dubai future economy strategy · contribution to the inflow of foreign investment and growth of...
TRANSCRIPT
Dubai Economy in collaboration with Frost & Sullivan have undertaken detailed studies of key industry and business
segments in Dubai with a focus on trends and opportunities
Dubai Future Economy Strategy Dubai’s Manufacturing Sector, 2017 – Outlook and Trends
Manufacturing sectors – Segments & sub segments
Manufacturing sector indicators
Manufacturing sector Outlook
Appendix
Contents
MANUFACTURING SECTOR IN DUBAI
• In 2017 Dubai manufacturing sector was the fourth top contributing sector to Dubai Economy after Financial services.
• The manufacturing sector will have a significant impact on Dubai’s economy towards 2030, as it is expected to lead to-
– Creating more than 27,000 specialized jobs for the region
– Increase in R&D spend by approximately 70mn AED
– 16bn AED forecasted increase in exports
– 18bn AED GDP growth within industrial sector (currently 41bn AED)
– 160bn AED forecasted increase in Dubai’s total GDP
• It achieved a modest growth rate of 3.9% since 2016 and the contribution remained same since 2016.
• The Dubai Industrial strategy identified 6 strategic sectors as the main drivers of the manufacturing economy including Aerospace, Maritime, Pharmaceuticals & Medical equipment, Aluminum & Fabricated metals, Fast moving consumable goods (FMCG) and machinery & equipment.
25
12
1297
7
6
44
15
Wholesale and retail trade
Transportation and storage
Financial and insuranceactivities
Manufacturing
Real estate activities
Construction
Hospitality and food serviceactivities
Information andcommunication
Professional and technicalactivities
Others
GDP Contribution (%)
• The GDP share of manufacturing sector shrunk from close to 14% during 2014 – when it was the third largest sector to 9% in 2016 shifting to 4th position.
• Between 2010 and 2016 net manufacturing license issued increased at an average of almost 4% per year. By the end of 2016, 3,200 manufacturing licenses had been issued in Dubai registering annual growth rate of 3% from the previous year.
• The shrink in GDP and modest growth rates could be attributed to diversification of economy to promote sectors like Information & communication and other professional activities.
No. of licensees
2,459 2,523 2,6352,803
2,9733,195
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2010 2011 2012 2013 2014 2015 2016
3,200
Manufacturing sector witnessed shrunk in GDP share fromprevious years coupled with marginal growth in licensees issued
• Dubai has 18 industrial zones split between mainland and free zones. Some of the Free trade zones include:
– Dubai Multi Commodities Centre
– Dubai Airport Free Zone Area
– Dubai Cargo Village
– Dubai Cars & Automotive Zone
– Dubai Logistics City
– Dubai Maritime City
– Dubai World Central
– Jebel Ali Free Zone Area
• The real benefits of free trade zones to foreign investors include – Developed infrastructure, Customs free trading zone, Independent free zone authority and “one stop shop” bureaucracy.
– 100% foreign ownership
– 100% repatriation of capital and profits
– 0% corporate, personal tax
– Quick business establishment
– No restrictions on recruiting foreign national labor.
Dubai Multi Commodities CentreDubai Airport Free Zone Area
Dubai is the world’s third largest re-exporter in the Middle East region with Free Trade Zones playing a predominant role
• DMCC has been growing on an average 33% annually. Contributes to nearly 9.6% of Dubai Economy.
• The DMCC Establishment law gives complete autonomy to the Authority to define the laws and regulations governing DMCC. The Authority has complete jurisdiction over all policies and procedures.
• The zone has been developed in 200 hectares of business and residential community Flexible office solutions various trading platforms including Dubai Gold and Commodities Exchange, Dubai Diamond Exchange, DMCC Pearl Exchange, DMCC Tea Centre and DMCC Trade Flow.
• The zone offers complete exemption from customs and all commercial levies/taxes and No foreign exchange controls.
• More over complete exemption from all taxes; Guaranteed 50 year tax holiday on personal and income taxes is provided.
• Other incentives include 100% foreign ownership, 100% repatriation of capital and profits and Long term renewable leases for land and low land rates.
• In terms of population, DMCC hosts 14,100 members in DMCC and 95% of member companies new to Dubai. 170 new companies add every year with 900 different business activities.
• Currently the zone hosts 92,500 employees with 75% are SME companies
Focus sectors in DMCCFor the Gold and precious stones commodity trading markets - Preferential freight rates; high tech secure vault facilities, assaying facilities, purpose built jewelry and Gemplex to facilitate manufacturing and a commercial tower to house trading, wholesale and banking operations
Impact on economy & FDI growth Dubai’s gold business has grown from $ 6 million in 2002 to $75 billion. Diamond business has grown from $ 3million in 2002 to $ 40 billion.
DMCC free trade zone in Dubai is the worlds biggest FTZ and Contributes to nearly 9.6% of Dubai Economy
Jebel Ali Free Zone (JAFZA)
• The development of free economic zones has spurred investment in Dubai’s manufacturing sector.
• Jebel Ali Free Zone (JAFZA) is the flagship free zone operation of Economic Zones World (EZW).
• JAFZA is currently home to over 7,500 companies with 17% of these companies operating in IT and electronics, 15% in construction material, 12% in chemical and petroleum products, 12% in machinery and equipment, 10% in food and healthcare, 9% in automotive and 5% in the logistics sector.
• Jafza estimated that these companies together have generated trade worth more than AED 330bn in 2014, providing more than 200,000 jobs in Dubai and the UAE.
Dubai International Airport Free zone
• Dubai International Airport Free Zone (DAFZA) contributed AED 109bn to Dubai’s non-oil foreign trade in 2014.
• It offers the same incentives package as JAFZA and other zones, while also being located next to Dubai airport, a big logistical advantage for manufacturers there.
• While certain cargo services have moved to Al Maktoum International Airport at Dubai World Central (DWC), DAFZA is still very much a major hub for airborne imports and exports.
JAFZA and DAFZA are the other key industrial zones in Dubai’s manufacturing zone
• The Free Trade Zone (FTZ) trade increased at a growth rate of 8% during 2015-16 and the custom ware house trade increased at growth rate of 4%.
• It is considered that the environment of incentives offered to foreign investors coupled with local eco system has triggered operations in the FTZs.
• FTZs like DAFZA have ear marked space for light industrial units to promote manufacturing.
• Strategic locations, live and work environment, Smart and flexible solutions for Governance and operations and empowerment as one stop authority are contributing to the success of manufacturing sector in FTZs in Dubai.
• DAFZA currently hosts some of the biggest and most prominent aviation companies– including Airbus, Boeing, General Electric, Rolls-Royce, and Bombardier, among others. In light of the development of the industry in the region
Business friednly incentives and World class infrastrcture in Free trade zones is attarcting foreign investmetnts manufactruing sector
Value of Trade in AED
1,26,588
32,85242,387
62,088
2,90944,191
ImportsExportsRe-exportsFTZ ImportsFTZ ExportsFTZ Re-exports
1,17,536 1,09,188
7,246 6,9690
20,00040,00060,00080,000
1,00,0001,20,0001,40,000
2016 2015Total Free Zone Trade Total Customs Warehouse Trade
MANUFACTURING SECTORS -
SEGMENTS & SUB SEGMENTS
Availability of high class infrastructure has driven businesses to set-up manufacturing activities in Dubai – (1/3)
• R&D
• Production
• Quality Assurance
• Chemicals & Chemical Products
• Glass and Plastic Products
• Special Chemical Products
• Petrochemical Products
• Perfume Manufacturers
• Cosmetics
• Boats
• Ships
• Floating Structures
• Shipyard
• Dry Docks
Pharmaceuticals
Chemicals & Plastics
Maritime
Perfumes & Cosmetics
Availability of high class infrastructure has driven businesses to set-up manufacturing activities in Dubai – (2/3)
• Electrical Product Manufacturers
• Electrical Machinery & Equipment Suppliers
• Electronic Equipment Manufacturers
• Retailers
• Apparel, Footwear Suppliers and Manufacturers
• Sport Accessories Manufacturers, Suppliers and Distributors
• Machines, Equipment Manufacturers
• Apparel Manufacturing Companies
• Garment and Apparel Export Agencies
• Cast Iron Suppliers
• Iron Products Manufacturers
• Aluminium and other Metal Export Agenicies
• Steel Products Suppliers and Manufacturers
Electrical Manufacturing
Sports Goods & Toys Manufacturing
Metals Manufacturing
Textile Manufacturing
Availability of high class infrastructure has driven businesses to set-up manufacturing activities in Dubai – (3/3)
• Construction Industry
• Domestic Sector- Households
• Commercial Sector- Schools, Offices &Hospitals
• Hotels & Restaurants
• Defence Equipment Manufacturers & Suppliers
• Military Infrastructure Service providers
• Arms Manufacturers & Suppliers
• Aircraft and other product Manufacturers
• Farms/ Growers
• Food Processors
• Intermediaries
• Sugar
• Retailers+ H8
• Education Sector
• Local Manufacturers & Suppliers
• Hospitality & Event Management
• Product Manufacturers
Wood and Furniture Manufacturing
Aerospace & Defence
Paper & Paper Products Manufacturing
Food & Beverage
Electronics market in Dubai is expected to grow at a rate of 4.7% and may go above AED 11 Billion by 2020
• During 2014, Dubai imported electrical machinery and equipment worth AED 252 Billion, while the exports and re-exports were worth AED 164.4 Billion.
• Since the electrical manufacturing is highly dependent on imports, the Government of Dubai is attempting to develop the various strategies and policies in order to contribute to the growth of the manufacturing sector.
• The electronics market in Dubai is expected to grow at a rate of 4.7% for the next four years and may go above AED 11 Billion by 2020
• The UAE is the world’s fourth largest aluminum producer with exports worth AED 14.31 Billion. The total investment in the Aluminum industry in the Gulf region is AED 81.84 Billion while the investments in the UAE alone is AED 39.27 Billion.
• During 2014, the UAE produced around 2.3 Million tonnes, of which only 300,000 tonnes are used in the domestic market while the rest are exported to around 35 countries.
Electrical manufacturing
Electronic Equipment Manufacturers
Electrical Machinery & Equipment Suppliers
Electrical Product Manufacturers
Metals Manufacturing
Steel Products Suppliers & Manufacturers
Iron Products Manufacturers
Iron Products Manufacturers
Source: Frost & Sullivan
Dubai is the fourth largest centre for apparel trading with a market size of AED 47 Bn
During 2015, consumers in the UAE spent AED 3.19 Billion on toys, games and viseo games. The UAE has the largest per capita spending on toys in the world and this is mainly due to the growing population, high disposable income and growth in tourism. The toys manufacturers are set to get a boost from the Playworld and Paperworld Middle East 2017 trade show in Dubai. Apparel and Footwear market in the UAE is worth AED 47 Billion.
• Dubai is a growing textile hub and is one of the major textile markets in the world. There are more than 200 apparel manufacturing companies in Dubai.
• The UAE accounts for 5.5 % of the total world’s annual textile and clothing sales and is the fourth largest centre for apparel trading and the apparel and footwear market in the Dubai is worth AED 47 Billion.
• One of the key features of the textile industry is the usage of high level of automation. Since labour is a major issue and highly expensive in the country, the UAE gradually started to shift the industry from depending on manual output to advanced textile machinery.
Sports Goods & Toys Manufacturing
Sport Accessories, Manufacturers,
Suppliers & DistributorsRetailers
Apparel, Footwear Suppliers and Manufacturers
Textile Manufacturing
Garment & Apparel Export Agencies
Machines, Equipment Manufacturers
Apparel Manufacturing
Companies
Source: Frost & Sullivan
The growth of the aviation sector in DAFZA is a key indication of its contribution to the inflow of foreign investment and growth of Dubai’s GDP.
DAFZA had participated in the Dubai Airshow 2017 aimed to support economic diversification flow of Foreign Direct Investment (FDI) to the UAE and Dubai into the aviation, aerospace and electronics industries. The growth of the aviation sector in DAFZA is a key indication of its contribution to the inflow of foreign investment and growth of Dubai’s GDP.
The aviation industry accounts for 8 per cent of the companies operating in DAFZA, occupies 10 per cent of the space and 17 per cent of the employees in the Freezone.
DAFZA also pays special attention to the aviation sector in terms of development programs and events, a recent one was the ‘Boarding to Success’ forum, which brought together several aviation companies in DAFZA and representatives of government agencies in the aviation sector to showcase the latest developments and challenges facing the global aviation industry and how to improve the investor experience in Dubai.
DAFZA has also organized a series of initiatives and workshops on the future of the aviation sector, which are based on cooperation between specialists and leaders of this sector, most notably a workshop on innovation and business development for small and medium enterprises that was held in collaboration with Booz Allen Hamilton.
Aerospace & Defence Manufacturing
Arms Manufacturers & Suppliers
Defence Equipment Manufacturers &
Suppliers
Aircraft and Other Product Manufacturers
Source: Frost & Sullivan
Dubai hosts high value industries in the value chain of Pharma, F&B, Chemicals and maritime manufacturing
The maritime industry in Dubai contributed AED 26.9 Billion to the Dubai economy, which was around 7% of Dubai’s GDP. Dubai has seen a tremendous growth in the water transport of both passengers and cargo, which has led to increase in demand for more production, service or maintenance of boats, ships and other maritime structures such as ship yard and dry docks.
UAE manufactured chemical products worth AED 40 Billion, including plastics and fertilizers, while the chemical and petrochemical industry in the UAE contributed 16% to the manufacturing sector in the GDP
Setting up of Du Biotechnology and Research Park Free Zone (DuBiotech) in 2005 also encouraged research and investment in the pharma sector.
Maritime Manufacturing Boats & shopsFloating
Structures Shipyard & dock yard
Chemicals & Plastics
Manufacturing
Petrochemical Products
Chemicals & Chemical products
Special Chemical Products
Pharmaceutical Manufacturing
Quality AssuranceR&D Production
Source: Frost & Sullivan
MANUFACTURING SECTOR
INDICATORS
The low share of exports in overall trade indicates high domestic consumption of the manufactured goods.
• During 2016, the total imports stood at AED1,276 Mn with AED 803 Mn imports followed by AED 330 Mn exports.
• Close to 63% of the trade is imports followed by 26% of re exports and 11% of exports.
• China & India are the largest trade partners followed by USA, Germany and other GCC countries.
• China-Dubai trade constitutes 37% of the emirate’s overall foreign trade. India came in second with 21% of Dubai’s total foreign trade, with AED 94bn, followed by the US (AED 86bn), Saudi Arabia (AED 52bn) and Germany (AED 50bn).
• Jewellery and phones are the predominantly traded commodities followed by Gold & diamonds.
• From the share of exports it is evident that the goods manufactured in Dubai are primarily used for domestic consumption.
Commodity wise trade Country wise trade
23%
16%
13%
30%
8%
5%5%
Phones Gold
Diamonds Jewelry
Automobiles Petroleum oils
Computers machine
Source: Trade statistics, Dubai customs
37%
21%
19%
12%
11%
China India USA Saudi Arabia Germany
Imports of electrical machinery and equipment constitute significant share of Dubai’s manufactured goods imports.
• Predominant share of imports in a few sub-sectors indicates the potential for the diversification within the manufacturing sector.
• By 2015, imports of electrical machinery and equipment along with pearls, precious stones and metals accounted for 70.8% of Dubai’s manufactured goods imports.
Value of Imports in AED
Source: Dubai statistics center, 2014
252
185.8
47.6 43.525 24.2 20.7
5.7 13.9
0
50
100
150
200
250
300
Electricalmachinery &equipment
Pearls, preciousstones & metals
Chemicals &products
Base metals &products
Minerals &products
Processed food& beverages
Plastics &rubber
Paper & printing Othermanufactured
164.4
117.1
32.820.6 20 18.3 13.1
4.6 5.40
20
40
60
80
100
120
140
160
180
Electricalmachinery &equipment
Pearls, preciousstones & metals
Base metals &products
Chemicals &products
Processed food& beverages
Minerals &products
Plastics &rubber
Paper & printing Othermanufactured
Even the exports and re exports are dominated by electric machinery and equipment followed by pearls and metals
• Exports and re-exports are dominated by electrical machinery and equipment along with pearls, precious stones and metals, accounted for 71% of Dubai’s manufactured exports and re-exports.
• Despite the overall importance of manufacturing in Dubai’s non-oil trade, the surprising degree of concentration of trade activity within a few key sub-sectors highlights the potential for diversification of Dubai’s manufacturing trade.
Value of Exports in AED
Source: Dubai statistics center, 2014
The Future of Manufacturing sector in Dubai is driven mainly by the Dubai Industrial Strategy and Expo 2020
• The Dubai Industrial Strategy aims to develop Dubai as a global platform and destination choice for international companies seeking growth and sustainability.
• The focus is to develop Aerospace, Maritime, Pharmaceuticals & Medical Equipment, Food &Beverage, Aluminum & Fabricated Metals and Machinery and Equipment sectors in order to attract companies from around the world for investments in the Emirate,
• The strategy is expected to boost the economy and creating job opportunities. The selection of the sectors will directly support Dubai’s vision to become global capital of the Islamic economy.
• The planned EXPO is projected to create about 270,000 job opportunities over the next few years in Dubai, thereby creating a demand for skilled workers for different sectors in the economy. It is expected to generate close to AED 147 Billion as FDI.
• The manufacturing sector is set to get a boost directly and indirectly from the planned projects and expected future demand.
MANUFACTURING SECTOR OUTLOOK
Glossary and Definitions
APPENDIX
Abbreviation Expansion
AED United Arab Emirates Dirham
DAFZA Dubai Airport Free Trade Zone Authority
DED Dubai Economic Department
DMCC Dubai Metals and Commodities Centre
FTZ Free Trade Zone
FDI Foreign direct Investment
F&B Food and Beverage
FMCG Fast moving consumable goods
JAFZA Jebel Ali Free Zone
R&D Research and Development
UAE United Arab Emirates
UK United Kingdom
Definition
Middle East
Bahrain, Iran, Iraq, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syrian Arab Republic, the United Arab Emirates and Yemen
United Arab Emirates
Emirate of Abu Dhabi, Emirate of Ajman, Emirate of Dubai, Emirate of Fujairah, Emirate of Ras al-Khaimah, Emirate of Sharjah, and Emirate of Umm al-Quwain
Free trade zone
Free-trade zone, also called foreign-trade zone, formerly free port, an area within which goods may be landed, handled, manufactured or reconfigured, and reexported without the intervention of the customs authorities.
FDI
Foreign direct investment (FDI) is an investment made by a company or individual in one country in business interests in another country, in the form of either establishing business operations or acquiring business assets in the other country, such as ownership or controlling interest in a foreign company.
The Government has planned sizeable investmetns in development of Investment enabler zones targeting various segments
• The Dubai chamber has announced the Dubai Food City project which is expected to be worth AED 734Million.
• Dubai Food City is a dedicated free zone for Food and Beverage manufacturing and will be completed in four stages.
• The Food City will have 5 Million square-foot self-contained free zone developments for food merchants and can hold 400-500 food companies.
• Recently, there has been a Halal cluster set up in the Dubai Industrial City in collaboration with Dubai municipality and Emirates Authority of Standardization and Metrology.
• The Halal cluster has about 15 companies and is expected to contribute to the global Halal food market.
Dubai Food city
• The Free Zone comprises of one of world’s largest sports complexes designed exclusively for sporting events. It’s built around five major sports venues and has number of sports academies, 50 million square feet of sport-integrated, master-planned development and a seating capacity of 25,000 at Dubai International Stadium, a venue ideal for major events.
Dubai Sports City
• Print Media is expected to grow in the future with the launch of International Media Production Zone at an area of 35 Million square feet. It is the first dedicated free zone created in the region for media-related production activities. The IMPZ is expected to become a major outsourcing centre for printing production and solutions across the world.
International Media Production Zone (IMPZ)
Strategic regional investments in the UAE are expected to boost the feed stock availability and supply chain
• It is a set of key themes showing the vision for socio-economic development of the country. According to the strategy, the UAE aims to become one of the best countries in the world by 2021, when the country completes 50 years of existence.
• The aim is to create a sustainable future for generations to come by positioning the country as a leading manufacturing hub through investment in global value chains.
UAE Vision 2021
• The Government of Dubai is establishing a dedicated free zone in Dubai for the textile industry. The free zone will be at an area of 460,000 square meters and the project cost is estimated to be around AED 220 Million.
• The free zone is expected to promote and facilitate growth of the textile industry in Dubai and can accommodate 295 showrooms once completed.
Dubai Textile Village
• The Government of the UAE has merged its two major state Aluminium companies in Abu Dhabi and Dubai to create the world’s fifth largest aluminium company, which is expected to be an ecosystem for development of metals industry at an estimated value of AED 55 Billion in the next 3 to 5 years.
Aluminium Industry