MAKE A WAY

Ras Al Khaimah | INDUSTRY | REVIEW

Ras Al Khaimah's well-established industrial sector has given the Emirate an enviable economic base, and free zone officials are working hard to forge new connections.

Ras Al Khaimah's industrial success is one of the factors that has set it apart from other Emirates. Whereas other members of the UAE have drawn upon their oil and natural gas reserves for revenues, Ras Al Khaimah has cultivated a strong industrial sector based on manufacturing and export activity in free trade areas. This has given it the diversified economy that some other Emirates are still working to build. All the while, Ras Al Khaimah's government is continuing to invest in infrastructure improvements, ensuring that the energy and logistical framework supporting its industrial sector is robust and able to handle continuing expansion.

The Emirate has been one of the UAE's industrial drivers since opening the country's first cement factory in 1970s, and today manufacturing and free trade zone activities make up 36% of Ras Al Khaimah's GDP, well above the UAE average. Ras Al Khaimah is home to the UAE's largest non-oil exporting company, RAK Ceramics, and an economic zone that spans 33 million sqm and is home to more than 13,000 firms.
This success has given the Emirate an economic base that is less susceptible to fluctuations in oil prices. Though global credit ratings agency S&P estimated that Ras Al Khaimah's economic growth slowed to 1.5% in 2017 due to lower demand in the region, the agency expects it to record stronger economic performance through to 2020. The Emirate's manufacturing base will continue to strongly contribute to maintaining Ras Al Khaimah's track record of fiscal surpluses and low debt.
RAK Ceramics has become one of the centerpieces of Ras Al Khaimah's industrial sector to become a key source of wall and floor tiles, producing 110 million sqm of ceramics each year. Since beginning operations in 1989, the firm has grown to become the world's fourth-largest ceramics producer as of early 2018, with a market value of almost USD1 billion. More than 70% of RAK Ceramics' production takes place in its facilities in Ras Al Khaimah, and the goods produced there are exported around the world.
The company's success even in the midst of a weaker regional and global economic environment illustrates how a well-established and diverse manufacturing sector can serve as a stabilizing force for the Ras Al Khaimah economy. RAK Ceramics is far from immune to the effects of lower oil prices and weaker regional demand, but its size and well-established capabilities allowed it to enter new markets in Asia, where demand is stronger. The firm announced in November 2017 that it was planning to expand its output in India from 11 million tons to 18 million, noting that the country offers significant capacity for growth in its infrastructure spending and rapid economic growth.
RAK Ceramics has additional facilities in Bangladesh and Iran, but it has continued to invest heavily in the Ras Al Khaimah facilities that are the foundation of its operation. During the current economic slowdown in the Middle East, the firm invested heavily in technology that increased efficiency and allowed the company to develop new lines that differentiated it from its competitors. In recent years, RAK Ceramics has adopted new digital printing techniques and introduced new high-quality lines that enabled it to make inroads into the European market. Its relationships with the UAE's construction industry are among its most important, and the firm has provided key components of major projects like the Burj Khalifa and the Burj Al Arab. For the wall and floor elements of Dubai International Airport, for example, RAK Ceramics dedicated an entire production line to the needed tiles. The UAE remains its largest market by volume, and Ras Al Khaimah's knowledge of the market is essential to its continued success.
India is a major source of FDI to Ras Al Khaimah. The Emirate offers entry into the GCC at a better value than other Emirates in the UAE. Some 3,000 companies in its free zones are Indian. Indian firm Ashok Leyland, the world's fourth-largest commercial automaker, announced an AED36.5-million expansion of its facility in 2016 in an effort to double bus assembly volumes, and FMCG firm Dabur International, and plastics firm Eurocap, both maintain high-tech manufacturing facilities in the area.
China, too, is expected to become a larger part of the Emirate's industrial growth. RAKEZ sponsored a free trade summit held in Shanghai in September 2017, and the free zone's leaders believe that it has the potential to be a key point for Chinese firms looking to export to the Middle East. At present, RAKEZ is home to more than 160 Chinese firms. RAKEZ has also sent delegations to Brazil and the US in its drive to raise awareness of the Emirate's industrial offerings and established the connections needed to further develop the free zone's industrial offerings.