Economic Update

Published 15 Jun 2017

As Abu Dhabi looks to fulfil economic diversification targets as part of both its medium- and long-term development strategies, its already strong industrial base continues to develop as a key facilitator of this goal.

Both light and heavy industry remain a key focus area under both the emirate and the UAE’s long-term agenda, with Sultan Al Mansouri, the UAE minister of economy, announcing at the Global Manufacturing and Industrialisation Summit in March 2017 that the country as a whole was targeting $75bn in industrial investments and raising the contribution of manufacturing to GDP to 25% by 2025.

To fulfil these targets, specialised industrial zones in Abu Dhabi, some of which occupy free zone status, are set to play a greater role through incentives and support infrastructure, easing the procedural hurdles faced by many current and would-be investors.

New expansions of such facilities announced in recent months should continue to improve Abu Dhabi’s value proposition in the very competitive arena of direct foreign and local investment.

Ship to shore

One of the largest and most active industrial zones in Abu Dhabi over the last year has been the Khalifa Industrial Zone Abu Dhabi (KIZAD), which is owned by Abu Dhabi Ports and integrated with Abu Dhabi’s Khalifa Port.

The KIZAD site covers approximately 410 sq km and houses several vertically integrated industries. One of these is its aluminium cluster, in which the anchor, Emirates Global Aluminium, produces raw product through its smelter. Other clusters span a broad spectrum of economic activity, from food products and processing to logistics and mixed-used industries.

Central to Abu Dhabi Port’s long-term strategy is the Khalifa Port Free Trade Zone, a segment of KIZAD, which now occupies 100 sq km of land adjacent to Khalifa Port following its expansion in March. The free trade zone allows 100% ownership, full repatriation of capital and profits, and is currently home to some 40 companies.

“Increasingly, we see companies consolidating their business at KIZAD to reduce costs,” Mohammad Al Shamisi, CEO of Abu Dhabi Ports, told OBG. “We are also seeing a diverse array of businesses setting up shop, including staples such as polymers, steel and aluminium, but also sectors like pharmaceuticals, food, and logistics.”

Recent years have seen several companies gravitate to the industrial zone, including the National Food Products Company, which is developing a Dh1.5bn ($408.4m), 752,000-sq-m food production facility at the site, and Al Dahra Holdings, which built a Dh140m ($38.1m) rice mill inaugurated at the site in late 2016. KIZAD expects an additional 12 companies to become operational in 2017.

Auto hub

The Higher Corporation for Specialised Economic Zones (ZonesCorp), another operator of industrial zones and residential facilities for workers in the emirate, is also expanding, building up infrastructure for both its Abu Dhabi and Al Ain real estate.

According to the company, it houses over 650 industrial facilities and has attracted a total of Dh29bn ($7.9bn) of investments from local and international companies since its creation in 2004.

Notably, at the 2017 Global Manufacturing and Industrialisation Summit, ZonesCorp announced plans to enter into automobile manufacturing and servicing through its 12.3-sq-km Rahayel City. Work is ongoing on the project’s Dh1.6bn ($435.6m) first phase, which is expected to be completed by the end of this year.

Infrastructure will be provided to around 1800 plots available for car showrooms, manufacturing facilities, warehouses and parts suppliers.

Meanwhile, early 2017 also saw new investments totalling Dh51m (13.9m) into ZonesCorp’s Al Ain Industrial City, a 9-sq-km industrial zone in Abu Dhabi’s eastern region. The new facilities –expected to be completed by the end of 2017 – include investments in plastics, ready-mix and precast concrete, and organic fertiliser.

Next generation industries

While KIZAD and ZonesCorp remain the emirate’s two principle operators, a host of smaller and more specialised industrial zones are contributing to diversification efforts, some of which are also undergoing planned expansion.

Tawazun Industrial Park, a zone catering to the emirate’s rapidly expanding defence manufacturing sector, announced in February that it was investing close to Dh300m ($81.7m) in expanding infrastructure. The park is currently home to 13 companies specialised in defence, but officials hope to at least double that number in the next five to 10 years.

Meanwhile, Nibras Al Ain Aerospace Park, which is being developed by Mubadala Investment Company and Abu Dhabi Airports Company, occupies 25 sq km of land and is fully dedicated to catalysing the emirate’s aerostructures manufacturing and maintenance, repair, and overhaul businesses.

Planned development by the park’s anchor tenant, Strata, announced earlier this year should help buoy activity at Nibras in the coming years.