Economic 360 for the UAE: Growth Prospects and Emerging Opportunities in the Manufacturing Industry

The manufacturing growth in the UAE has been led by the development of the cement, petrochemicals, electrical machinery and power, food processing, and pharmaceutical industries. The government has been encouraging investments through special zones like the Industrial City of Abu Dhabi (ICAD) and Dubai Industrial City (DIC). The manufacturing industry is an important component of the government's plan of economic transformation. The UAE is expected to emerge as a logistically and economically viable manufacturing base for the supply of hardware and power electronics in the Middle East. The government is also encouraging investments in energy-intensive manufacturing industries.

Political Framework

• Economic 360 Perspective: Key Features of Political Structure (UAE), 2011
• The council of ministers or cabinet headed by the Prime Minister is the executive authority of the federation.
• The constitution was established on December 2, 1971 on temporary basis and was made permanent in 1996. The constitution separates power into executive, legislature and judicial branches.
• The unicameral Federal National Council (FNC) is the legislative branch of the UAE.
• The UAE is made up of seven emirates of Abu Dhabi, Dubai, Sharjah, Ajman, Umm-al-Quwain, Ras-al-Khaimah and Fujairah under a constitutional framework.
• The ruler of Abu Dhabi is the President of the UAE and the head of the state. The ruler of Dubai is the Prime Minister of the UAE and the head of the government.
• The local government is formed based on the population size of the emirates. The interrelation between federal and local government is governed by the constitution.
• The supreme authority in the UAE is the Federal Supreme Council (FSC) comprising the rulers of the seven emirates. The FSC is responsible for federal legislation and legal policies in the UAE.
• Elections are held for one half of the Federal National Council (FNC) members and the other half is appointed by the government.

The UAE Government Objectives: 2011–2013

• Formulating effective regulation and integrated policies by resourceful planning.
• Coordination and cooperation among federal entities and local governments.
• Focus on high-quality, customer-centric, and uniformed government services.
• Achieving excellence through strategic thinking, continuous performance management and efficient resource management within federal entities, and leveraging dynamic partnership.
• First-rate education system
• Social cohesion and national identity
• Competitive knowledge economy
• World-class health care
• Fair judiciary and public safety
• Sustainable infrastructure and environment
• Strong global positioning
• Skilled human capital and customer-centric services
• Efficient financial management and good educational governance
• Efficient legislative process and government networks
• Integrated policymaking and effective government communication

Diversification Strategies for Each Emirate

Abu Dhabi

Abu Dhabi’s Government has announced plans to privatize and diversify key manufacturing industries such as metals, chemicals and petrochemicals, and food processing between 2011 and 2015. A state-owned firm, General Holding Company (GHC), is forging Public Private Partnerships (PPPs) in areas such as cement, steel, and pipe plants. Mubadala Development Company strives to generate sustainable economic benefits for Abu Dhabi through joint ventures between domestic and foreign companies.

Dubai

Dubai Industrial City (DIC) aims to reduce Dubai’s reliance on imports of manufactured goods, especially those used in the construction industry between 2011 and 2015. A major public company called Al Wasit Machinery , specializes in construction and heavy machinery equipment and is expected to invest in infrastructure development projects such as earthmoving, quarries, asphalt, and construction between 2011 and 2012.

Sharjah

Sharjah plans to grow its economy through infrastructure development, higher tourism growth, increased public-private sector partnerships, and the expansion of its small and medium enterprises (SME).

Ajman

Ajman Free Zone (AEZ) is expected to promote investment in textiles, readymade garments, and leather goods, food and beverages, and tobacco; timber, furniture, and wood products; paper and pulp, printing and publishing; chemicals and plastics; non-metallic minerals; basic metals; metal products, machinery, and industrial equipment; and other conversion industries between 2011 and 2015.

Umm al-Quwain

Umm al-Quwain is expected to promote investments through the Emirates Modern Industrial Area (EMIA) that will mainly cater to the manufacturing industry in the forecast period. Investments are expected in industries such as metalwork, architectural fabrications, kitchen furniture, electrical equipment, fiberglass, air-conditioning units, and furniture.

Ras al-Khaimah (RAK) and Fujairah

Major global investors are expected to make RAK their manufacturing hub. An increase in ceramic production and exports is expected between 2011 and 2012. An increase in investments in tourism and real estate is expected in Fujairah. The major industries that are predicted to attract investments are chemicals and petroleum, and construction and equipment during 2011-2015.

Key Political Trends

• The political leaders are against implementing the electoral process in the UAE, arguing that elections were likely to create Islamist division across the nation. This is likely to hinder the political reform process between 2011 and 2015.
• In 2006, the UAE introduced a limited and administered election process for half the FNC seats. The rest of the seats continue to be appointed by the government.
• The UAE is expected to increase sequentially the size of the FNC and raise its regulatory power.
• The FNC has power to analyse federal Act, but not execute or veto it. It however can question, but not denounce ministers of the cabinet.
• The FNC has the authority to question federal ministers on economic and social issues. Its sessions are opened to public.
• On 8 March 2011, the government made an announcement to increase the size by three times the size of the current electorate in the FNC election held on September 24th 2011.

Impact of ME Unrest on the UAE

• The crisis which engulfed majority of the nations in the ME did not affect the UAE mainly due to its liberal government. It was however predominant in other parts of the region.
• In March 2011, the government invested $x.xx billion to rebuild infrastructure for other ME nations affected by the unrest.
• The UAE has also joined other Gulf Co-operation Council (GCC) nations in supporting the Al Khalifa regime in Bahrain. The UAE, along with Saudi Arabia, Kuwait, and Qatar, are expected to provide financial assistance to Bahrain and Oman.

Freedom of Press

• In 2006, Shaykh Abdullah was removed from the post of Information Minister and media independence was allowed, but there is still a strong regulatory and political control on the media content.
• In 2009, a new media law witnessed opposition from human rights groups, as it claimed penalties for journalists criticizing UAE leaders.
• The law governing electronic and communication licensing do not apply to the ‘Free Trade Zones’ in the UAE

Economic 360 for the UAE: Manufacturing Industry Growth Prospects and Emerging Opportunities

Published: December 2011  No. of Pages: 89    Price: US $ 1495     



Table of Contents

Executive Summary

Political Analysis

Economic Analysis

Social Analysis

Technology Analysis

Legal Analysis

Environmental Analysis

Manufacturing Industry

About Frost & Sullivan

List of Figures

List of Charts