Abu Dhabi is the main administrative centre for military and defence-related operations in the UAE. More broadly, the emirate is a key international aviation gateway, which has helped it to attract major multinational aerospace manufacturers and service providers to establish operations in Abu Dhabi and its various industrial zones. Continued work from both the federal and emirate governments to enhance the local business environment is further driving that trend.
Industrial and ICT sector development strategies have a strong focus on areas such as cybersecurity, advanced robotics and autonomous vehicle production, with the aforementioned developments helping to strengthen international research and manufacturing partnerships. While growth in these areas represents a significant step towards achieving national development goals, the emirate is keen to ensure its local talent pool is suitably equipped for emerging opportunities, with multiple training and educational programmes recently unveiled to cater to that demand.
Structure & Oversight
At the military level, the federal government is responsible for sector oversight. The UAE has a unified military of 77,000 personnel that operates as a single body across the seven emirates, with policy formulation happening at the federal level. Oversight of all land, air and naval forces is carried out at the UAE Armed Forces General Headquarters in the capital of the UAE, Abu Dhabi City.
On the federal level, the UAE Ministry of Defence works to bolster national security and protection by formulating and implementing strategies designed to enhance military and defence capabilities. Also operating on the federal level, the Ministry of Interior is tasked with managing various aspects of domestic security, such as the police, prisons, civil defence and traffic.
Meanwhile, the Tawazun Council is the defence and security acquisitions authority for the UAE Ministry of Defence, the Abu Dhabi Police, and other federal and emirate-level security agencies, and is responsible for financial management and budgeting and acquisition strategies related to those areas.
Another significant entity in the military and defence sector is the UAE government-owned conglomerate EDGE Group, whose 25 subsidiary companies develop and manufacture military equipment and technologies. EDGE Group was ranked among the top-25 military manufacturing and procurement conglomerates in the world in 2020 for arms sales, according to the Stockholm International Peace Research Institute.
Key Partnerships
In 2023 it made significant strides to boost its local and international partnerships, signing over 20 agreements and joint ventures with suppliers such as Raytheon Emirates, the UAE subsidiary of the US aerospace and defence conglomerate RTX, as well as US-based firm L3Harris and UK-based firm BAE Systems. The deals were agreed at the 2023 International Defence Exhibition & Conference (IDEX) and Naval Defence & Maritime Security Exhibition and Conference (NAVDEX). The events are held concurrently every two years by the Abu Dhabi National Exhibitions Company (ADNEC) to provide a platform for regional and global manufacturers to display the latest products and technologies. In the days preceding the 2023 event, which ran from February 20 to 24, ADNEC and the Ministry of Defence announced the launch of IDEX NEXT_GEN – a new component of the broader event focused on more deeply integrating local and global start-ups into defence and security value chains, with 82 start-ups from 25 countries featured in 2023.
Meanwhile, the Emirates Defence Companies Council (EDCC) is the UAE’s representative body for the defence industry. Since its establishment in 2014, the EDCC has worked to facilitate cohesion and cooperation between the defence sector’s major public authorities and commercial operators. IDEX 2023 brought the announcement that the EDCC and the federal Ministry of Industry and Advanced Technology (MoIAT) will work together to strengthen the standing of start-ups and small and medium-sized enterprises (SMEs) in the UAE’s defence industry to propel sector growth.
In the field of aerospace, the General Civil Aviation Authority (GCAA), established by federal decree in 1996, is the sole regulatory body for civil aviation activities. Setting stringent safety procedures, overseeing navigation and promoting the UAE’s civil aviation industry globally are among the GCAA’s strategic priorities.
The space industry is seeing increased investment from both public and private entities around the world, with governments working collaboratively and independently to develop robust regulatory frameworks for this emerging, high-value segment (see regional analysis). The UAE Space Agency, established in 2014 and based in Abu Dhabi, operates with financial and administrative independence to regulate the space industry, develop and incentivise investment opportunities, and establish global partnerships to drive the sector’s performance and contribution to the economy. The federal agency has released a raft of regulatory and strategic frameworks since its inception, most notably the National Space Strategy 2030, launched in March 2019, and the UAE Space Law in December 2019.
Advances in technology have increased the focus on cybersecurity. The UAE’s Signals Intelligence Agency, formerly the National Electronic Security Authority, has issued a list of standards with which all federal and emirate government and semi-government organisations and business entities critical to national security and infrastructure must adhere. Various third-party commercial agencies can be engaged by companies to ensure thorough application of the standards.
Due to changing demands, the federal government issued an updated cybersecurity law in January 2022, and ICT-specific authorities such as the MoIAT and Abu Dhabi’s Telecommunications and Digital Government Regulatory Authority are in the process of implementing robust cybersecurity strategies (see ICT chapter).
Strategy
Broadly speaking, the UAE’s defence strategy sees the country working to strengthen regional and global alliances through trade, security and defence agreements and cooperation. As the GCC’s two largest and most influential nations, cooperation between the UAE and Saudi Arabia has played an important role in both national and regional security over the past decade. On the global front, the UAE has a long-standing security and defence alliance with the US, which ranks as the primary supplier of military equipment to the UAE. The relationship has also featured active military cooperation. Due to the shifting global geopolitical landscape, the UAE is placing greater emphasis on diversifying its military and defence-related trade agreements and investing heavily in developing domestic industries to raise local procurement.
Indeed, one of the core drivers of the separate but complementary UAE and Abu Dhabi industrial strategies, which were launched in 2021 and 2022, respectively (see Industry & Retail chapter), is to develop high-value, high-tech production lines, making the military and defence industry a key beneficiary and driver of related progress. Meanwhile, the UAE Strategy for the Fourth Industrial Revolution, unveiled in 2017, and its constituent drive to more deeply embed advanced technologies into production processes and output features a dedicated military and defence component, given the technical demands in those areas of manufacturing, with advanced robotics and autonomous vehicle production among the areas earmarked for development. In addition, the security, aerospace and defence sector is being harnessed to enhance domestic human capital through skills and knowledge transfer, as well as tailored training and education programmes.
Research & Human Capital
The rapid pace of technological development has underscored the need to develop a skills base in advanced technologies, particularly artificial intelligence (see Education & Research chapter). The UAE’s aim to establish itself as a global tech centre makes domestic skills a high priority. The Advanced Military Maintenance Repair and Overhaul Centre (AMMROC) and Global Aerospace Logistics, both based in Abu Dhabi, announced in February 2023 they would, in collaboration with the UAE government-owned Rabdan Academy, establish a training centre to bolster research capacities and projects, and offer internships and training courses, alongside other components, in the areas of safety, security, defence, emergency preparedness and crisis management.
Performance & Size
A broad array of economic activities contribute to the performance of the security, aerospace and defence sector in Abu Dhabi. In 2020 GDP for the public administration and defence sector in the emirate grew by 9.8% to Dh60.4bn ($16.4bn). In 2021, however, the sector underwent a 0.18% contraction before a slight rebound of 0.38% brought sector GDP to Dh60.5bn ($16.5bn) in 2022. Manufacturing, transport and storage, and ICT are also instrumental to the areas under consideration, and in 2022 Statistics Centre – Abu Dhabi (SCAD) data shows growth of 9.7%, 11% and 4.3%, respectively, across those sectors. Indeed, cybersecurity, aerospace and defence industries and capabilities are key to the Abu Dhabi government’s drive to boost the local innovation ecosystem and technical capacities, while their highly technical nature makes them central to the development of Industry 4.0 capacities. Meanwhile, Abu Dhabi’s strong aviation segment, which is key to transport sector growth, also serves to attract aerospace manufacturing companies to the emirate. Indeed, in March 2023 the Tawazun Council and the Abu Dhabi Department of Economic Development (ADDED) announced that they had agreed to work in closer collaboration to develop the local manufacturing segment, as Abu Dhabi government entities work towards the goal of doubling the emirate’s non-oil industrial GDP by 2031, as specified in the Abu Dhabi Industrial Strategy launched by ADDED in 2022.
Expenditure & Funding
The UAE’s defence spending is the second highest in the Middle East, after Saudi Arabia. The UAE is working to localise defence-related manufacturing, technology development and procurement. The UAE is currently a net importer of military supplies and equipment. The country’s defence spending rose by 6.6% in 2022 to reach $22.5bn. A further increase of 5.3% is forecast for 2023, for a total of $23.7bn, according to a 2022 report by UK analytics firm GlobalData. By 2025 defence spending is expected to reach $26.4bn. Growth in acquisitions has been a key driver behind recent spending hikes. In 2022 the acquisition budget amounted to $6.3bn, with compound annual growth of 6.9% expected to bring the total to $8.8bn by 2028.
Rising global geopolitical tensions should see the UAE’s defence spending increase further over the coming years. The country’s cumulative defence spending is forecast by GlobalData to surpass $107bn during the period 2024-27, making the UAE’s defence market one of the most lucrative in the region.
While US manufacturers currently hold a 64% share of the market, recent deals will see the UAE co-manufacture aircraft with Russian firm Rostec and South Korea-based Korea Aerospace Industries, demonstrating the country’s willingness to diversify its partners and welcome new operators to the market.
In addition, in July 2022 the UAE Space Agency announced its National Space Fund, in which the government will invest Dh3bn ($816.6m) with the aim of accelerating the growth of the country’s space-related industries, establish research and development (R&D) facilities, and boost specialised national human capital and manufacturing capabilities.
Investment Zones & Institutions
According to the most detailed available data from SCAD, the total stock of foreign investment in Abu Dhabi’s public administration and defence sector has risen considerably in recent years, expanding by 1145% from Dh12.4bn ($3.4bn) in 2016 to Dh154.4bn ($42bn) in 2021.
The 22.6-sq-km Tawazun Industrial Park in the northeast of the emirate is a regional centre for defence and military manufacturing, with incentives such as 100% foreign ownership and capital repatriation allowances in place to incentivise investment, as is the case with the emirate’s other industrial and economic zones (see Industry & Retail chapter). Business establishment and operational support services are also offered to companies in the zone, making it an attractive place to do business. As of mid-2023 the zone housed 31 military, defence and advanced technologies-related manufacturing and research businesses.
February 2023 saw the Tawazun Council designate 2.8 sq km of its industrial zone as a free zone. Activities targeted for expansion in the free zone include electronics and advanced technology development, safety and security-related production, and R&D.
An additional development in February 2023 came when the MoIAT, Tawazun Industrial Park and the Emirates Development Bank signed an agreement to provide financing solutions and business enablement initiatives to facilitate market access for SMEs to key industries in the UAE, with defence-related manufacturing among the areas targeted for growth. The programme will be implemented under the banner of the MoIAT’s industrial development initiative, Make it in the Emirates (see Industry & Retail chapter).
Abu Dhabi’s multiple sovereign wealth funds are central to developing the high-priority sectors targeted in emirate-level development strategies. Mubadala Development Company and International Petroleum Investment Company were merged in 2017 to create Mubadala Investment Company, with the new entity’s prime directive to drive economic diversification. As of late 2021 Mubadala Investment Company’s aerospace portfolio was valued at more than $8bn. Central to that portfolio is the Nibras Al Ain Aerospace Park in Al Ain, Abu Dhabi, which was established under a joint venture between Mubadala Development Company and Abu Dhabi Airports in 2012. Other key operators in the aerospace industry, such as AMMROC and flight training academy Horizon, also operate out of the zone.
Another important entity based in the zone is Strata Manufacturing, a composite aerostructures manufacturer whose partnerships include France’s Airbus and US-based Boeing. Strata Manufacturing is a tier-one supplier to Swedish aerospace and defence manufacturer Saab and Belgian aerospace industrial firm SABCA. The company had 30 production lines in its Al Ain facility in 2022, and it produced 5020 shipsets and 74,128 aerostructure parts that year.
Strata Manufacturing plays an important role in the UAE and Abu Dhabi’s industrial strategy and broader economic initiatives. Its workforce comprises 64% UAE nationals, with females making up 88% of that figure. A further 400 Emiratis graduated from Strata Manufacturing’s Aerostructure Technician Training Programme in 2022, and raising both the company and the country’s skills base is a core component of Strata Manufacturing’s Advanced Manufacturing Strategy.
Bilateral Cooperation
In 2021 the UAE and the UK governments entered into an agreement to collaborate in areas such as defence research and artificial intelligence development – one of a number of technology and research-related partnerships announced between the two countries recently.
In September 2022 EDGE Group and Malaysia’s Armed Forces Fund Board, which operates the pension fund for serving members of the national army, signed a memorandum of understanding to work together to explore ventures to strengthen mutual defence capabilities, in addition to identifying potential partnership investments in the Malaysian defence industry.
Meanwhile, in December 2022 three manufacturers based in the Nibras Al Ain Aerospace Park – Strata Manufacturing, Global Aerospace Logistics and Calidus – announced partnerships with the Indonesian government-owned aerospace company Dirgantara Indonesia to establish long-term marketing, modernisation and capacity-building ventures related to aircraft manufacture, as part of the UAE’s efforts to deepen economic ties with the broader Islamic world.
IDEX
The IDEX and NAVDEX events in February 2023 saw the UAE sign military and defence procurement contracts worth Dh23.3bn ($6.3bn), with the Tawazun Council and EDGE Group key to securing those deals. The list of contracts signed by the Tawazun Council featured a number of UAE-based manufacturers. Indeed, of the 12 deals the council signed on the final day of the show, seven were with companies based in the UAE, including a Dh799m ($217.5m) agreement with munitions manufacturer Elbit Systems Emirates and a Dh612m ($166.6m) contract with Abu Dhabi-based Etimad Strategic Security Solutions that will see the company provide technical support for border security systems. The Tawazun Council also signed contracts with manufacturers from Europe, China and the UK for datalink equipment, advanced telecommunications apparatuses and training programmes.
EDGE Group similarly entered into a range of new agreements with global defence companies during the event, with its signed contracts valued Dh18.6bn ($5.1bn). It also launched 14 new products, which included 11 autonomous, unmanned machines and vehicles. These developments – alongside the Dh4bn ($1.1bn) worth of deals it secured to export its products internationally – demonstrate the group’s capacity to facilitate progress towards the goals of the UAE and Abu Dhabi’s defence and industrial sectors.
Outlook
Advances in the security, aerospace and defence sector demonstrate progress towards Abu Dhabi’s goal of establishing itself as a regional and global centre for advanced manufacturing and technologies. The increasing collaboration between the public and private sectors taking place in the security, aerospace and defence sector is reflective of ongoing development strategies throughout the emirate’s economy – a trend that is seeing significant improvements in international investor confidence. Add to that the UAE’s expanding military manufacturing and international trade relations, increased federal defence spending and signs that the government’s drive to localise related production is gaining significant traction, and it seems apparent that these high-value areas of the economy will undergo continual expansion moving forwards.
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