Contents Dubai Future Economy Strategy Manufacturing sectors – Dubai’s Manufacturing Sector, Segments & sub segments 2017 – Outlook and Trends Manufacturing sector indicators Manufacturing sector Outlook Appendix Dubai Economy in collaboration with Frost & Sullivan have undertaken detailed studies of key industry and business segments in Dubai with a focus on trends and opportunities MANUFACTURING SECTOR IN DUBAI • In 2017 Dubai manufacturing sector was the fourth top contributing sector to Dubai Economy after Financial services. • The manufacturing sector will have a significant impact on Dubai’s economy towards 2030, as it is expected to lead to- – Creating more than 27,000 specialized jobs for the region – Increase in R&D spend by approximately 70mn AED – 16bn AED forecasted increase in exports – 18bn AED GDP growth within industrial sector (currently 41bn AED) – 160bn AED forecasted increase in Dubai’s total GDP • It achieved a modest growth rate of 3.9% since 2016 and the contribution remained same since 2016. • The Dubai Industrial strategy identified 6 strategic sectors as the main drivers of the manufacturing economy including Aerospace, Maritime, Pharmaceuticals & Medical equipment, Aluminum & Fabricated metals, Fast moving consumable goods (FMCG) and machinery & equipment. GDP Contribution (%) Wholesale and retail trade Transportation and storage Financial and insurance 15 activities 25 4 Manufacturing 4 Real estate activities 6 Construction Hospitality and food service 12 7 activities 7 Information and 12 communication 9 Professional and technical activities Others Manufacturing sector witnessed shrunk in GDP share fromprevious years coupled with marginal growth in licensees issued • The GDP share of manufacturing sector shrunk from close to 14% during 2014 – when it was the third largest sector to 9% in 2016 shifting to 4th position. • Between 2010 and 2016 net manufacturing license issued increased at an average of almost 4% per year. By the end of 2016, 3,200 manufacturing licenses had been issued in Dubai registering annual growth rate of 3% from the previous year. • The shrink in GDP and modest growth rates could be attributed to diversification of economy to promote sectors like Information & communication and other professional activities. No. of licensees 3,200 3,500 3,195 2,973 3,000 2,803 2,635 2,459 2,523 2,500 2,000 1,500 1,000 500 0 2010 2011 2012 2013 2014 2015 2016 Dubai is the world’s third largest re-exporter in the Middle East region with Free Trade Zones playing a predominant role Dubai Airport Free Zone Area Dubai Multi Commodities Centre • Dubai has 18 industrial zones split between mainland and free zones. Some of the Free trade zones include: – Dubai Multi Commodities Centre – Dubai Airport Free Zone Area – Dubai Cargo Village – Dubai Cars & Automotive Zone – Dubai Logistics City – Dubai Maritime City – Dubai World Central – Jebel Ali Free Zone Area • The real benefits of free trade zones to foreign investors include – Developed infrastructure, Customs free trading zone, Independent free zone authority and “one stop shop” bureaucracy. – 100% foreign ownership – 100% repatriation of capital and profits – 0% corporate, personal tax – Quick business establishment – No restrictions on recruiting foreign national labor. DMCC free trade zone in Dubai is the worlds biggest FTZ and Contributes to nearly 9.6% of Dubai Economy • DMCC has been growing on an average 33% annually. Contributes to nearly 9.6% of Dubai Economy. • The DMCC Establishment law gives complete autonomy to the Authority to define the laws and regulations governing DMCC. The Authority has complete jurisdiction over all policies and procedures. • The zone has been developed in 200 hectares of business and residential community Flexible office solutions various trading platforms including Dubai Gold and Commodities Exchange, Dubai Diamond Exchange, DMCC Pearl Exchange, DMCC Tea Centre and DMCC Trade Flow. • The zone offers complete exemption from customs and all commercial levies/taxes and No foreign exchange controls. • More over complete exemption from all taxes; Guaranteed 50 year tax holiday on personal and income taxes is provided. • Other incentives include 100% foreign ownership, 100% repatriation of capital and profits and Long term renewable leases for land and low land rates. • In terms of population, DMCC hosts 14,100 members in DMCC and 95% of member companies new to Dubai. 170 new companies add every year with 900 different business activities. • Currently the zone hosts 92,500 employees with 75% are SME companies Focus sectors in DMCC For the Gold and precious stones commodity trading markets - Preferential freight rates; high tech secure vault facilities, assaying facilities, purpose built jewelry and Gemplex to facilitate manufacturing and a commercial tower to house trading, wholesale and banking operations Impact on economy & FDI growth Dubai’s gold business has grown from $ 6 million in 2002 to $75 billion. Diamond business has grown from $ 3million in 2002 to $ 40 billion. JAFZA and DAFZA are the other key industrial zones in Dubai’s manufacturing zone Jebel Ali Free Zone (JAFZA) • The development of free economic zones has spurred investment in Dubai’s manufacturing sector. • Jebel Ali Free Zone (JAFZA) is the flagship free zone operation of Economic Zones World (EZW). • JAFZA is currently home to over 7,500 companies with 17% of these companies operating in IT and electronics, 15% in construction material, 12% in chemical and petroleum products, 12% in machinery and equipment, 10% in food and healthcare, 9% in automotive and 5% in the logistics sector. • Jafza estimated that these companies together have generated trade worth more than AED 330bn in 2014, providing more than 200,000 jobs in Dubai and the UAE. Dubai International Airport Free zone • Dubai International Airport Free Zone (DAFZA) contributed AED 109bn to Dubai’s non-oil foreign trade in 2014. • It offers the same incentives package as JAFZA and other zones, while also being located next to Dubai airport, a big logistical advantage for manufacturers there. • While certain cargo services have moved to Al Maktoum International Airport at Dubai World Central (DWC), DAFZA is still very much a major hub for airborne imports and exports. Business friednly incentives and World class infrastrcture in Free trade zones is attarcting foreign investmetnts manufactruing sector • The Free Trade Zone (FTZ) trade increased at a growth rate of 8% during 2015-16 and the custom ware house trade increased at growth rate of 4%. • It is considered that the environment of incentives offered to foreign investors coupled with local eco system has triggered operations in the FTZs. • FTZs like DAFZA have ear marked space for light industrial units to promote manufacturing. • Strategic locations, live and work environment, Smart and flexible solutions for Governance and operations and empowerment as one stop authority are contributing to the success of manufacturing sector in FTZs in Dubai. • DAFZA currently hosts some of the biggest and most prominent aviation companies– including Airbus, Boeing, General Electric, Rolls-Royce, and Bombardier, among others. In light of the development of the industry in the region Value of Trade in AED 44,191 Imports 2,909 Exports 1,26,588 Re-exports 62,088 FTZ Imports FTZ Exports FTZ Re-exports 42,387 32,852 1,40,000 1,17,536 1,20,000 1,09,188 1,00,000 80,000 60,000 40,000 20,000 7,246 6,969 0 2016 2015 Total Free Zone Trade Total Customs Warehouse Trade MANUFACTURING SECTORS - SEGMENTS & SUB SEGMENTS Availability of high class infrastructure has driven businesses to set-up manufacturing activities in Dubai – (1/3) Pharmaceuticals Maritime • R&D • Boats • Production • Ships • Quality Assurance • Floating Structures • Shipyard • Dry Docks Chemicals & Plastics Perfumes & Cosmetics • Chemicals & Chemical Products • Perfume Manufacturers • Glass and Plastic Products • Cosmetics • Special Chemical Products • Petrochemical Products Availability of high class infrastructure has driven businesses to set-up manufacturing activities in Dubai – (2/3) Electrical Manufacturing Metals Manufacturing • Electrical Product Manufacturers • Cast Iron Suppliers • Electrical Machinery & Equipment Suppliers • Iron Products Manufacturers • Electronic Equipment Manufacturers • Aluminium and other Metal Export Agenicies • Steel Products Suppliers and Manufacturers Sports Goods & Textile Toys Manufacturing Manufacturing • Retailers • Machines, Equipment Manufacturers • Apparel, Footwear Suppliers and • Apparel Manufacturing Companies Manufacturers • Garment and Apparel Export Agencies • Sport Accessories Manufacturers, Suppliers and Distributors Availability of high class infrastructure has driven businesses to set-up manufacturing activities in Dubai – (3/3) Wood and Furniture Paper & Paper Products Manufacturing Manufacturing • Construction Industry • Education Sector • Domestic Sector- Households • Local Manufacturers & Suppliers • Commercial Sector- Schools, Offices • Hospitality & Event Management &Hospitals • Product Manufacturers • Hotels & Restaurants Aerospace & Food & Defence Beverage • Defence Equipment Manufacturers & • Farms/ Growers Suppliers • Food Processors • Military Infrastructure Service providers • Intermediaries • Arms Manufacturers & Suppliers • Sugar • Aircraft and other product Manufacturers • Retailers+ H8 Electronics market in Dubai is expected to grow at a rate of 4.7% and may go above AED 11 Billion by 2020 Electrical Electrical Machinery