The 2016 Hannover Messe International Industrial Fair in Hannover, Germany kicked off today (Monday, April 25, 2016) with a big participation of the United Arab Emirates which was represented by a large pavilion led by Abu Dhabi Department of Economic Development in coordination with the Ministry of Economy. The pavilion covers an area of over 900 square meters and hosts the presence of 10 government agencies and 30 factories.
After the inauguration of the UAE Pavilion, H.E. Sultan Bin Saeed Al Mansouri, UAE Minister of Economy, said that the UAE's industrial sector has been positioning itself as one of the main pillars of the country's national economy and one of the vital tools needed in supporting the policy of diversifying income sources, noting that the country will rely heavily on the industrial sector in the post-oil period.
He pointed out that the local industrial sector is famous for its diversified products, which includes volume- and capital- intensive light and heavy, industries such as aluminum, iron, aircraft components, and other important sectors where the UAE has made great progress. Such industries have also helped boost the competitiveness of the national economy and made it more durable.
H.E. Al Mansouri added that the formal figures indicate the rapid development of the industrial sector and also reflect the great interest to further strengthen it. The total volume of investments in various industrial fields in the UAE reached AED 127.609 billion in 2015 as compared to AED121.189 billion in 2014 and AED125.609 in 2013 and AED 74.464 billion in 2008.
Following the inauguration of the UAE pavilion at Hannover Messe which is running from April 25 to April 29, 2016, H.E. Al Mansouri emphasized that the Ministry's figures and statistics demonstrate the continued success of the industrial sector, with investment volumes recorded for the UAE's industrial plants exceeding AED 127 billion in 2015 as compared to AED 125 billion in 2014.
He also stated that the value of foreign investments in the UAE's industrial sector doubled over the last eight years, rising from AED 74.464 billion in 2008 to more than AED127 billion by the end of 2015. The food and beverage industry accounts for 31 per cent of total foreign investments, followed by basic metal industries at nearly 25 per cent, non-metallic ores at 15 per cent, and oil refining products at 6.7 per cent.
The Minister said that such figures reflect the increasing demand for investments in the industrial sector, which is attributed to the success of the UAE's policies aimed at creating an ideal investment environment backed by major opportunities especially in infrastructure and investments.
H.E. Al Mansouri added: "The industrial sector has become a key driver for the strong performance of the national economy and an important contributor to the development and diversification of income sources. The sector is of great interest as one of the main goals of UAE Vision 2021 as being the second largest contributor to GDP after oil and gas. The ministry has completed drafting legislation amending Law No. (1) of 1979 covering the Organization of Industry Affairs which will be issued soon. It will mark a major leap for the UAE's industrial sector."
The Minister emphasized that the UAE Government and the Ministry of Economy in particular are committed to supporting the industrial sector's growth and prosperity, and will provide the facilities needed to enable industrial companies in the UAE to tackle current and emerging challenges, which in turn, will help attract regional and international investments.
He said that the UAE's participation at Hannover Messe 2016 showcases the UAE Government's efforts to support the industrial sector and encourage investments in it--promoting its position as a key driver for economic development. He also mentioned the significance of opening new channels of collaboration and intensifying joint efforts to exchange expertise in order to enhance this vital sector's role as a main supporter of a strong national economy, in line with the rapid economic changes in the world.
H.E. Al Mansouri added that the UAE has adopted a strategy for supporting the industrial sector that focuses on attracting and directing huge investments towards this sector to increase its GDP contribution and reduce dependence on oil as a main source of income. The growth that the industrial sector has witnessed in the last few years, he said, reflects the attractiveness, durability and diversity of the national economy, the effectiveness of legislation, and advanced infrastructure – all of which are main pillars designed to increase the contribution of the industrial sector to the GDP.
H.E. Al Mansouri expects the industrial sector's contribution to the UAE's GDP to rise to 25 per cent in 2021 as compared to 4 per cent in 2016. He stated that the UAE is implementing an ambitious strategy for strengthening the role of the industrial sector in the growth of the national economy and increase its contribution to the GDP.
The UAE Minister of Economy said that the industrial sector contributed around 14 per cent to the GDP of the UAE – representing AED 240 billion – in 2014. Its contribution jumped to AED 252 billion by the end of 2015 and is forecasted to increase to 25 per cent by 2021.
According to data from the Ministry of Economy, the industrial sector has recorded significant growth, as seen in the increased volume of industrial investments in the UAE and the establishment of many industrial areas that have contributed to attracting investments to the industrial sector. The Minister said that the UAE has succeeded in building an industrial sector that is a source of pride, composed of a number of vital industries that play pivotal roles in promoting sustainable development and supporting aspirations in industries such as petrochemicals, aluminum, iron and steel, building materials, and aircraft components, among others.
H.E. Al Mansouri further explained that the most important segments in the UAE's industrial sector, which received various national and foreign investments in 2015, include non-metallic mining (AED 19.19 billion); food and beverages (AED 39.432 billion); basic metals (AED 31.536 billion); oil refinery products (AED 8.578 billion); chemicals (AED 8.416 billion); metals (AED 7.57 billion); and transportation equipment (AED 3.51 billion).
He added that 2015 saw national and foreign investments across other industrial segments that are as important as those previously mentioned, such as rubber, plastics, paper and articles thereof, machinery, electrical supplies, wood and articles thereof, textiles, publishing and printing, vehicles, trailers, ready-to-wear apparel, recycling, leather and articles thereof, and crafts, in addition to scientific and professional appliances, office devices and machinery, computers, audio-visual devices, telecommunication tools, and tobacco products.
H.E. Al Mansouri further pointed out that the number of industrial licenses issued in the UAE totaled 6,084 until 2015--having issued 144 licenses in 2015 alone with an increase of 3.38 per cent as compared to 5,881 total licenses until 2014.
He added that the number of industrial facilities in the UAE from 2014 to 2015 totaled 450, reflecting an increase of 6.8 per cent over the 381 facilities recorded from 2012 to 2013.
With regards to industrial licensees in the UAE up to 2015, H.E. Al Mansouri said that the 'National Foreign' category scored the highest share with 3,824 licenses, followed by 'National' with 1,925 licenses, 'GCC' with 190 licenses and 'National GCC' with 83 licenses. He underlined that these numbers reflect the confidence entrusted to the UAE by foreign investors who look at the country as a safe and lucrative haven for their investments in this strategic sector.
He said that the total number of workers in the industrial sector in the UAE up until 2015 reached around 435,930 as compared to 417,756 in 2013 and 427,636 in 2014. The total was only 356,839 back in 2008.
He explained that the increase of employment in the industrial sectors over the last few years clearly demonstrates the industry's development and growth through Foreign Direct Investment expansion and the establishment of new specialized plants across the UAE.
H.E. Al Mansouri reaffirmed the Ministry's commitment to cooperate with local entities and industrial facilities to overcome the challenges facing the UAE's industrial sector and discuss ways to manage industrial work procedures. He also assured that sufficient financing channels would be provided for their manufacturing operations and for facilitating exports and the access of national products to the global markets.
He further added that the industrial sector is a key component of the UAE economy and maintains a continuously high growth rate in line with the country's efforts to establish specialized industrial zones and encourage foreigners to invest in them. He also referred to efforts to bring in modern technologies for boosting the industry's competitiveness with relevant international markets.
H.E. Al Mansouri concluded by commending the Abu Dhabi DED's role in leading the UAE pavilion at Hannover Messe 2016 and consolidating the country's presence in the international event, which is attended annually by industry-leading countries and state-of-the-art companies from around the world.
For his part, H.E. Ali Majed Al Mansouri confirmed the stable and continuous growth of Abu Dhabi's industrial sector over the last few years. He said that the sector has been attracting significant local and foreign investments through the seven advanced industrial areas across the emirate. This progress serves as further encouragement for efforts to cultivate growth in the industrial sector and raise investments further within the next few years.
"Abu Dhabi is witnessing great advances in its industrial sector which will attract more investors and capital from all over the world. These will help in the development of necessary facilities for addressing crucial issues such as energy prices and the import of production materials, aside from providing suitably priced land for industrial investments to accommodate local and international companies and investors," said H.E. Ali Majed Al Mansouri during his opening speech at the UAE pavilion.
H.E. further explained that Abu Dhabi Economic Vision 2030 places a great deal of emphasis on non-oil trade activities in an effort to increase its contribution to the GDP in order to further drive the economic diversification process of Abu Dhabi. He added that Abu Dhabi has made great strides in this regard and will continue to develop its manufacturing industry activities.
He added that an industrial development bureau has been established as a regulatory board which will be dedicated to implementing the industrial strategy and upgrading the industrial sector's performance in Abu Dhabi. They will perform such tasks while supervising operational authorities in the sector beside the Khalifa Industrial Zone and the Higher Corporation for Specialized Economic Zones. The new bureau is currently preparing to survey local industrial facilities to create a new database.
H.E. said that by the end of 2015, Abu Dhabi and its three major zones, including Abu Dhabi, Al Ain and the Western Region, had a total of 1,425 registered factories under the industrial development bureau, distributed as 1,079 in Abu Dhabi, 306 in Al Ain, and 40 in the Western Region.
He pointed out that there are a total of 371 factories for metal industries in Abu Dhabi, while there are 336 factories for building materials, 183 are for fiberglass, plastic and sponge, 154 for carton, wood and paper, 139 for chemicals, 105 for food, 73 for appliances and equipment assembly, 40 for clothes, and 24 for recycling.
He added: "According to Statistics Center - Abu Dhabi (SCAD), the estimated value added by manufacturing industries for fixed prices in the emirate in 2015 was at AED 47,655 billion compared to AED 42,843 billion in 2014. The added value for the extraction industry in 2015 was estimated at around AED 383,987 billion."
"The added value of manufacturing industries based on current prices in Abu Dhabi in 2015 was at around AED 56,18 billion, compared to 54,707 billion in 2014." SCAD also made an estimate on fixed capital formation for the manufacturing industries in Abu Dhabi in 2015. The numbers are estimated at AED 19,776 billion, which are approximately the same as in 2014 which posted AED 19,681 billion."
H.E. noted that the prices of industrial products improved in 2014 compared to 2013 figures based on the industrial producer's prices issued by SCAD which posted a quarterly continuous improvement.
"The industrial sector's performance indicator and the results of surveys on Abu Dhabi's industrial facilities show continuous improvement within the sector starting from 2013. This is largely due to the steps taken by the Abu Dhabi Government to develop significant projects, coupled with improvements in the securities market and increasing demand and gains in the business and investments", added H.E. Al Mansouri.
The added value of manufacturing industry activities increased within the fixed prices to AED 43 billion in 2014, at an annual growth of 6.9 per cent compared to 4.6 per cent in 2013. The manufacturing industries sector formed 5.8 per cent of the GDP and 11.6 per cent of the non-oil product in 2014, which are the same rates achieved over the last few years.
Chemicals and plastics accounted for 48 per cent of manufacturing industry products, and 73 per cent of this sector's capital. This is as expected, as Abu Dhabi is a major oil and gas producer which is fundamental driver for this industry. Abu Dhabi is eager to improve the local added value for this important economic resource, given that the basic metal industries (steel and aluminum) form 11.6 per cent of the total value of the manufacturing industries.
The added value of the industrial sector in Abu Dhabi grew by USD 366 billion in terms of fixed prices in 2014 compared with AED 364 billion dollars in 2013. The annual growth rate for this sector between 2010 and 2014 was at 4.7 per cent.
Abu Dhabi has a large amount of hydrocarbon resources which play a fundamental role in the economic growth of the emirate. The presence of this resource further enhances the government's ability to achieve huge changes in the local economy's structure though a thoughtful economic diversification policy.
The total formation of fixed capital within the extraction industries in the current prices increased from AED 27.6 billion in 2013 to reach AED 29.2 billion in by 2014, achieving an annual growth of 5.6 per cent. This was due to huge investments made during the last few years which have enabled the emirate to increase production capacity.
H.E. said: "The UAE and Abu Dhabi have implemented strong and efficient policies within the energy sector, especially in oil and gas, to ensure the proper use of natural resources and ensure their sustainability in supporting development projects; increase the standard of living of citizens; provide job opportunities; and attract more foreign investments to encourage the private sector to actively participate within this vital sector."
He added: "The Abu Dhabi's industrials Index Expectations for 2015 were encouraging, with the growth indicator value set to achieve 57 points within the same year."
The continuous efforts of the Abu Dhabi Government to achieve economic diversification by increasing the contribution of non-oil activities to the GDP showed the estimates for direct foreign investments in Abu Dhabi by 2015 at a growth of 8.9 per cent and set to reach AED 88,324 compared to AED 81,112 billion in 2014. The investment rate's value also contributed to the manufacturing industries by 18.9 per cent from the total direct foreign investments stock, amounting to AED 16,710 billion dirhams in 2015 at a growth of 7.8 per cent over AED 15,502 billion and a 19.1 per cent contribution in 2014.
Manufacturing ranked second after real estate in terms of increased direct foreign investments in 2014. It is estimated to have posted AED 14.2 billion dirhams at an increase of AED 1.2 billion over 2013 at a growth rate of 8.9 per cent. Direct foreign investments to the manufacturing industries are estimated at 17.3 per cent of Abu Dhabi's total direct foreign investments.
In the geographical zones (Abu Dhabi – Al Ain- Western), the survey's results reflected during 2015 increased optimized levels for industrial facilities in the west zone followed by Abu Dhabi and then Al Ain, whereas the Western Area recorded high levels compared with 2013, 2014 due to planning efforts to establish industrial areas especially in Al Ruwais, in addition to the existence of various industrial activities for many global and national companies.
With regards to access to the external markets, the number of economic facilities increased in Abu Dhabi, which focused sharply on these markets in 2015 over 2014. In 2015, 4.8 per cent of those facilities managed to target the external markets compared to only 4 per cent in 2014. Although this shows improvement, it does not adequately reflect the steadfast efforts to promote growth rates within the emirate's non-oil exports which is one of the main priorities of the 2030 Economic Vision to achieve economic diversification.
H.E. Ali Majed Al Mansouri explained that petrochemicals, machinery and equipment and clothes recorded high levels compared to other industrial activities, with indicators recording 47, 42, 37 and 35 points, respectively.
He stated that the use of energy by industrial facilities in Abu Dhabi was more stable in 2015 than in 2014, when the rate was at 72 per cent. The rates during the last five monitored years were close to the global rates, although the increased production capacity also contributed to the advancement of economic diversification efforts, increased productivity in Abu Dhabi, and promoted innovation.
The Minister of Economy and the Chairman of Abu Dhabi's Department of Economic Development visited the UAE pavilion and reviewed the nature of the exhibitors' participation and the promising investment opportunities they offer to investors and businessmen visiting Hannover Messe, which will help attract more industrial investments into the country.