Dubai: The UAE’s industrial sector is providing 14 per cent contribution, on average, to the country’s non-oil GDP over the past decade, according to a study by the Dubai Chamber of Commerce and Industry.

The study shows Dubai has targeted services and light industries, while Abu Dhabi believes its competitive advantage lies in heavier manufacturing industries, due to the availability of cheap energy.

Investment in the UAE manufacturing sector has been spurred by the development of free zones, with the largest and most high-profile of the free zones being Dubai’s Jebel Ali Free Zone (Jafza), which hosts over 6,000 businesses from more than 110 countries. Seventy-five per cent of those are involved in trading, warehousing, and distribution, while 20 per cent are involved in manufacturing. The remaining provide services.

The bulk of industrial investment in Jafza is concentrated on light engineering and final-stage assembly in sectors such as electronics.

“Dubai Industrial development is gaining prominence in the UAE’s economy following a decline in several business sector during the economic crisis,” said Dr Abdul Hameed Radwan. “Major free zones are attracting billions of dirhams worth of investments, especially in the manufacturing sector.”

He said the emirate’s ability to provide excellent logistics and infrastructure facilities, a rich talent base for knowledge-intensive industries and an legal and regulatory framework, have helped in creating a thriving industrial base in the emirate.

Sustain growth

Mohammad Al Asoomi, a leading UAE economist, said that while the investment in the industrial sector is secure, much more should be done to sustain the growth in this sector.

“All the advantages offered to the industrial sector are excellent to energise this business segment but it is not enough.”

“The investment potential in the industrial sector in the UAE is very high and government should step in and offer extra facilitation and the right support to this sector.”

Pointing to diversification the industrial sector can added to the UAE economy, Al Asoomi said that since each emirate has its own resource, so it can have its own industry and niche.”

Export

The Dubai Chamber study said that the UAE manufacturing sector has driven much of the country’s non-oil trade. In 2012, manufacturing exports (including re-exports) accounted for 53 per cent of the UAE’s total non-oil exports of merchandise goods and 22 per cent of total exports including oil exports, which are also considered as relatively high.

UAE manufactured exports increased from $8.3 billion (Dh30.4 billion) in 2000 to about Dh59.2 billion in 2012 registering a cumulative annual growth rate of about 18 per cent.

In 2012, about 77per cent of the UAE manufactured exports went to Asia, 10.4 per cent to Africa, 6.4 per cent to Europe, and the rest to US and other transition economies, according to the study.

Despite the increase in the domestic consumption of manufactured products in the UAE with the expansion of the economy, it is estimated that the value of manufactured exports exceeded the domestic consumption, said the study.

UAE establishment

According to UAE Ministry of Economy latest figures, there were there were 5,201 industrial establishments with total employment of almost 399,794 workers. This is compared to 4,960 industrial establishments in 2010, registering an annual growth rate of 5 per cent.

Forty per cent of the manufacturing firms were located in Dubai, 29 per cent in Sharjah, 15 per cent in Ajman and 7per cent in Abu Dhabi. However, about 58.8 per cent manufacturing sector investments were in Abu Dhabi, 22 per cent in Dubai, 7 per cent in Fujairah and rest in other emirates.

UAE’s main industries include food and beverages, tobacco, chemicals, mineral products, metal products, equipment, paper products, textiles, clothing and wood products. The largest individual manufactured products include aluminium, cabling, petrochemicals, steel, and marine industry products.