UAE’s industrial zones spur innovation, growth

As the UAE gets set to ramp up its industry’s global competitiveness with its newly launched 10-year Industrial Strategy – known as Operation 300bn, the opportunities for 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.

Jebel Ali Free Zone

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 per cent increase from AED592.5 billion in 2018.

They also contribute greatly to economic diversification. Together, their economic output accounted for 38 per cent 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 per cent of total imports coming into these zones, followed by India with 15.5 per cent, the US with 6.9 per cent, 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. 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 300 billion will only further enhance as the nation drives towards becoming a regional and international industrial hub.

Leading the region

The UAE leads the Mena region with 47 industrial parks, followed by Jordan with 16, Saudi Arabia and Egypt with 10 each, Oman with five, Kuwait with four and Bahrain three, according to a whitepaper released by Abu Dhabi Ports.

The ‘Key Considerations in Industrial Park Selection – Bringing Predictability to Long-Term, Capital-Intensive Investment’, whitepaper addresses key factors for local and global manufacturers preparing to set up in any one of the close to 100 industrial parks active across the Mena region.

Abdullah Al Hameli, Head of the Industrial Cities and Free Zone cluster, Abu Dhabi Ports said:

“Understanding that policies need to be set in place with the acceptance that they are to continuously evolve is important. It is a critical viewpoint that has enabled the UAE to find success with the development of Economic Zones. This has been particularly the case with Abu Dhabi within the industrial parks sector, where the emirate has established a robust economic climate with one major objective — achieve competitiveness for investors and businesses to operate by offering value-driven products.”

Industry experts interviewed for the whitepaper said that the location of an industrial park is of prime consideration for most businesses. It not only determines access to markets but also factors in whether other enablers – human resources, raw materials, vendor ecosystem, and social infrastructure – are all readily available and within close geographic proximity.

Multimodal connectivity and logistics capability are also crucial considerations for companies in their selection of an industrial park. For example, Abu Dhabi’s industrial zones, which are strategically located with access to over 100 worldwide markets through land, air, and sea, provide a perfect scenario for most companies. Furthermore, the whitepaper examined other key considerations taken by companies, such as the ecosystem, incentives, and financing factors, against the backdrop of the current global economic climate. According to the whitepaper, by 2030, it will be difficult to imagine that there is a trade, logistics, or manufacturing-related company anywhere in the world that does not have at least part of its global operation based in an industrial park.

Provided due consideration is given to timeline, market, connectivity, eco-system, incentives, finance, value-chains, 4IR, and sustainability, organizations can be assured to benefit from today’s ever-improving industrial park model.

Since the mid-1990s, the number of industrial parks around the world increased from 800 to over 6,000. Over 70 million jobs have been created globally as a result, and industrial parks have become central to the economic-development agendas of many countries.

Abu Dhabi Ports, part of ADQ, one of the region’s largest holding companies with a broad portfolio of major enterprises spanning key sectors of Abu Dhabi’s diversified economy, aims to increase the competitiveness of Abu Dhabi’s economic zones and make them more attractive destinations for investment in the region.

Abu Dhabi Ports’ Industrial Cities and Free Zone cluster oversees the operations of Khalifa Industrial Zone Abu Dhabi (Kizad), the largest integrated trade, logistics, and industrial hub in the region, and ZonesCorp, the largest operator of purpose-built economic zones and workers residential cities in the UAE. Combined, Kizad and ZonesCorp cover a land area of 5.8 billion sq ft (555 sq km), equal to the size of the city of Manchester, UK, and are currently hosting more than 1,400 global, regional, and local organizations.

4.4pc rise in free zone firms

Earlier this year, the UAE reported a 4.4 per cent year-on-year rise in the total number of companies operating across its 44 free trade zones.

Around 60,600 were registered in the country’s free-zones as of mid-February 2021, the UAE’s National Economic Register (NER) revealed. It said that the free zones account for 8 per cent of the total number of companies registered in the UAE, most of which are based in Abu Dhabi and Dubai.