Manufacturing sector records 7pc growth

As the largest non-oil economic sector, the vibrant manufacturing activities in the UAE registered a combined turnover of Dh39 billion in 2003, according to a study by Emirates Industrial Bank.

Although the sector provides employment to large number of people it now accounts for one-fifth of the entire non-oil economy, the study said.

Analysts said the growth in the manufacturing sector has been steady due to a rise in population and demand for consumer goods, growth of the free zones and foreign direct investments in the country on the other hand.

Industry sources say, steel and aluminium industries contributed to a large extent in this sector as steel production in the UAE presently accounts for about a quarter for the total local demand and the demand is increasing due to the high rate of construction activities and also due to a major demand arising from the Iraq reconstruction. More and more steel plants are required to fulfill the demands of the region.

Recent statistics reveal that industries in the manufacturing sector which achieved maximum growth last year was Wood & Furniture with a 15.3 per cent growth in employment, followed by Non-Metallic Mineral Products with a 13.8 per cent growth and Food & Beverages 10.9 per cent.

According to sources, the textile & garment industry is witnessing losses as a production shift in favour of woven (non-knitted) category has been accompanied by a general decline in production of both knitted and non-knitted garments and is currently less than 40 per cent of the peak reached in 1997.

Analysts report that Dubal is the largest single site aluminium smelter in the region and the largest single non-oil contributor of Dubai's economy. There are number of local companies that take aluminium from Dubal and process it into a wide range of products.

The growth of the manufacturing sector will be boosted as foreign direct investments into the UAE have been increasing, particularly after the setting up of the free zones in virtually every Emirate .

The free zones are part of the diversification, industrialization and development strategy of each Emirate. Currently, there are more than 3000 companies in the various free zones across the country, with an estimated investment of around Dh15 billion. However, the majority of the units in the free zones are not manufacturing establishments.

At present, basic metals dominate non-oil manufactured exports, most of it being accounted for by aluminium smelting. Other significant contributors to non-oil exports from UAE are cement, corrugated cartons, metal scrap, snack foods, plastic products, paints, lubricants and chemicals. The primary market for most of these firms is still domestic.