INDUSTRIAL REVOLUTION
As the UAE continues to push for a more diversified economy, it has carefully planned the transition away from oil reliance.
As revenue from fossil fuels has become less and less reliable, the country's leadership has orchestrated a carefully planned pivot away from the energy economy, and key to this is the development of a strong and durable industrial sector. Industrial development has historically been the cornerstone of any emerging economy including fellow oil producers Malaysia and Mexico, and the UAE will be no exception. Thus, the rise of the Emirates as a global commerce hub hinges in part on the country's industrial plan and its ability to support the growth of small manufacturers into major players in the economy.
As detailed in the UAE's Vision 2021, and in Abu Dhabi's Economic Vision 2030, there is a standing goal of reducing the contributions of oil and gas to 20% from its current level of 30%. More specifically, Abu Dhabi aims to elevate the share of its non-oil private sector to 40% of GDP by 2030, against the current level of 27%. This private-sector growth is most feasible in the manufacturing and industry sector. On this front, the Ministry of Economy expects to nearly double the manufacturing base of the UAE to 20% by 2021, and then raise it further to 25% by 2025. Within the Emirate of Abu Dhabi, however, the manufacturing base trails at around 5%, with the Department of Economic Development highlighting its intentions to double the sector to 10% in the long run.
Commenting on the drive for industrialization, Director General of Abu Dhabi's Industrial Development Bureau Ayman Al Makawi said, “The 2016-20 strategy will be all about enabling the private sector, about linking the larger industries with the smaller and medium-sized companies.” Makawi is shrewd to put faith in the UAE's SME sector. Globally, SMEs fail at a rate of 80%, with only 20% of businesses surviving. However, the UAE's failure rate is far lower, with the success rate hovering between 25 and 30%.
With the support of several initiatives and agencies, the success rate for such enterprises may rise to as much as 50%, high above the international benchmark. Initiatives such as the Khalifa Fund for Enterprise Development and the National Programme for SMEs help to provide a framework for the SME sector to thrive, incentivize entrepreneurship, and offer technical support and training to businesses after they have launched, helping them to blossom into larger industrial entities.
Government support also comes from the National Industrial Coordination Council and the Industrial Development Bureau of Abu Dhabi, which seek to steer a bulk of the UAE's economic growth toward the industrial sector. One key achievement of these organizations has been a law allowing for 100% ownership of businesses in industry and manufacturing to foreign nationals, bolstering FDI in the sector.
These types of initiatives are critical, as industrial development is noted to be the most difficult area for SMEs to emerge. Entrepreneurship in manufacturing is relatively risky, requiring huge capital investments. However, it is also the sector that has the best opportunity for contributing to local growth. Manufacturing goods are more likely to use local resources, and are more likely to be exported compared to other sectors. Conversely, trade sectors bring in goods from foreign markets and move cash outside of the UAE. Because of this, manufacturing has a powerful multiplier effect; for every USD1 million of development in manufacturing, USD1.3 million is added to the economy.
To showcase the vision for industrialization and to facilitate the development of SMEs into major players in the manufacturing industry, the UAE hosted the Global Manufacturing and Industrialization Summit on March 30, 2017. The summit was a joint effort by the UAE Ministry of Economy and the United Nations Industrial Development Organization (UNIDO). This was the first global gathering of manufacturing industry leaders and SMEs, and was hosted under the patronage of HH Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi. The goal of the summit was to connect the industry's decision-makers, creating a forum for sharing best-practices in industrialization, while backing the local vision for technology and innovation in manufacturing.
The World Industrial Summit did more than launch a platform for collaboration between small and large industrial businesses. It was also a signal to the world that the Emirates will not settle for nominal diversification. Instead, it is positioned to propel itself to the forefront as a regional leader in industry, transforming a sector that had lagged behind for decades. Bringing the UAE's industry to the core of its economy is no small order.
INDUSTRIAL REVOLUTION
TABLE OF CONTENTS
Guest Speaker
Mohammad Sanusi Barkindo, Secretary General , Organization of Petroleum Exporting Countries (OPEC)
TBY talks to Mohammad Sanusi Barkindo, Secretary General of the Organization of Petroleum Exporting Countries (OPEC), on mutual cooperation between the UAE and OPEC and hosting the World Oil Outlook (WOO) launch in Abu Dhabi.
read articleFocus: Female Empowerment
On the road to equality
Today the UAE stands as a beacon in the fight for female empowerment in the Gulf. The country has adopted an inclusive agenda to further integrate women into the highest levels of management in public and private entities, rewritten part of its legislation to reorient it toward gender equality, and designed programs to foster the creativity of a growing number of female entrepreneurs.
read articleInterview
Khalifa Bin Salem Al Mansouri, Undersecretary , Department of Economic Development – Abu Dhabi (ADDED)
TBY talks to Khalifa Bin Salem Al Mansouri, Undersecretary of the Department of Economic Development – Abu Dhabi (ADDED), on its plans to make the Emirate a better place to do business, the new industrial plan, and how it is fostering innovation.
read articleInterview
Mohammed Ahmed Bin Abdul Aziz Alshehhi, Undersecretary , Ministry of Economy of the UAE
TBY talks to Mohammed Ahmed Bin Abdul Aziz Alshehhi, Undersecretary of the Ministry of Economy of the UAE, on the value of creativity, the development of the industrial sector, and supporting SME development.
read articleInterview
Khaldoon Khalifa Al Mubarak, Group CEO & Managing Director , Mubadala Investment Company
TBY talks to Khaldoon Khalifa Al Mubarak, Group CEO & Managing Director of Mubadala Investment Company, on how the merging of two key investment entities will drive Abu Dhabi's diversification strategy.
read articleFocus: Knowledge Economy
Turning the ship around
The government of Abu Dhabi, in coordination with the Executive Council, is investing heavily in a shift from an oil-based economy to a knowledge-based economy, where information supersedes commodities and the highest form of capital is human capital.
read articleInterview
Rashed A. Al Blooshi, Chief Executive, Abu Dhabi Securities Exchange (ADX)
TBY talks to Rashed A. Al Blooshi, Chief Executive of Abu Dhabi Securities Exchange (ADX), on the powers of blockchain technology, strengthening bankruptcy law, and enhancing Abu Dhabi's position as a global finance hub.
read articleInterview
Philippe Ghanem, Vice Chairman & CEO , ADS Securities
TBY talks to Philippe Ghanem, Vice Chairman & CEO of ADS Securities, on confirming Abu Dhabi's place in the global financial sun, the importance of smart and predictable regulation, and having had the foresight to diversify before the oil crash.
read articleInterview
Ali Vezvaei, President, Middle East & North Africa of Linde Engineering,
TBY talks to Ali Vezvaei, President, Middle East & North Africa of Linde Engineering, on tying one's belt in trying times, the smart combination of technology and operational elements, and building a blueprint for the CO2 eco-system.
read articleInterview
Mansour Al Mansoori, Director General , National Media Council (NMC)
TBY talks to Mansour Al Mansoori, Director General of the National Media Council (NMC), on the changing nature of media consumption in the UAE, developing local content, and improving literacy in the Emirates.
read articleFocus: MAQTA GATEWAY
Bridging outwards
One of the core pillars of the Abu Dhabi Vision 2030 is to enable economic diversification and growth. Abu Dhabi Ports made its own contribution to this vision by launching the Maqta Gateway in 2014, a port community system that integrates functions and sectors of trade into a single platform.
read articleInterview
Saif Mohammed Al Suwaidi, Director General, UAE General Civil Aviation Authority (GCAA)
TBY talks to Saif Mohammed Al Suwaidi, Director General of UAE General Civil Aviation Authority (GCAA), on opportunities in the sector and GCAA's contributions to the development of aviation in Abu Dhabi.
read articleFocus: International Business Universities
Bringing in the experts
The development of a highly skilled and developed workforce is an integral part of Abu Dhabi Vision 2030 and one of the seven pillars upon which the future economic development of the Emirate lays. Education has therefore been placed in the spotlight as one of the key areas to keep a close eye on.
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