HEAVY LIFTING

UAE, Sharjah 2017 | INDUSTRY | REVIEW

Excellent infrastructure and proximity to a combined market of over 2 billion makes Sharjah one of the most convenient and accessible industrial hubs in the world.

Accounting for approximately 33% of the UAE manufacturing sector and 40% of the industrial sector at large, Sharjah has carved itself a niche as the up-and-coming epicenter of industry in the UAE. Currently, industrial activity accounts for 16% of the Emirate's GDP, with estimates from the Industrial Affairs Department suggesting that the contribution of the industry sector to Sharjah's GDP may reach 25% by 2025. The main lines of business are petrochemicals, textiles, leather, FMCGs, and basic non-metal industries. Sharjah International Airport, Port Khalid, Port Khorfakkan, and Hamriyah Port are the main points of departure for industrial exports leaving the Emirate.

The success and projected growth of the industry sector is largely attributed to Sharjah's infrastructure offering, as well as the business-friendly regulatory environment in the country. The two major free trade zones of Hamriyah (HFZ) and Sharjah Airport International (SAIFZ) also add to the attractiveness of the Emirate as a place to operate. Meanwhile, low-cost airline Air Arabia has been based in Sharjah since 2003, giving passengers the option to reach half of the world's population in five to six hours, now at an affordable price.
In 1Q2017, the Sharjah Chamber of Commerce and Industry (SCCI) revealed that the number of registered industrial companies reached a new record of 66,295. The total number of new and renewed memberships reached 16,799 by the end of the quarter, compared to 16,132 YoY, recording a growth rate of 4%. In an interview with the press, Abdullah Sultan Al Owais, Chairman of SCCI, commented that new registrations reflect the confidence investors have in Sharjah and highlight the success of the Emirate's sustainable development efforts.

PULLING OUT AHEAD

Spurred on by competition in Abu Dhabi, Dubai, and the wider GCC, Sharjah is working toward pulling out ahead by focusing on connectivity and clear legislation. Marwan Orabi, General Manager of Metallic Industries Company, explained to TBY that, “The combination of developed infrastructure and capable and professional logistics services makes Sharjah the perfect location for a business to have its headquarters,” adding, “The cost of living is reasonable, transportation to and from work is reasonable, and the government is flexible and accommodating.”

International players such as Metallic Industries Company and Kingston Holding have capitalized on the accessible infrastructure of the Emirate to expand their businesses and probe new markets. As well, interested investors find Sharjah to be an ideal headquarters when it comes to sending staff abroad for conferences, meetings, and sales. “When we receive an order from Uganda, India, or Angola, we can transport staff to complete the job with great ease and convenience,” Metallic Industries Company's Orabi commented.
Kingston Holdings, the single-largest investor in the SAIFZ, operates three manufacturing units that produce over 1,200 types of products in Sharjah. The company also makes use of Sharjah as a base from which to distribute to over 100 countries. The company currently has offices in Oman, Qatar, Bahrain, Kuwait, and Saudi Arabia, and does business with the larger African economies of Kenya, Nigeria, Tanzania, Uganda, Ethiopia, Egypt, and Ghana. Since 2015, the company's growth has allowed it to expand into the subcontinent to India, Pakistan, Bangladesh, Nepal, Sri Lanka, and the Maldives. Speaking to TBY, Samuel Lalu, Chairman of Kingston Holdings, honed in on the logistics support and advanced technology of the Emirate as some of the keys to industrial success. “The manufacturing base here in Sharjah has also helped to further encourage development and utilize the best technology in cooperation with tech leaders all over the world,” Lalu said, adding, “Our location has afforded us the opportunity to establish joint ventures with companies across the world for a wide variety of products.” The company's facility in Sharjah is 100,000sqm, with over 60,000sqm of built-up area.
Clear and strict laws afford subcontractors the luxury of being able to resolve any potential disputes quickly and fairly. Subcontractors wary of operating in unfamiliar markets are welcomed in Sharjah by two industry sector regulatory bodies, which also function as filters for ensuring that unqualified or unprofessional subcontractors cannot undercut the market. This in turn has made the market more lucrative and increased the quality of end products.

According to local players in the sector, however, there is still work to be done. “Sharjah has many competitive advantages,” Mohammed N. Al Hazzaa, General Director of Emirates Company for Industrial Cities (ECIC), told TBY. “We need to continue to find new ways to attract businesses to come and invest in Sharjah. To do this effectively, the various Sharjah governing bodies… should establish clear guidelines and frameworks that will separate the Emirate from its competitors and encourage sustainable growth.”

Ahmed Ali Nalwala, General Manager of Anchor Allied Factory Ltd., emphasized that the market stability in Sharjah has led to investor confidence, but has also triggered resistance to change—especially in the manufacturing sector. “New policies could be introduced to incentivize more FDI and to further grow the manufacturing base,” he said, noting that a stronger focus on marketing the Emirate to entrepreneurs could help boost the sector further. Nalwala also explained that while it takes three to four years to establish and set up a new manufacturing plant, once in operation, the factories have all performed well. The company, which is present in 47 countries worldwide, benefits from prime access to two coastlines with international links, as well as the “Sharjah provides an environment that is very conducive to manufacturing, and if you are in a technology-based manufacturing company then there is no better place,” he concluded.

KEEP ON GIVING

A large part of Sharjah's industrial activity is concentrated in two free zones, both of which allow for full foreign ownership. SAIFZ and HFZ are not only major sources of business and economic growth, but also huge contributors to the burgeoning job market.

As of 2017, more than 50,000 people work at HFZ, with 50% accommodated on site. HFZ is located adjacent to Hamriyah Port, one of the Emirate's three deepwater ports north of Sharjah City. Over 6,600 companies operate out of HFZ, many of which are hydrocarbons sector-related enterprises. On the industry side, manufacturers and petrochemicals producers can also be found in the free zone. HFZ is subdivided into an SME zone, a micro business zone, and a logistics zone. In addition to taking advantage of HFZ's access to a 14-m deepwater port, companies in the free zone can benefit from warehouses, office units, and factories for rent. Since its opening, HFZ has attracted more than USD3 billion in FDI.

The SAIFZ, on the other hand, is a dynamic business destination established in 1995. Now home to over 6,500 companies from 91 companies,the zone is the second largest in the Emirate, offering access to two of the major seaports in Sharjah.

Looking ahead, industry players are set to continue increasing industrial output, seeking and launching operations in new markets and seizing the latest logistics and technology options. However, with economic trends shifting, sustainable and eco-friendly production is also an area of interest for forward-thinking investors. “In 2016 we started using eco-friendly materials in our supply chain and introducing the specialized, eco-friendly gasket into the market. This has attracted a large volume of business.” Karnam Murthy, Executive Director of InMarco, told TBY. At the same time, Anchor Allied Factory Ltd. is the first company in Sharjah to build a solar-powered industrial plant, due to become operational in 2017.