Dubai: Just less than 50 years since its formation, the United Arab Emirates has transformed its economy from one based on oasis farming, fishing, date and pearl trading, to one of the region’s and the world’s most dynamic and fastest growing marketplaces.
Today, in its golden Jubilee year, The Emirates boasts a knowledge- and innovation-based economy which has set its sights on becoming a global industrial leader in the next ten years.
Though oil have historically formed the bedrock of the UAE’s economic growth, the nation’s leadership has always moved quickly and responded rapidly to evolving global shifts to set ambitious diversification plans in motion to build a sustainable socioeconomic development framework and leverage new opportunities.
Such a future-forward outlook has seen the UAE rise to become a global financial, logistics and transport hub that serves as the regional headquarters for a multitude of international companies. And for good reason.
The Emirates enjoys a vastly diverse energy mix at competitive prices. It boasts a best-in-class transport, communication, and logistics and service infrastructure, 21 economic trade zones including in Abu Dhabi, Dubai, Fujairah and Sharjah. It was among the top-performing countries in 2020 for economic performance and entrepreneurship. What’s more, more than 5 billion people around the world can fly to the UAE within 8 hours.
Given its strong fundamentals, including its ideal strategic location, the UAE has become a gateway to markets that reach almost three billion people. It’s the sort of access that investors from around the world crave.
Now the UAE is setting its sights on the industrial sector. Driven by the vision of its leadership, The Emirates is targeting growth across the industrial value chain. It will look to stimulate growth and boost productivity in industries where it is already firmly established, including energy, petrochemicals, plastics, metals and manufacturing.
Beyond this, it will also look to accelerate the growth of strategic industries to reinforce its resilience and reduce its dependence on global supply chains like food, agriculture, water and healthcare. And it will also look to spur the development of industries of the future, like space, hydrogen and medi-tech, where Fourth Industrial Revolution (4IR) technologies will play a critical role.
The vision is predicated on stimulating innovation and accelerating advanced technology adoption across the value chain to enhance global competitiveness, generate in-country value and create jobs for its citizens as it takes its diversification efforts to a new level.
Under the Ministry of Industry and Advanced Technology’s (MoIAT) comprehensive strategy, “Operation 300 Bn”, the UAE is aiming to more than double the industrial sector’s GDP contribution to AED300 billion by 2031 and transform the UAE into a leading industrial hub.
Pivoting to move with the times is nothing new to The Emirates. Its status as a regional economic leader is the result of many years of meticulous planning and cultivating a productive, competitive and resilient business mindset. Key to this has been the development of the requisite laws and legislation which support innovation and entrepreneurship, and which will fortify the nation’s new era of industrial prominence.
At the dawn of the new millennium, the UAE ratified a federal law to regulate and protect industrial copyrights for patents and industrial designs. Relevant authorities also issued a package of resolutions and decrees to build a framework for the corporate governance process by clarifying general guidelines for general assemblies, administrative structures, and workflow mechanisms.
The UAE government adopted a bankruptcy law which achieves a balance between the interests of creditors and debtors, while ensuring the rights of both parties. Meanwhile, the insolvency law became a unique legal framework that reflected the UAE’s pioneering legislative structure, by granting debtors a time limit to pay their debts without causing any serious harm to creditors. Also, the law constituted a major addition which enriched the growing wealth management and family business sectors locally and regionally.
Then, marking an inflection point for the nation’s business landscape, the new amendment to the companies’ law issued in 2020 allowed foreign entrepreneurs and investors 100 per cent ownership of companies.
The UAE’s competitive business advantages extend beyond its advanced regulatory and logistical framework and flexible financing solutions. The Emirates enjoys robust economic stability and a promising investment environment due to its strategic location, strong financial reserves, large sovereign wealth funds, and robust and uninterrupted government spending.
Indeed, spending on sustainable development projects is a priority. The nation’s infrastructure and economic sectors received AED4.5 billion within the 2021 budget. And in the World Competitiveness Yearbook 2020, issued by the Swiss-based International Institute for Management Development, the UAE advanced five positions in to rank 28th in the world for its infrastructure.
What’s more, the UAE also ranked third globally and first regionally in the strength of investment in infrastructure projects and investment in facilities over the past years, as part of the Global Infrastructure Index 2020. In addition, the UAE ranked first among countries with the best electronic infrastructure globally, and 31st for the quality of digital life in 2020.
Another major pull for international industry players is the many specialized free zones across the UAE in the fields of finance and business, information technology, in addition to creative economy sectors such as media and artistic production and which support a multitude of small and medium enterprises (SMEs).
In total, SMEs in the UAE contribute 62% to the country’s non-oil GDP and employ about 85% of the workforce in the private sector. During 2017 and 2018, the rate of SME growth ranged between 5-7 per cent, and the UAE recently issued a number of initiatives to support SMEs, including reducing the rate of return that commercial banks receive from the financing provided to project owners, reducing guarantees required by the banks, as well as allocating a specific share of banks’ public financing for entrepreneurs.
The UAE continues to take steps to support and empower the SME sector by strengthening the partnership between various parties to provide an incubating environment for entrepreneurship, such as the strategic partnership between the Ministries of Economy and the Ministry of Human Resources and Emiratisation, which aims to achieve several goals, including strengthening the role of entrepreneurship and freelance work.
Given the UAE’s unyielding commitment enhancing its leading economic position, it is natural for the country to lead the region in global indicators and to be recognized with solid credit ratings from. The UAE government obtained the highest sovereign rating in the region (Aa2) from the international rating agency Moody’s with a stable outlook towards the national economy.
Furthermore, the UAE ranked ninth in the world among the most competitive countries, and came first for the fourth consecutive year among MENA countries in the World Competitiveness Yearbook 2020 report. The country also ranked 16th globally in the World Bank’s “Doing Business” report and ranked first in the Arab world for the seventh year in a row.
According to a report by New World Wealth, which specializes in wealth research, the fortunes of millionaires and billionaires in the UAE increased by $45 billion (AED165.15 billion) in H2 of 2020, registering an increase of 4,276 millionaires (measured in US dollars), in addition to one billionaire by the end of December 2020. By the end of 2020, 87,000 millionaires and 13 billionaires lived in the UAE, with a combined wealth of $870 billion (AED3.2 trillion) – which is up from 82,724 millionaires and 12 billionaires previously.
More than 4,500 wealthy people moved to reside and live in the UAE between 2000 and 2020. It follows then, that the UAE is the largest wealth management hub in the region, with assets amounting to approximately $110 billion.
The UAE’s vibrant industrial and advanced technology ecosystem, which can accelerate further growth in the economy gives the nation great confidence that it will continue to be seen as an ideal country to invest in thanks to its attractive business environment, its status as a global hub for trade and logistics, and its world-class ICT infrastructure allied to one of the world’s best ports and logistics infrastructure.