The Place of Manufacturing in the UAE’s Growing Economy
Manufacturing has been helping to shape the global economy since the dawn of the Industrial Revolution in the late 18th century, and it’s still an essential industry in the present-day 21st century, too. And what’s true in other places is just as true in the UAE. The manufacturing industry currently contributes around 14 percent of the GDP, and UAE officials hope that number will grow to 25 percent over the next 15 years.
While it’s fair to say that the Emirate will continue depending upon the ongoing contributions of oil and petroleum manufacturing, the level of dependency is expected to decline, and oil’s contributions to UAE’s GDP should shrink progressively over time. The UAE has been intentionally working to diversify its economy, and non-oil sectors continue to grow in importance. Keep reading to learn more about new manufacturing company opportunities in Dubai, brought to you by your friends at MSZ Consultancy!
The Coming of Age of Manufacturing in the UAE
Did you know that manufacturing is the second-biggest driver of non-oil-related economic growth in the UAE? In fact, this sector has ranked second in GDP contribution for some 15 years and counting. This fact reflects some of the substantial investments the UAE government has made in growing its manufacturing industry. The strategy is clear – as the population and the economy both grow, the demand for finished materials and products will only increase over time. In some respect, each of the seven Emirates is making its own push for developing industrial centers to help meet the present and coming need for manufacturing. Perhaps not surprisingly, the two key Emirates leading the charge are Dubai and Abu Dhabi.
Dubai and Abu Dhabi Are Leading the Way for Manufacturing in the UAE
The value of manufactured exports coming from the UAE has risen steadily in recent years. Let’s take a closer look at two Emirates in particular which are helping to drive that growth: Dubai and Abu Dhabi.
At last look, Dubai had some 18 industrial areas, eight of which are located in Free Zones. Nearly 10% of Dubai’s GDP came from non-oil manufacturing activities in 2017, with only storage and transport seeing a stronger growth rate in recent years. Looking forward, the expectation is that the manufacturing sector will contribute 25% of the overall GDP of the UAE by 2025.
Concerning Dubai, in particular, industrial manufacturing growth is supposed to reach $16.1 billion US dollars and add more than 25,000 new specialized jobs by 2030. In fact, the Dubai government has embarked upon Dubai Industrial Strategy 2030, with 75 initiatives identified to help turn Dubai into an international hub for knowledge-based innovations and sustainable industrial activities.
To that end, no Emirate has invested more in growing its manufacturing capabilities than Dubai. For example, Dubai has created a Free Zone specially dedicated to the industrial and manufacturing sector called Dubai Industrial City. This is an ideal location for foreign investors looking to get into the manufacturing business in the UAE.
Abu Dhabi is still the largest and most affluent of the UAE’s seven Emirates. And like Dubai, Abu Dhabi has also come up with its own non-oil economic growth plan called Economic Vision 2030. Some of the current major manufacturing sectors with a presence in Abu Dhabi include:
• Building materials and non-metallic mineral products
• Petrochemicals and chemicals
• Food, beverage, and consumer goods
• Aerospace and defense equipment
• Industrial equipment
Abu Dhabi has developed a number of Free Zones tailored towards manufacturing and industrial zones, as well. Even so, experts have noted two particular challenges for Abu Dhabi when it comes to growing its manufacturing sector:
1. Skilled labor
The issue is not in not having enough qualified staff, but in being able to find enough qualified local staff. Abu Dhabi would like to be able to draw more local Emiratis, but in many cases, companies have been forced to hire expatriate workers, or to simply leave open positions unfilled.
2. Energy costs
General energy inputs aren’t really a problem, but the costs for certain required inputs remain very high. These increases in energy costs are proving to have a negative impact on the financial sustainability of some production processes.
How to Start Your Own Manufacturing Business in the UAE
While oil and gas still play a significant role in terms of the UAE manufacturing and production sector, many other manufacturing branches have emerged and are experiencing growth. Foreign investors who are looking to start manufacturing business in UAE have more opportunities available to them now than ever before. To that end, Dubai has risen to the top as an ideal location for launching a manufacturing company. If opening a manufacturing factory in Dubai sounds attractive to you, here are some steps you’ll need to follow:
1. First, you’ll need to choose an appropriate activity in terms of what you want to manufacture and produce.
2. Once you select your chosen activity, you’ll need to find a reliable local UAE sponsor. This is a required step for starting any manufacturing company in the UAE mainland proper.
1. Submit the necessary documentation to the Department of Economic Development (DED) to get your business name approved and to gain initial approval (or pre-approval) for your business venture.
3. After gaining name approval and initial business approval, the applicant and the chosen UAE sponsor will need to sign the Memorandum of Association in the presence of a local notary public.
4. Next, you’ll need to locate a proper warehouse facility for setting up your manufacturing plant. At this point, you’ll need to obtain a tenancy contract and Ejari from the property owner.
5. Now you’ll need to obtain an Industrial License. This will require you to gain approval from the Municipality of the particular Emirate in question.
6. Once this process is complete and the proper approvals have been obtained, you’ll need to submit all required documents to the Environment Department for industrial clearance.
7. You’ll need to obtain a NOC from the civil defense department, and will also need to get other needed external approvals. For example, if you’ll be manufacturing food products, you’ll need approval from food control. The specific external approvals needed will depend upon the specific nature of your manufacturing business.
8. After getting all the needed approvals, you’ll be ready to submit your final application to the Economic Department.
9. Once that goes through, make your required fee payment, and your industrial permit will be issued!
Advantages of Having a Manufacturing Business in Dubai, or Elsewhere in the UAE
There are many good reasons to consider founding a manufacturing business in Dubai or another chosen Emirate. Here are just a few:
The UAE already has all the needed infrastructure in place to launch a successful manufacturing business, including land, ready-to-use industrial facilities, office space, etc.
There’s already an effective system of transportation, distribution, and storage in place here, as well.
3. Favorable geographical location
The UAE sits at an advantageous crossroads in the Middle East, convenient to Africa, Asia, and Europe. And our top-notch international airports bring the rest of the world closer, too.
4. Labor costs
The cost of manufacturing labor here is generally cheaper than that of other comparable locations. For example, the UAE draws many laborers from India, Pakistan, and the Philippines. In addition, trade unions are prohibited by the UAE government.
5. Energy costs
When you combine the UAE’s vast petroleum reserves with its increased emphasis on renewable power sources, energy is plentiful and affordable here.
6. Tax advantages
There are NO taxes for manufacturing businesses established in UAE Free Zones!
How MSZ Consultancy Can Help Turn Your UAE Manufacturing Company Dream into a Reality
We hope you’ll find these tips and nuggets of information to be helpful. But even so, you may still have some questions about getting a Dubai manufacturing business started. If you’re ready to get serious about launching a manufacturing company in the UAE, let us also offer one more piece of advice – don’t try and tackle the UAE business setup process all by yourself!
Our experts at MSZ Consultancy are here to help! We’d be honored to come alongside and help guide you through everything you need to know and do in terms of manufacturing business setup. Our company headquarters is located right here in Dubai, and we know all the ins and outs when it comes to helping you navigate the entire business formation process effectively and smoothly. We can help you to avoid any unnecessary hiccups along the way, too!
Reach out today to book your FREE consultation with one of our local experts! Just call us direct at +971 52 544 1248, or you can also get the conversation started by shooting us an email at firstname.lastname@example.org.
There’s really no need to wait any longer; let’s get started on making your dreams of starting a manufacturing business in the UAE a reality. Our team is standing by, and we’re ready to assist you!