The Department of Economic Development in Abu Dhabi "Studies Directorate" today at its headquarters a seminar entitled "Reality and prospects for the industrial sector in the Emirate of Abu Dhabi" with the participation of Ministry of Economy, Higher Corporation for Specialized Economic Zones and Abu Dhabi Chamber of Commerce and Industry.

The seminar was opened with a welcoming speech from the Department of Economic Development in Abu Dhabi, delivered by Ms. Mona Al Suwaidi, Head of the Economic Studies Section, who said the symposium comes within the framework of constructive cooperation between the Department of Economic Development, government and semi-government entities concerned with the development of industry in the emirate. Al Suwaidi expressed hope that this cooperation, would further coordination and complementarities of the roles of all departments, local authorities, and federal institutions; and help overcome all problems and constraints that limit the contribution of the manufacturing sector in the process of economic development, in the Emirate of Abu Dhabi.

Al Suwaidi said that Dhabi's march towards the future is spurred by the ambitious strategies for economic and social advancement, on the basis of the fundamental pillars of diversifying sources of income and production, to ensure continuous economic growth. She added that the emirates paid attention very early to industrial development and realized of the role of industrialization in expanding the production base to reduce dependence on oil as a source of income. The manufacturing industry advantage would further the overall functioning of the economy, and the development of the rest of the economic sectors.

Ms. Mona emphasized that the Government of Abu Dhabi had implemented several programs in support of the industrial sector, provided infrastructure necessary required for industrial progress, established specialized industrial zones, and provided various facilities for investors. All this is based on the government's firm belief in the importance of partnership with an active private sector, with distinct role in the development process of the Emirate of Abu Dhabi.

Al Suwaidi noted that the "Abu Dhabi Economic Vision 2030" gave priority to the development of a number of industries with competitive advantages at regional and global levels, including petrochemical metallurgical industries, aerospace and defense, pharmaceuticals and biotechnology. She stated that sincere efforts have helped to bring quantitative and qualitative development in the manufacturing sector, which led to increase sector output steadily over the last ten years from AED 17 billion in 2001 to more than AED 40 billion in 2009. However, the contribution of manufacturing in Abu Dhabi's GDP is still limited, reaching approximately 7.4% in 2009.

Ms. Mona Al Suwaidi, Head of Economic Studies section, stressed that the Department of Economic Development believes in the importance of industrialization as one of the optimal choices aimed at strengthening economic stability, and seeks to further contribution of permanent source and a renewable income, develop human resource base, create more jobs , contribute to the transfer of advanced technology and expertise, and create sources of domestic investment by increasing the absorptive capacity of the national economy.

 

The Department of Economic Development is working at the moment to set a strategy for the development of industry, in cooperation with a number of partners. This strategy would embody an integrated system including, legislation, procedures and programs to be adopted and implemented by both public and private sectors in the emirate, to help in the development of the industrial sector and enhance its competitiveness t all levels..

 

Ms. Al Suwaidi explained that the objectives of the strategy focus on maximizing the contribution of the industrial sector in economic development, through continuous industrial modernization to address and curb imbalances, low levels of productivity and inefficiency in this important sector. The objectives also focus on providing an attractive environment for industrial investments, rendering support and giving incentives for various activities of the manufacturing industries, with emphasis on industries with export potential in particular.

At the end of her speech, Al Suwaidi gave thanks to all participants in the symposium, hoping that the anticipated recommendations would be applicable, contribute to the advancement of this important sector and give a strong impetus to progress and development.

The event activities started with the working paper of the Department of Economic Development, entitled " The Competitiveness of the Manufacturing Industry in the Emirate of Abu Dhabi" presented by Dr. Mohamed Hassan Abdul Qader, Senior Economic Researcher, at the Studies Directorate of the Department of Economic Development. Dr. Abdul Qader addressed the reality of the manufacturing industry and the indicators for measuring the degree of its competitiveness, presenting an overview of promising industries in the Emirate. He said that the industrial sector is the propeller of economic growth; and is capable of introducing structural changes in the economy through privatization and appropriate utilization u of resources. Abdul Qader pointed out that Abu Dhabi Economic Vision 2030 focuses on reducing reliance on the oil sector as a source of economic activity, and diversifying sources of national income in the emirate by targeting promising sectors, including the development of manufacturing industries.

 

Dr. Abdul Qader indicated that manufacturing is a strategic priority for the UAE economy in general and the Abu Dhabi's economy in particular. He revealed that the value of the manufacturing industry in Abu Dhabi went up from AED 17.2 billion in 2001 to AED 40.5 billion in 2009, ; however, the sector's contribution to GDP decreased from 9% in 2001 to 7% in 2009 , due to the increase in oil sector contribution to GDP.

Dr. Abdul Qader browsed the general indicators of the Industrial sector in the Emirate of Abu Dhabi, indicating that the number of industrial establishments operating in the manufacturing sector in the emirate amounted to about 1410 establishments in 2009, accounting for 30% of the total number of industrial establishments operating in the country. The high number of facilities indicates the high degree of competition in the local market.

Abdul Qader added that the investment in the manufacture of metal products was the highest in volume within the specialized economic zones in 2009 and earlier, which amounted to AED 10.2 billion, constituting 48% of the total capital invested in the specialized economic zones. The number of workers in this industry is the highest as it reached 46% of the total working force in the specialized economic zones. Construction products followed by 22% of the total capital investment.

According to Dr. Abdul Qader, the volume of investment outside the specialized zones is topped by, construction products at AED 10.1 billion acquiring the highest proportion of 36.5% of the total capital investment outside the specialized economic zone, followed by plastic products and fiber glass which constituted 25% of the total capital investment. Workers in the industrial sector are characterized by low educational and professional qualifications; where expats comprise the highest percentage of the total workforce. In turn, citizens constitute a small proportion of workers which does not exceed 4% of the total workforce.

 

Dr. Abdul Qader reviewed the reforms effected in the industrial sector in the Emirate of Abu Dhabi, pointing out the indented preparation of an integrated strategic plan for the advancement of the manufacturing industry, and simplifying of investment licensing procedure, required by the Higher Corporation for Economic Zones, in addition to the abolishing of the condition of minimum capital required to establish limited liability companies in the country. He also mentioned that work is ongoing for amending funding ceiling of the Khalifa Fund to AED 10 million instead of AED 5 million.

In his paper, Dr. Abdul Qader, probed some of the challenges facing the manufacturing sector; most important of which are the need for more flexibility in the legislation, and speeding up the completion of the draft laws currently being studied, such as the Draft Foreign Investment Law, and the draft Competition Law and others laws.

 

Among the challenges reviewed by the researcher, Dr. Abdul Qader, was the low labor productivity due to the workers low level of professionalism and education, the financing challenges, the low technical component in the manufacturing industry and the high operational costs.

 

The researcher focused on the importance of working with indicators of cost, efficiency and technology to measure the performance of manufacturing industry in the emirate,, He mentioned that the investment cost of manufacturing activity declined; and explained that a production worth AED 1 (one dirham) of the investment in manufacturing activity required an expenditure of AED 2.1 as cost in 2008, whereas the same used to require AED 3.7 in 2000.

 

Dr. Abdul Qader said there was an increase in the efficiency of utilization of fixed assets in the manufacturing industry in Abu Dhabi, as the number of units of GDP, obtained from using the fixed assets increased from 0.27 in 2000 to 0.47 in 2008, thereby rising the efficient using of fixed assets by 74%.

 

He said that the measurement of the coefficient of technical efficiency in the manufacturing industry according to Cobb-Douglas (CD) model, revealed that it is low , and this, calls attention to the need to develop the technological environment of manufacturing industry, and enhance the quantitative measurement using descriptive analysis to calculate the index of competitive industrial performance; whereas the index for the share of medium and high tech products in exports of manufactured products (CIP) showed a low value.