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Overview Of The Manufacturing Industry in Dubai

Jan 5, 2024 | Featured Posts, Human Resources

The manufacturing industry in Dubai stands as a cornerstone of the emirate’s dynamic economy, contributing significantly to its GDP and demonstrating robust growth trends. This sector is marked by a diverse range of sub-sectors, including chemicals, plastics, metals, food, and beverage, each playing a pivotal role in the overall industrial fabric of Dubai.

The city’s advanced infrastructure, strategic location, and government support provide a fertile ground for the manufacturing industry to thrive. As Dubai continues to focus on sustainability and renewable energy, it sets the stage for a future where green manufacturing practices align with the global movement towards environmental responsibility.

Dubai’s Manufacturing Industry

Key Industries in Dubai’s Manufacturing Sector

Dubai’s manufacturing sector is a vibrant part of its economy, with several key industries fuelling its growth. The chemicals, rubber, and plastics sector is particularly significant, pouring a substantial portion into the national manufacturing value added. Dubai has become a hub for plastic manufacturing plants, showcasing the sector’s strength.

Metals manufacturing is another major player, with the UAE recognised as one of the top aluminium producers globally. The metal fabrication equipment market in the UAE is also on the rise, signalling a strong demand within this sector.

You must recognise the food manufacturing sector, as it’s vital to the UAE’s manufacturing puzzle. The sector draws significant investments with numerous food and beverage manufacturing units, underlining its importance to the economy. These key industries are the pillars of Dubai’s manufacturing industry, each playing a crucial role in its overall performance and growth.

Contribution to the UAE Economy

Manufacturing is a vital pillar of the UAE’s economy, significantly contributing to the nation’s GDP. It’s the third-largest sector in terms of share of nominal GDP, just behind mining and manufacturing, as well as retail and wholesale trade. In 2022, manufacturing made up just under 10% of the UAE’s nominal GDP.

While the share of manufacturing in nominal GDP is a bit lower in Dubai and Abu Dhabi, the overall figure is boosted by other Emirates with substantial industrial bases, like Ras Al Khaimah and Sharjah.

The strategic vision for the UAE’s manufacturing sector is captured in Operation 300bn, which was announced in March 2021. This ambitious 10-year strategy, led by the Ministry of Industry and Advanced Technology (MoIAT), aims to boost the industrial sector’s contribution from USD 36.2 billion to USD 81.7 billion by 2031. The strategy highlights the development of key sub-sectors, including food and beverage and pharmaceuticals, to reach this target.

Growth Trends in Dubai Manufacturing

The growth trends in Dubai’s manufacturing sector paint a dynamic picture. Real growth in UAE manufacturing has picked up compared to pre-COVID trends, with the manufacturing sector’s real GDP growth hitting 8.75% in 2022, way above the average rate of 2.8% seen between 2017 and 2019. However, Dubai’s real manufacturing GDP growth was more modest at 0.26% year-on-year in 2022.

The annual growth rate in Dubai’s manufacturing sector has dipped since 2013, averaging 1.2% between 2014 and 2022, a drop from the average of 5.8% between 2010 and 2013.

Despite these ups and downs, the future looks bright, with significant growth expectations across all manufacturing sub-sectors.

The food and beverage sub-sector, in particular, is expected to see a substantial increase in value-added, projected to grow by 210% by 2031.

This growth reflects the sector’s rising importance, as manufactured products make up a crucial share of the UAE’s non-oil exports.

The Operation 300bn strategy also aims to boost the competitiveness of UAE exports globally. Non-oil exports have become more important in the UAE’s trade activities, with the largest segments being pearls, stones, precious metals, and base metals. The rubber and plastics category and the food and beverage sub-sector are also key contributors to non-oil export values.

Investment in the industrial sector is strong, with about USD 9.7 billion worth of projects planned or underway.

The ‘other manufacturing’ sub-sector, which includes a diverse range of production activities, leads in terms of investment. Bank credit to the manufacturing sector has stayed stable, with the largest shares going to ‘other manufacturing’, chemicals, chemical products, petrochemicals, and basic metal products.

Interestingly, the share of credit going to the food and beverage sector has increased, in line with its priority status in the Operation 300bn strategy.

The Emirates Development Bank (EDB) has set aside USD 8.17 billion to support the sector’s growth, expecting to help around 13,500 SMEs meet their financing needs. This financial support is a sign of the strategic importance placed on the manufacturing industry within Dubai’s broader economic landscape.

Manufacturing Warehouse

Top Manufacturing Industries In Dubai

Plastic

The city’s strategic location and advanced infrastructure have turned it into a hub for producing and exporting plastic goods. The industry thrives on the availability of raw materials and a supportive business environment, which encourages investment and innovation in plastic manufacturing.

Chemicals

This industry covers a broad spectrum of products, from basic chemicals to more complex compounds. Manufacturers in Dubai are known for adhering to international standards and regulations, ensuring they produce high-quality products for various industries, such as construction, pharmaceuticals, and agriculture.

Rubber

Rubber manufacturing is a crucial component of Dubai’s industrial tapestry. The sector has grown due to the demand for rubber products in the automotive, construction, and other industrial sectors. Producers in Dubai have leveraged the latest technologies to boost their production capabilities, making the city a competitive force in the global rubber market.

Metals

Focusing on aluminium, steel, and other metals, manufacturers in Dubai meet the needs of diverse sectors, including construction, automotive, and aerospace. The industry benefits from the city’s robust logistics and transportation network, which ensures the efficient distribution of metal products both regionally and internationally.

Food

Companies like Global Food Industries and Al Islami Foods are at the forefront of this expansion. Global Food Industries, which has been part of the Albatha Group since 1992, is a frozen food manufacturer based in Sharjah. They import Halal raw materials and supply products both within the UAE and internationally. Their brands, such as Healthy Farm, Al Areesh, and Arctic Gold, offer a range of frozen seafood, meat, poultry, and vegetable items.

How To Start A Manufacturing Company In Dubai

  1. Register Your Company Name

The initial step in establishing your manufacturing company in Dubai is to select a company name that complies with the UAE’s stringent naming conventions. The chosen name should reflect the nature of your business while respecting cultural norms and avoiding any potentially offensive or disrespectful language.

  1. Obtain Your Business Licence

Securing a trade licence is the next step after finalising your company name. This industrial licence is essential for manufacturing operations. It varies slightly depending on your location within Dubai or its free zones. It authorises a wide range of manufacturing activities, catering to the diverse industrial landscape of Dubai.

  1. Apply For Visa

To operate your business, you’ll require a visa. The Green visa is particularly beneficial for investors contributing to the UAE’s economy, offering a more extended stay compared to previous residence visas. Eligibility for this visa requires proof of investment and endorsements from the ICP and local authorities.

  1. Open A Corporate Bank Account

Opening a corporate bank account is crucial for managing your finances, enabling you to receive payments and handle expenses efficiently within the UAE’s dynamic economic environment.

Cost of a manufacturing licence in Dubai

The cost of obtaining a manufacturing licence is an initial financial consideration, with prices starting at USD 3,760. This licence is a prerequisite for entering the UAE’s manufacturing sector.

Documents required to open a manufacturing company in Dubai

A comprehensive set of documents is required to establish your manufacturing company, ensuring that every aspect of your operation is meticulously planned and regulated. You’ll need to submit a detailed factory report, which includes:

  • Information on the factory layout
  • Machinery
  • Production costs
  • Funding sources

Approval from the Ministry of Health and the Ministry of Environment and Water is necessary to ensure compliance with the UAE’s health, safety, and environmental regulations.

Permitted Activities Under A Manufacturing/Industrial Licence in Dubai

Companies must obtain an industrial licence from the Department of Economic Development (DED) to participate in Dubai’s industrial sector. This authorisation permits a plethora of activities, enabling businesses to contribute to the diversification and enhancement of the emirate’s economic fabric.

The range of permissible activities under this licence is broad, encompassing the production of textiles, garments, and rugs and the fabrication of machines and appliances. Woodworking, steel fabrication, and electricity generation and transmission are also included.

The scope further extends to the production of motorcycles and their parts, as well as precision activities such as gold and precious stone cutting, glass repair and lens cutting, and eyeglasses production. Those manufacturing leather products and paper products and engaging in ship construction will also find opportunities within Dubai’s industrial landscape.

List Of Permitted Activities:

  • Appliances and Machinery Manufacturing
  •  Bags, Shoes and Leather Products Manufacturing
  • Block and Building Stones Industry
  •  Carpet and Mat Manufacturing
  • Coating, Insulations, Seals and Protection Materials Manufacturing
  • Equipment and Engines Manufacturing
  • Food Industries
  • Foodstuff Mills and Packaging
  • Glass and Chinaware Manufacturing
  • Gold and Precious Stones Cutting Manufacturing
  • Light Aircraft Manufacturing and Maintenance
  • Lighting Equipment Manufacturing
  • Manufacturing of Chemicals
  • Meat Processing
  • Medicines Manufacture
  • Metal Containers and Boxes Manufacturing
  • Oven and Stove Manufacturing
  • Paper and Paper Products Manufacturing
  • Petroleum Products Manufacturing
  • Plastic Industries
  • Ship Building and Repairing
  • Stationery Manufacturing
  • Steel Workshop
  • Textiles and Products Manufacturing
  • Tyres and Rubber Products Manufacturing
  • Water Manufacturing and Bottling

Employees Working In The Manufacturing Industry

Future Outlook for Manufacturing in Dubai

Opportunities for Foreign Investment

The emirate is poised for a significant evolution, with a strategic plan to attract foreign capital. A pivotal element of this plan is the forthcoming energy policy, set to launch at the beginning of 2024 as part of the D33, which seeks to enhance economic diversification and expansion.

Managed by DEWA, the policy incentivises manufacturers in sectors such as data centres and agri-tech to implement captive solar generation. This initiative aligns with the emirate’s objectives to foster a green economy by allowing businesses to produce their own energy, thereby reducing operational costs and contributing to environmental sustainability. Additionally, these manufacturers will be granted preferential access to i-RECs, facilitating their efforts to achieve net-zero emissions and adhere to global sustainability benchmarks.

The anticipated influx of investments, driven by this policy, is expected to bolster the manufacturing landscape and its associated logistics and trade services. It underscores Dubai’s dedication to promoting a resilient and environmentally conscious industrial sector.

The UAE’s goal to enhance its manufacturing output by 30% and add $6.8 billion to its GDP by 2031 is a testament to its commitment to industrial progress. The Smart Manufacturing Project in Abu Dhabi exemplifies this dedication, offering new financing options through the commercial banking system to encourage the integration of cutting-edge manufacturing technologies.

The IDB has been accepting registration for this project since February 2022, aiming to elevate factory operations in terms of automation, safety, and efficiency.

Moreover, the U.S. Commercial Service in the UAE provides valuable assistance to American firms seeking opportunities in the UAE market, offering services such as matchmaking and market research. This is particularly beneficial for burgeoning manufacturers in high-growth industries looking to enter the UAE’s vibrant industrial sector.

Sustainability and Renewable Energy Focus

The D33 Agenda, championed by His Highness Sheikh Mohammed bin Rashid Al Maktoum, strongly emphasises green manufacturing. This approach is consistent with the overarching goal of nurturing a green economy and preserving a sustainable environment conducive to enduring economic growth.

The forthcoming energy policy for manufacturers is a critical component of this sustainable vision, aiming to reduce the sector’s carbon footprint substantially. This initiative is harmonious with the UAE’s Net Zero by 2050 strategy, underscoring the nation’s commitment to combating climate change. The policy’s introduction is timely, aligning with the UAE’s role as the host of COP28 at Expo City Dubai and reinforcing the emirate’s dedication to environmental stewardship.

By advocating for energy-efficient and environmentally friendly production methods, Dubai is enhancing its industrial output and establishing itself as an attractive destination for sustainable enterprises. This effort is integral to the Dubai Industrial Strategy 2030, which aspires to make Dubai a leading centre for advanced manufacturing.

Dubai Manufacturing: A Forward-Thinking Industry

Dubai’s manufacturing industry stands as a testament to the emirate’s innovative spirit and business acumen. It has established itself as a cornerstone of the region’s prosperity by driving economic growth and diversification. In the face of global economic shifts and competitive pressures, Dubai has not only sustained but increased its attractiveness to investors, business leaders, and entrepreneurs alike.

With strategies like Operation 300bn providing a clear roadmap, the sector is set to reach new heights, marrying sustainability with advanced technology. As Dubai continues to develop state-of-the-art infrastructure, foster skilled talent, and uphold a supportive business environment, the manufacturing industry is well-equipped to thrive in the global marketplace. For those looking to be part of an industrious future, there’s no denying that Dubai is forging ahead, embracing the challenges and opportunities of tomorrow’s manufacturing landscape.

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