Manufacturing accounts for 9.7% of the UAE's GDP (Statista), making it one of the largest economic sectors after oil and gas. The oil and gas sector has long been the foundation of the country's economy, however, recent government initiatives to diversify the economy have seen concerted efforts to expand alternative industries, with a significant focus on manufacturing. This domestic desire for growth in manufacturing, coupled with global demand, makes the UAE's manufacturing industry an attractive investment opportunity. Here, we discuss why the UAE is a potentially attractive option for investors and examine which manufacturing activities in the UAE might present the best opportunities. Table of contents The current state of manufacturing in the United Arab Emirates Scope for manufacturing activities in the UAE The top manufacturing activities to invest in, in the UAE The current state of manufacturing in the United Arab Emirates The manufacturing industry in the UAE is set to grow rapidly, fueled by a combination of government initiatives and global circumstances. According to the UAE government’s website, the manufacturing sector currently contributes USD 36.2 billion to the GDP, intending to hit USD 81.7 billion by 2031. UAE manufacturing companies have access to a solid economic base and a large market with diverse consumers that fuel the manufacturing industry. Other advantages include its proximity to important markets such as Asia, the Middle East and Africa and its well-developed infrastructure. The current state and future predicted growth of manufacturing activities in the UAE makes it an attractive investment opportunity for international investors, with many different opportunities for setting up a business in the UAE. Established infrastructure The UAE's well-established infrastructure for producing, transporting, storing and shipping goods is a significant draw for SME manufacturers and investors. As such, the region's network of roads, facilities, companies, skilled personnel, and regulations means new manufacturing companies can rapidly establish and grow their business. Proximity to important markets Another favourable draw for investors considering the UAE manufacturing sector is its proximity to important markets such as India, the Middle East and Africa. This proximity allows manufacturers to ship goods to market quickly and efficiently while benefitting from the lower production costs of setting up manufacturing operations in the UAE versus other regional locations. Moreover, as demand continues to grow for electronics and other manufactured goods in these key regions, the UAE's robust logistics infrastructure and strategic location will continue to make it a prime location for foreign investors looking for potential growth opportunities. Global sentiment and demand The fragile nature of the global supply chain, as exposed by the pandemic, is encouraging manufacturers to move as close as possible to the "point of demand". Lockdowns and travel restrictions during the pandemic caused extensive delays in the international delivery of many goods and products – impacting thousands of businesses to the extent of bankruptcy. In the post-COVID marketplace, manufacturers are now mitigating their exposure to future supply chain issues by narrowing their supply chain. This means the UAE's central location to densely populated areas of consumers is more beneficial for investors, and more manufacturers are likely to move into the area to reduce their exposure to long-distance shipping and supply chain issues. These trends drive growth in foreign direct investment (FDI) inflows into the UAE manufacturing sector and create opportunities for international investors to consider the region as a location for their manufacturing and export operations. Scope for manufacturing activities in the UAE Compounding the UAE's established logistical infrastructure and ideal location is the region's governmental desire to diversify the economy's income sources. Some ongoing projects are already showing results progress with projects related to the government strategy, including: The construction of an artificial intelligence hub in Abu Dhabi The launch of the Dubai Industrial Strategy The Dubai Future Accelerators programme aimed at accelerating technology adoption across the emirate Furthermore, the Global Manufacturing and Industrialisation Summit hosted by the Ministry of Economy in April 2022 highlighted the importance of developing the country's manufacturing sector to boost local job creation and strengthen the country against global volatility. A major attraction for investors prospecting in the UAE's manufacturing sector is the region's governmentally-backed "Operation 300bn". Operation 300bn is the cornerstone of the region's plan to increase industrial manufacturing’s contribution to the GDP to 25% by 2031, raising it from AED 133 billion (USD 36.2 billion) to AED 300 billion (USD 81.7 billion). As part of the initiative, the government has allocated more than AED 100 million to support SMEs within the UAE in the manufacturing and retail sectors. The government is also offering incentives to investors looking to set up manufacturing facilities in the country through initiatives such as "Made in UAE". Moving forward, the government will continue to support existing industries and attract foreign investment by offering incentives through policies such as the Industry Excellence Programme and the Smart Factory Initiative. Additionally, while these initiatives are already underway, plans for additional enterprises will likely follow in the future in order to further support the growth of manufacturing in the country. Top manufacturing activities to invest in Ras Al Khaimah, UAE With the UAE's manufacturing industry set to double over the next eight years, investors interested in backing a manufacturing company in the Middle East should carefully consider the potential returns available with individual activities and the relative risk involved. Potential manufacturing activities to consider include: Aluminum The UAE is home to some of the world's largest aluminium smelters and is a major exporter of aluminium products. With the forecasted growth in construction and consumer goods in the region, aluminium will likely be in high demand for packaging and materials. Construction materials The UAE's construction industry is booming, with tourism and residential projects, creating a high demand for construction materials such as cement, steel, glass, building blocks, etc. Food and beverage The UAE is home to a growing food and beverage sector with various international products, including processed foods, confectionery, and soft drinks. Chemicals The UAE is a major producer of petrochemicals and has a rapidly growing speciality chemicals sector. Textile and apparel The region is investing in the textile and apparel industry to diversify its income stream. Thus, raw textiles and products are a lucrative manufacturing investment opportunity. Automotive The country is investing in the automotive sector and has attracted several car manufacturers to set up their manufacturing facilities in the country. Renewable Energy UAE is investing in the renewable energy sector and has set a target of producing 7% of its energy from renewables by 2020. The business licenses for all of the above-listed manufacturing businesses are issued by Ras Al Khaimah Economic Zone (RAKEZ) –home to thousands of manufacturing companies, and one of the largest and fastest-growing economic zones in the region attracting investment in Ras Al Khaimah. Some pertinent considerations for investors while choosing which activity to invest in include: The region's rapidly growing real estate market. New residential and commercial megaprojects throughout the UAE are creating a high demand for construction materials. Projects such as Reem Hills and Falcon Island are stimulating the local market for locally manufactured textile and ceramic products, construction materials, metal and metal components, plastic and polymers, and electronic equipment and appliances. There is increased foreign interest in healthcare equipment manufactured in reliable areas, particularly the UAE. Investors should pay close attention to which facilities and companies garner foreign investment and media attention, as this could potentially indicate sentiment towards various manufacturing activities in the UAE. If you or someone you know wants to set up a manufacturing business or invest in UAE manufacturing activities, contact RAKEZ now for a free consultation. Call +971 7 204 1111 or send an email to info@rakez.com.
Manufacturing accounts for 9.7% of the UAE's GDP (Statista), making it one of the largest economic sectors after oil and gas. The oil and gas sector has long been the foundation of the country's economy, however, recent government initiatives to diversify the economy have seen concerted efforts to expand alternative industries, with a significant focus on manufacturing.
This domestic desire for growth in manufacturing, coupled with global demand, makes the UAE's manufacturing industry an attractive investment opportunity. Here, we discuss why the UAE is a potentially attractive option for investors and examine which manufacturing activities in the UAE might present the best opportunities.
The manufacturing industry in the UAE is set to grow rapidly, fueled by a combination of government initiatives and global circumstances. According to the UAE government’s website, the manufacturing sector currently contributes USD 36.2 billion to the GDP, intending to hit USD 81.7 billion by 2031.
UAE manufacturing companies have access to a solid economic base and a large market with diverse consumers that fuel the manufacturing industry. Other advantages include its proximity to important markets such as Asia, the Middle East and Africa and its well-developed infrastructure.
The current state and future predicted growth of manufacturing activities in the UAE makes it an attractive investment opportunity for international investors, with many different opportunities for setting up a business in the UAE.
The UAE's well-established infrastructure for producing, transporting, storing and shipping goods is a significant draw for SME manufacturers and investors. As such, the region's network of roads, facilities, companies, skilled personnel, and regulations means new manufacturing companies can rapidly establish and grow their business.
Another favourable draw for investors considering the UAE manufacturing sector is its proximity to important markets such as India, the Middle East and Africa. This proximity allows manufacturers to ship goods to market quickly and efficiently while benefitting from the lower production costs of setting up manufacturing operations in the UAE versus other regional locations.
Moreover, as demand continues to grow for electronics and other manufactured goods in these key regions, the UAE's robust logistics infrastructure and strategic location will continue to make it a prime location for foreign investors looking for potential growth opportunities.
The fragile nature of the global supply chain, as exposed by the pandemic, is encouraging manufacturers to move as close as possible to the "point of demand". Lockdowns and travel restrictions during the pandemic caused extensive delays in the international delivery of many goods and products – impacting thousands of businesses to the extent of bankruptcy. In the post-COVID marketplace, manufacturers are now mitigating their exposure to future supply chain issues by narrowing their supply chain. This means the UAE's central location to densely populated areas of consumers is more beneficial for investors, and more manufacturers are likely to move into the area to reduce their exposure to long-distance shipping and supply chain issues.
These trends drive growth in foreign direct investment (FDI) inflows into the UAE manufacturing sector and create opportunities for international investors to consider the region as a location for their manufacturing and export operations.
Compounding the UAE's established logistical infrastructure and ideal location is the region's governmental desire to diversify the economy's income sources. Some ongoing projects are already showing results progress with projects related to the government strategy, including:
Furthermore, the Global Manufacturing and Industrialisation Summit hosted by the Ministry of Economy in April 2022 highlighted the importance of developing the country's manufacturing sector to boost local job creation and strengthen the country against global volatility.
A major attraction for investors prospecting in the UAE's manufacturing sector is the region's governmentally-backed "Operation 300bn". Operation 300bn is the cornerstone of the region's plan to increase industrial manufacturing’s contribution to the GDP to 25% by 2031, raising it from AED 133 billion (USD 36.2 billion) to AED 300 billion (USD 81.7 billion). As part of the initiative, the government has allocated more than AED 100 million to support SMEs within the UAE in the manufacturing and retail sectors. The government is also offering incentives to investors looking to set up manufacturing facilities in the country through initiatives such as "Made in UAE".
Moving forward, the government will continue to support existing industries and attract foreign investment by offering incentives through policies such as the Industry Excellence Programme and the Smart Factory Initiative. Additionally, while these initiatives are already underway, plans for additional enterprises will likely follow in the future in order to further support the growth of manufacturing in the country.
With the UAE's manufacturing industry set to double over the next eight years, investors interested in backing a manufacturing company in the Middle East should carefully consider the potential returns available with individual activities and the relative risk involved.
Potential manufacturing activities to consider include:
The UAE is home to some of the world's largest aluminium smelters and is a major exporter of aluminium products. With the forecasted growth in construction and consumer goods in the region, aluminium will likely be in high demand for packaging and materials.
The UAE's construction industry is booming, with tourism and residential projects, creating a high demand for construction materials such as cement, steel, glass, building blocks, etc.
The UAE is home to a growing food and beverage sector with various international products, including processed foods, confectionery, and soft drinks.
The UAE is a major producer of petrochemicals and has a rapidly growing speciality chemicals sector.
The region is investing in the textile and apparel industry to diversify its income stream. Thus, raw textiles and products are a lucrative manufacturing investment opportunity.
The country is investing in the automotive sector and has attracted several car manufacturers to set up their manufacturing facilities in the country.
UAE is investing in the renewable energy sector and has set a target of producing 7% of its energy from renewables by 2020.
The business licenses for all of the above-listed manufacturing businesses are issued by Ras Al Khaimah Economic Zone (RAKEZ) –home to thousands of manufacturing companies, and one of the largest and fastest-growing economic zones in the region attracting investment in Ras Al Khaimah.
Some pertinent considerations for investors while choosing which activity to invest in include:
If you or someone you know wants to set up a manufacturing business or invest in UAE manufacturing activities, contact RAKEZ now for a free consultation. Call +971 7 204 1111 or send an email to info@rakez.com.
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