The Future of Manufacturing in the UAE

by Zaara 10, Mar 2022

The Future of Manufacturing in the UAE

At the global level, the manufacturing industry has continually spiked, involving several segments in its umbrella. Manufacturing is one of the essential components in the targeted market that confirms the presence of a commodity. The United Arab Emirates has been one of the most competitive market areas for the establishment of companies. Whether it's a small or large-sized enterprise, business investors consider the site to be a lucrative place to invest in.

The universal expansion of production and trade has become imperious in an increasingly globalised business environment. The UAE is no exception to this rule and has already recognised the advantages of improving its output sector. The manufacturing sector's contribution to GDP currently stands at 14%, and the UAE has drawn up plans to increase this to 25% in the next 15 years. In particular, notable investments are made in petrochemicals, fertilisers and metals production.

While the Emirate will remain dependent on the oil sector for several years to come, its dependence level is steadily decreasing. The share of oil in the UAE's GDP is gradually diminishing. Although the petroleum industry remained the most significant region in terms of its GDP share at 31 per cent in 2016, the shared share of the non-oil sectors, 69 per cent, reflects the growing diversity of the UAE economy.

The Early Phases of the UAE Manufacturing Sector

The manufacturing sector of the UAE is the second most active engine of economic development in non-oil areas. Its GDP contribution had a share of 12.9% in 2007 and 12.2% in 2008, putting the hydrocarbon industry in the second position in two periods.

The consistent output represents the significant expenditure of the government in the production sector.

Realising how crucial the manufacturing sector’s position in diversifying the economy has been, the government has taken several initiatives that have sustained free zone growth. The demand for finished goods and materials grows as the economy progresses.

By the third quarter of 2008, the official report had established that the overall combined industrial capital value of all non-oil and gas industrial projects in the UAE exceeded US$ 20 billion, representing approximately 290,000 jobs. The 'new economy' offers equipment and resources for manufacturing, infrastructure, shipbuilding, power generation and even retail, for this new wave of manufacturers.

Among the different sectors, the automotive industry has the highest added value. Under governmental siege, this field is used to achieve sustainable development, either backwards to raw materials or forward to medium and final goods. Different emirates worldwide are pushing for the initiative to build industrial centres to meet both the demand and the vision of becoming the most vibrant manufacturing hub globally.

Current Scenario

The fourth industrial revolution (4IR) drives the manufacturing system on a global scale into a state of evolution. Digital technologies and associated advances, as a result, offer the unparalleled potential for development and revolution.

While both the East and the West have undergone numerous industrial revolutions over the years, it would be a first for the Gulf, where the manufacturing industry is relatively new. This paradigm change can only be seen as an opportunity in a region with forward-thinking leaders with a vibrant private area and a planned geographical position.

 

The UAE's economic diversification initiatives, Abu Dhabi's Economic Vision 2030 and UAE Vision 2021 identify the industrial sector as a projected sustainability engine. The statistics support this: the industrial sector of the UAE, including manufacturing, mining, utilities and construction, expanded by more than a third in 2007-17, according to data from Oxford Economics.

The anticipated growth of the manufacturing sector in the Gulf shows how valued it is when it comes to economic development. It is imperative to direct investment in inventions and technology to secure long-term benefits. In particular, an ethos of transformation has profoundly instilled in the UAE. Now is the time to pilot it in the manufacturing sector, with the 4IR still in its infancy.

Here is the contribution of the different sectors of GDP, particularly in the manufacturing industry.

As the Emirate is working on a well-diversified strategy to promote the industry, emphasising knowledge-based, sustainable, and creative sectors, the current manufacturing industry’s current stage looks promising.

The Future of Manufacturing in the UAE

The manufacturing industry is a rising one in the UAE as it contributes to the economy to a large extent. According to a survey, the manufacturing sector is projected to produce 7 per cent of Abu Dhabi's GDP, exceeding production by 22.8 per cent, and creating an employment pipeline of more than 21.7 billion. In its umbrella, the manufacturing sector has separate parts covering the manufacturing of:

  • Metals
  • Materials for Building
  • Chemicals and Petrochemicals
  • Pharmaceutical products
  • Food, Beverage and Consumer Goods
  • Aerospace and Defense Equipment
  • Industrial Equipment

The existing manufacturing capacities and potential production expectations of the U.A.E. concentrate on several main verticals, maybe above all: metals, construction materials, petrochemicals, pharmaceuticals, food and beverages, industrial products, facilities for defence and aerospace, and transportation equipment.

Metals

Both Abu Dhabi and Dubai have facilitated the growth of primary metals and the growth of high-value downstream manufacturing sectors, a key component of their industrialisation strategies. They have thus capitalised on the U.A.E.'s competitive benefits in terms of resources and logistics and the central global position of the UAE.

 

Aluminium- The production of aluminium and steel, which drives the market, is the most prominent when it comes to the metal industry in the UAE. The Al Taweelah Alumina refinery is one of the first refineries in the UAE to be developed with an investment of about AED 3,3 trillion.

 

Steel- Significant demand for the steel industry in the UAE is expected to increase by 30 per cent by 2021. As sponsored by the Dubai Expo 2020, the growth is expected to be enormous. By 2022, f prefabricated construction and structural steel’s market size will increase by USD 4 trillion.

Gold- Known as the land of Gold, when it comes to gold production, the UAE is the ultimate destination. In addition to the manufacturing section, several choices are open to you if you deal with gold. Click here to find out more about the gold sector in the UAE.

Copper- In addition to aluminium, steel and gold, copper is the metal that produces various items such as ornaments, copper cables, etc.

Therefore, it can be seen that it is feasible to move forward with the metal processing sector in the UAE.

Building Material

One of the main contributors to the UAE's land is the construction industry. The top targets are cement, ceramics, pipes, rebar, roof blocks, and glass manufacture construction materials. The UAE is a significant glass producer, and one of the favoured reasons is Ras-Al-Khaimah as the units set up there can produce 700 tonnes of glass every day.

As a whole, and in particular, Ras Al Khaimah has booming industries for materials such as cement, ceramics, and glass-related to the building. Due to the rapid construction of homes, retail developments and landmark projects by the U.A.E., such as Expo 2020 Dubai.

When it comes to the real estate market, the UAE's future holds tremendous promise. As a result, there will be a massive competition for the demand for construction equipment. If you are dealing with or preparing to expand the construction equipment market, Dubai is the ultimate place for you.

Chemical

The U.A.E. has a booming chemical sector based in Abu Dhabi and powered primarily by its ready access to petrochemical feedstock.

Pharmaceutical Goods

The pharmaceutical sector is one of the manufacturing sectors expected to cross AED 2.5 billion by 2022. There is a wide variety of adhesive dressing, wadding and gauzes, gel preparations for surgery, first-aid boxes, veterinary vaccines in the pharmaceutical manufacturing industry—drugs, dental supplies, etc. To know more about the pharmacy business in the UAE, click here.

A significant domestic pharmaceutical manufacturing industry has been developed by the U.A.E., particularly for generic drugs.

The U.A.E. has a rising domestic pharmaceutical manufacturing sector, marked by U.A.E. producers' collaborations with prominent U.S. pharmaceutical giants such as MSD and Pfizer.

Food and Beverages

The food & beverage industry is one of the world's most productive sectors. For the F&B industry, the UAE has been one of the flourishing destinations that have opened up numerous business opportunities for global investors. For the F&B industry, the year 2020 will be a remarkable one, as the area is projected to draw more than 25 million visitors.

 

It will be a lucrative one to create an F&B manufacturing unit as it can be easily extended to other neighbouring destinations such as Riyadh, Jeddah, Doha, Khobar, and Manama, Kuwait. To know about the Food and Beverage industry, click here.

The U.A.E., particularly in Dubai, hosts a diverse and robust number of food and beverage products.

Although the U.A.E. imports about 85% of its food, it has become a regional hub for food processing.

Consumer Products

Simultaneously, as the U.A.E. has many manufacturers of food and beverages, it is also home to various companies manufacturing other consumer products, ranging from fast-moving consumer goods such as toiletries to durable goods such as jewellery.

Aerospace and Defense Equipment

By investing heavily in domestic capabilities and forming strategic alliances with some of the largest and most recognised multinational corporations in these sectors, the U.A.E. is aiming to become more self-sufficient in meeting its aerospace and defence needs.

Equipment for Transportation

When it comes to transport vehicles, such as motor vehicles and watercraft, the U.A.E. is increasingly advancing its development capabilities.

Industrial and Other Equipment

Finally, the U.A.E. is a significant producer of industrial equipment used in the oil and gas industry.

Future- What Lies Ahead for the Manufacturing Sector in the UAE?

When it comes to the UAE, the production industry is on an upward trajectory. The year ahead will be a disruptive one for the manufacturing industry in the Middle East. To understand, here are a few examples of an initiative to expand this sector taken by the Government of Dubai, UAE.

Dubai Industrial Strategy 2030

Sheikh Mohammed initiated the 2030 Dubai Industrial Strategy in 2016 to make Dubai a global forum for knowledge-based and sustainable companies. The initiative is focused on five key goals that will serve as a framework for Dubai’s industrial future.

The initiative aims to increase the manufacturing sector's total production and value-added, expand the scope of innovation and expertise. To make Dubai a favoured destination for global companies, encourage environmentally-friendly, energy-efficient manufacturing and make the Emirates a centre for the Islamic commodity industry worldwide.

UN's Agenda for 2030

Often known as Global Goals, the Sustainable Development Goals (SDGs) are a set of 17 goals that seek to provide improved living conditions for everyone. The SDG covers industry, creativity, and technology as part of the plan. It is mainly aimed at building resilient infrastructure, fostering inclusive and sustainable industrialisation and promoting innovation.

Abu Dhabi Economic Vision 2030

The Economic Vision 2030 of Abu Dhabi proposes creating strategic sectors looking to attract local and foreign investment, especially in the export-oriented manufacturing, telecommunications, transport, tourism and energy sectors. Motivated by the Emirate’s need to diversify the economy and the sharp rise in population, development has been at the centre of significant government investment in different industries. Several primary industrial players are expanding their operations in Abu Dhabi in recognition of favourable market conditions.

Thus, if we look at potential prospects, the manufacturing sector in the UAE would hold an essential role in the UAE economy. The UAE Industrial Cooperation Council is establishing an integrated and cohesive plan for the country’s manufacturing sector.

Conclusion

Since manufacturing is still a long-term proposition for investors worldwide and opportunities continue to evolve, the UAE offers an excellent arbitration opportunity today. We assume that investors can now invest in the UAE’s Emirates, where capital and economic development will be comparatively higher over the next few years. Also, there is no saturation point for the manufacturing sector, and it will only grow in the future.

The UAE manufacturing market has its own set of challenges, including understanding the standard specifications and laws of enforcement of the country. What the future of the manufacturing industry in the Emirates holds relies on the government's initiatives.

Commitbiz has supported multiple customers across the UAE to provide the best and streamlined integration procedure, helping them launch their business roots. We have been assisting numerous business owners in turning their business ideas into reality since the beginning. Our experts have business expertise and are well-versed in the legal rules and procedures regarding the businesses’ incorporation.

To understand the business requirements and have realistic and customised business setup solutions, they take the initiative. Do have a word with our consultants to proceed ahead with your manufacturing company. Contact us today-we’d be glad to assist.

FAQs

Whether the manufacturing sector growing in UAE?

Yes

Is this really the time to invest in the UAE?

 Yes

What are the top three priority sectors for the UAE's industrial sector's growth?

The UAE's industrial sector's top three priorities are pharmaceuticals, food supply, and the military.

What is the expected growth in the UAE's manufacturing GDP share?

  The expected growth in the UAE's manufacturing GDP share is around AED 300 billion by 2031.

What is the UAE strategy focused on?

 The UAE's strategy focuses on some of the most important industrial areas to stimulate development, increase productivity, foster long-term economic success, and create employment opportunities.

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