free zones in the UAE, with nine more currently in development. Sectors have a wide range from goods trading, commodities, health care, education, information technology and finance to business services, media, advertising, vehicles and environment.The government is developing a number of integrated industrial zones and others large-scale projects for the establishment of a network of world-class transportation and road networks.In addition to this, a federal railway is being established to connect important residential and industrial centres across the country through a safe and reliable route.The government is also linking ports to create an efficient logistics environment that serves transportation of materials and production inputs, as well finished products within the local market. With all this progress, the UAE is set to become an important commercial and logistics hub for manufactured goods.

The Ministry of Economy is constantly involved in strategic benchmarking and knowledge transfer initiatives with leading global players such as South Korea, Germany, the US and others. The quest is to basically import the best practices the world has to offer in manufacturing excellence; this in turn will enhance the UAE’s productivity capacity and increase its competitiveness in international markets.

The Future of Local Manufacturing

According to numerous sources and government spokespersons, the UAE aims to increase the contribution of the manufacturing sector to overall GDP from the current level of 11 per cent to an impressive 25 per cent by 2025.

The UAE’s Vision 2021 National Agenda is a focus on creating national policies that achieve sustainable growth, and the manufacturing sector has been highlighted by this agenda as a priority for achieving sustainability through economic diversification towards sectors where the UAE can prove a lucrative competitive advantage.

Among the many factors that are set to boost this sector is the new UAE investment law, which allows for one hundred per cent ownership to foreigners, a move that will surely give massive interest and a boost to the manufacturing sector. The investment law, which is in the final phase of being drafted, is likely to be issued this year.

Meanwhile, the UAE’s plans to host the world’s first Global Manufacturing and Industrialisation Summit in Abu Dhabi in 2016, shows a desire to enhance the status of the manufacturing sector even further in a move that will also help to develop local Small and Medium Enterprises. More than 1,000 government and industry leaders are expected to attend the event that will be hosted by the UAE’s Ministry of Economy in collaboration with the United Nations Industrial Development Organisation (Unido) and the World Economic Forum’s Global Agenda Council for the Future of Manufacturing.Hosting of the summit is testament to the country’s growing role in developing a global, knowledge-based economy that values human capital development and innovation.

In terms of drivers of manufacturing excellence, human capital, along with physical and financial capital, is widely regarded as the basis for higher productivity and sustainable economic development. In an effort to develop the future of this sector, the UAE University, in conjunction with Tawazun, began offering an MBA in manufacturing excellence in 2012. These reflect just some of the initiatives that are expected to turn the UAE into a global centre for manufacturing excellence.

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