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BUILDING PROSPERITY

Sharjah 2016 | ENERGY, INDUSTRY & ENVIRONMENT | REVIEW: INDUSTRY

Sharjah's manufacturing base has developed into an economic juggernaut that now accounts for more than 25% of the Emirate's total economic production.

As the manufacturing backbone of the UAE, Sharjah is an integral part of the nation's economic wellbeing. Sharjah's free zones, shipping and transportation infrastructure, low rents, cheap labor, and generous investment incentives converge to create one of the most industry friendly environments in the GCC. An emphasis on industrial diversification has succeeded in insulating Sharjah from the ups and downs of the oil market, giving Sharjah's economy a greater degree of dependability than it neighbors. This environment did not spring up overnight, but is the product of decades of consistent focus and a fundamental commitment to a world-class manufacturing sector. According to the Sharjah Economic Development Department (SEDD), industrial facilities averaged annual growth rates of 8% over the last 10 years. Additionally, licenses issued by the Emirate have seen consistent growth rates, with the latest available numbers showing a quarterly increase of 4.6%, according to the SEDD.

Strategically located near the Strait of Hormuz—the narrow stretch of sea separating the Persian Gulf from the Gulf of Oman—Sharjah is the only Emirate with a part in each of its neighboring seas, a characteristic that has helped transform the Emirate into a shipping powerhouse. With three major deep-water ports, the Hamriyah Port and Khalid Port on the Persian Gulf and the Khorfakkan Port on the Indian Ocean, and a large cargo-friendly international airport, Sharjah is able to efficiently transport its industrial output across the globe.
Based on the most recently available statistics from the Sharjah Chamber of Commerce and Industry, manufacturing industries accounted for roughly 16.5% of Sharjah's GDP and totaled more than AED13 billion. Additionally, total economic output in the Emirate surpassed AED127 billion, of which manufacturing was more than AED34.6 billion, or 27.2%, making manufacturing the single largest contributor to Sharjah's economic production. As time passes, the industrial sector is only expected to grow in importance; the Industrial Affairs Department projects that industrial activity could contribute as much as 25% to Sharjah's GDP by 2025. Currently, industrial production in Sharjah is dominated by six major sectors: fabricated metal and equipment, accounting for 32% of firms; chemical and plastic products for 20%; wood products for 17%; non-metallic mineral products for 12%; paper products and printing for 11%; and textile, apparel, and leather for 8%.

Much of the industrial activity in Sharjah is clustered in free zones, which offer a wide variety of operational advantages for foreign and domestic firms alike. The two major free zones are the Hamriyah Free Zone (HFZ) and the Sharjah Airport International Free Zone (SAIF Zone). While each free zone has a diverse collection of firms spread across multiple industries, manufacturing is key.

Both founded in 1995, the HFZ and the SAIF Zone benefit from state-of-the-art transportation and logistics infrastructure and a slew of generous investment incentives. These incentives include the ability to be 100% foreign owned, full repatriation of capital and profits, free transfer of funds, full exemption on import and export duties, 100% exemption from corporate and personal income tax for companies, investors, and employees, and 25-year leases with comparable extension periods. The SAIF Zone includes more than 6.1 million sqm of space and houses 6,800 firms from 157 nations. The SAIF Zone welcomed a number of new manufacturers and projects in 2016, including two new specialized factories being built by British firm Advanced Armour Engineering, a tin can factory being built by Delta Food Industries and Anand Tin Containers, and an assembly plant for rotary pumps constructed by the American firm Stanadyne, to name but a few.

The government of Sharjah is committed to ensuring that all of the firms operating in its free zones receive the assistance they need to succeed. In an exclusive interview with TBY, Lars Seistrup, Managing Director of Damen Shipyards, discussed the close relationship his firm has with the Emirate and its officials. “We have close contact and excellent support from HE Sheikh Khaled Al Qasimi, the Chairman of Sharjah Port and Hamriyah Free Zone, and it's very easy for me to consult with him if I have something to discuss," said Seistrup. “It's a huge benefit for us to have such strong support from Sharjah Port and Hamriyah Free Zone." Others have had similar success, and the HFZ's 12 million sqm and seven specialized commercial zones now host 6,100 firms from more than 150 nations. The HFZ's distinct zones are the Oil & Gas Zone, the Construction Zone, the Petrochemical Zone, Maritime City, Timber Land, Perfume World, and Steel City. According to statistics from the HFZ, steel/metals are the single largest type of firm operating in the HFZ and they account for 13% of all companies, while construction companies come in second, accounting for 12%. Large private investments also continue to be made in the HFZ; the international chemical company Hazel Middle East is currently in the middle of building a new USD126 million terminal and distillation facility for its chemical blending operations.
In October 2015, Sharjah Asset Management (SAM) broke ground on Al Saja'a Industrial Oasis, an industrial park that is likely to cement Sharjah's status as the industrial epicenter of the UAE for decades to come. Stretching over 14 million sqft and consisting of 353 plots that can be secured on a freehold or leasehold basis, Al Saja'a Industrial Oasis is expected to create up to 20,000 jobs, according to the Sharjah Investment and Development Authority. On April 15, the second stage of construction was launched, making 114 plots, ranging from 14,000 sqft to 112,000 sqft, available for bidding. In an effort to ensure that the businesses operating in Al Saja have the tools and facilities they need to grow, SAM has thus far invested over USD105 million in infrastructure, ranging from road, water, drainage, gas, telecommunications, and electricity systems.

The Sharjah Investment Center (SIC), a mixed-use industrial area developed as a joint venture between the UAE and Saudi investors, is also nearing completion. With 32 million sqft dedicated to a variety of manufacturing and commercial activities, the SIC is an ambitious AED2 billion investment in Sharjah's manufacturing base. According to SNASCO, the Saudi property developer spear-heading the development, over 80% of the plots constructed in the first two phases have already been sold, indicating that manufacturing from across the UAE and the globe continues to recognize the value of operating in Sharjah.

With investment pouring in from around the world, industry in Sharjah is all but assured continued success. As the Emirate continues to diversify, manufacturing will play an ever-greater role. The pivot from traditional energy sources to more renewable forms and the growth of the construction industry and the electronics industry are likely to sustain robust growth across Sharjah's manufacturing sectors far into the future.


 

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