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Manufacturing in UAE: Driving Economic Growth and Diversification

by CEO Editorial Team

May 8, 2023 24

The manufacturing sector in the United Arab Emirates (UAE) has been growing steadily over the past few years, thanks to a favorable business environment and government support. The UAE has been actively promoting its manufacturing industry as a key driver of economic growth, and its efforts have been paying off. In this article, we will discuss the manufacturing sector in UAE and its contribution to the economy.

The manufacturing sector in UAE comprises a wide range of industries, including textiles, chemicals, food and beverages, plastics, metals, and machinery. The sector has been growing at a rapid pace, with a compound annual growth rate (CAGR) of 5.5% over the past decade. According to the Federal Competitiveness and Statistics Authority, the manufacturing sector contributed 13% to the UAE’s gross domestic product (GDP) in 2020.

One of the reasons behind the growth of the manufacturing sector in UAE is the favorable business environment. The UAE has been ranked as the easiest place to do business in the Middle East and North Africa region by the World Bank’s Doing Business report. The country has a well-developed infrastructure, a stable political environment, and a strategic location that connects it to the rest of the world. The government has also been offering incentives to attract foreign investors, such as tax breaks, subsidies, and free zones.

Another factor that has contributed to the growth of the manufacturing sector in UAE is the availability of skilled labor. The UAE has a highly skilled and diverse workforce, with a large number of expatriates working in the country. The government has been investing in education and training programs to develop the skills of its citizens and ensure that they are equipped to work in the manufacturing industry.

The UAE’s manufacturing sector is also benefiting from the country’s position as a global trading hub. The UAE has a well-established logistics and transportation infrastructure, which makes it easier for manufacturers to import raw materials and export finished products. The country has also been investing in its ports and airports to improve their efficiency and capacity.

The UAE government has been actively promoting the manufacturing sector as part of its economic diversification strategy. The country has traditionally relied on its oil and gas sector for economic growth, but with the decline in oil prices and the need to diversify the economy, the government has been focusing on developing other industries. The manufacturing sector is seen as a key sector that can create jobs and reduce the country’s dependence on oil revenues.

To promote the manufacturing sector, the UAE government has been offering a range of incentives and support measures. These include tax exemptions, land grants, access to financing, and support for research and development. The government has also established free zones where foreign investors can set up their manufacturing operations without having to pay taxes or customs duties.

The manufacturing sector in UAE faces several challenges, including competition from low-cost producers in other countries and a shortage of skilled labor in certain areas. However, the government’s efforts to promote the sector and the favorable business environment are expected to continue to drive growth in the sector.

In conclusion, the manufacturing sector in UAE has been growing steadily over the past few years and has become an important contributor to the country’s economy. The sector benefits from a favorable business environment, a skilled workforce, and the country’s position as a global trading hub. The UAE government has been actively promoting the sector as part of its economic diversification strategy, and its efforts are expected to continue to drive growth in the sector.