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Eye of Riyadh
Eye of Riyadh
Business & Money | Sunday 4 April, 2021 10:58 am |
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The UAE’s special industrial zones vital incubators for innovation

 The UAE is headed towards an exciting new phase of sustainable economic growth – one that is driven by an enhanced, technologically advanced and resilient industrial base.

 

This is precisely the vision behind the recently launched comprehensive 10-year Industrial Strategy – known as Operation 300bn that aims to transform the industry into a vital enabler and contributor to national GDP.

 

Implemented by the Ministry of Industry and Advanced Technology in collaboration with more than 200 industrial stakeholders, the strategy seeks to build on the robust industrial foundations set in place over the last two decades. By identifying the obstacles and opportunities to expand and accelerate industrial growth, Operation 300bn lays out an ambitious-yet-practical set of objectives and initiatives to more than double the industrial sector’s GDP contribution to AED300 billion by 2031 and generate new levels of in-country value.

 

As the UAE gets set to ramp up its industry’s global competitiveness, the opportunities for innovators and developers from around the world to benefit from its vibrant business climate are rife, thanks largely to the multitude of incentives on offer.

 

Whether it’s setting up an expansive manufacturing operation or establishing an ultra-connected logistics and distribution services, the 28 business and logistical services zones across the emirates offer an enabling business environment with access to worldwide markets, vast energy supplies at competitive tariffs and raw materials.

 

From the Jebel Ali Free Zone (Jafza) in Dubai to the Khalifa Industrial City (Kizad) in Abu Dhabi; from the Hamriyah Free Zone in Sharjah to the free zones in Ajman, Ras Al Khaimah and Fujairah, each offers a strategic location to complement all business needs. 

 

Location is everything for companies that depend on globally connected trade routes; access to the consumer is king. This is central to the success of the UAE’s industrial free zones. The UAE has access to more than 100 countries – who have each signed free trade and bilateral agreements. It also has access to more than 22 custom-exempt countries. 

 

A pivotal role for the free zones and special economic zones in the Emirates

 

Thanks to the favorable prerequisites the UAE’s free zones offer, they are naturally a major contributor to national economic activity. According to the UAE’s Ministry of Economy’s figures, trade of goods volumes coming out of the UAE’s free zones increased to AED658.9 billion during 2019, an 11 percent increase from AED592.5 billion in 2018.

 

They also contribute greatly to economic diversification. Together, their economic output accounted for 38 percent of the country’s total non-oil trade during 2019, which amounted to AED1.7 trillion. 

 

Furthermore, the total value of free zone imports amounted to AED340.6 billion in 2019. As for exports, they increased to AED41.1 billion, and re-exports amounted to AED277.1 billion.

 

Currently, Chinese companies comprise the largest number of trading partners in the UAE free zones. Chinese imports constitute 23.9 percent of total imports coming into these zones, followed by India with 15.5 percent, the US with 6.9 percent, while Vietnam, Japan, Bahrain, Saudi Arabia, Germany, UK and South Korea all imports goods into the UAE’s free zones.

 

The COVID-19 pandemic demonstrated the importance of an integrated manufacturing environment that can ensure industrial security in times of crisis. Global supply chain disruptions led industrial companies to rethink the importance of having their partners and suppliers within quick reach to prevent disruptions to production. 

 

As such, industrial integration proved its value during the pandemic, demonstrating that manufacturers located in integrated ecosystems, such as specialized industrial zones, have been much more resilient when faced by supply chain shocks.

 

Despite the challenging times, the UAE ranked high on the list of the world's safest countries during COVID-19, thanks to its ability to address the challenges the virus imposed in the industrial and commerce sectors globally.

 

The strong prerequisites, combined with the country’s high agility to adapt to challenging times, fortifies the indispensable role of the UAE’s free zones and special industrial zones not just for the nation, but the global markets that depend on their productivity and performance. It’s a role that Operation 300bn will only further enhance as the nation drives towards becoming a regional and international industrial hub.

 

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