Abu Dhabi is seeking to increase the contribution of private sector by 5 per cent in the next three years as well as attract more foreign direct investment in the non-oil sector to boost growth, a top official said on Tuesday.
“We are aiming to raise the contribution of private sector to Abu Dhabi’s GDP (gross domestic product) from 32 per cent to 37 per cent by 2021 and the share of non-oil FDI from 1 per cent to 7 per cent,” said Saif Mohammad Al Hajeri, chairman of Abu Dhabi’s Department of Economic Development.
Al Hajeri made the remarks while speaking at the “private sector forum” in Abu Dhabi, which was attended by a number of government officials as well as executives from different private companies.
A number of new measures to accelerate the growth of the economy were outlined during the forum including increasing cooperation between private and public sector and increasing loans to small and medium enterprises operating in Abu Dhabi.
Al Hajeri said private sector is a strong partner to the government and they are making sure it performs well.
“We believe that public and private sector are partners in building sustainable and globally competitive knowledge based economy. The government is paving the way for public, private partnerships in different projects such as large infrastructure projects and educational projects like schools which are funded by the government and run by the private companies.”
Abu Dhabi is also putting emphasis on improving business environment, he said.
“Our objective is to elevate Abu Dhabi from 12th rank to top ten economies for doing business.”
Speaking on the small and medium enterprises sector, he said the government is focusing to increase the share of SME sector to the economy from 16 per cent to 23 per cent by 2021.
The new measures form part of Dh50 billion Ghadan 21 programme that was announced by His Highness Shaikh Mohammad Bin Zayed Al Nahyan, Abu Dhabi Crown Prince and Deputy Supreme Commander of the UAE Armed Forces last year to accelerate the development of emirate’s economy.
Abu Dhabi’s overall GDP (gross domestic product) in 2019 is expected to grow by 3 per cent at constant prices with non-oil growth projected at 3.9 per cent.
For 2020, non-oil growth is forecast at 4.1 per cent.
The new measures come as low oil prices hurt the growth of Abu Dhabi’s economy in the last few years. From more than $80 per barrel in 2014, oil prices plunged to less than $60 per barrel at the end of 2018.
Abu Dhabi currently derives 50 per cent of its real GDP and more than 90 per cent of central government revenue from the hydrocarbon sector, including oil taxes and royalties and dividends from Adnoc, ratings agency S&P recently said in a report.
To increase lending to SMEs, the government launched credit guarantee scheme in cooperation with the First Abu Dhabi Bank.
Abu Dhabi government will provide guarantees to banks to lend to SMEs with an annual turnover of Dh15 million to Dh250 million, a top executive of the bank said adding 75 per cent of the facility side is guaranteed by the government for the UAE nationals and 60 per cent for expatriates in case of a default.
“Over all SME ecosystem will have a great impetus and great improvement with this initiative,” said Vikas Thapar, head of business banking at Frist Abu Dhabi Bank.
“In the last few years, it has been challenging for SMEs to access financial services now with this, they will have more confidence and banks will also be more confident in looking at SMEs and providing them the facilities.”
New incentives on electricity tariffs were also announced by the government to reduce the operational cost of industries and increase their revenue.
The government is also putting emphasis on tourism with the new ecotourism incentive packages to promote under-explored areas in Mirfa in the western region of Abu Dhabi.
The packages provide benefits to hospitality investment and ecotourism operators including land lease exemptions, tax waivers, accelerated licensing, marketing and government infrastructure investment.