Industry leaders rally behind ‘ambitious but achievable’ Operation 300bn targets
▶ SME ecosystem is key to UAE’s industrial growth strategy, which will also boost FDI, panellists at GMIS say
Goals of the UAE’s Operation 300bn “are ambitious but achievable”, according to senior government and industrial sector executives.
They believe the targets are central to attracting foreign direct investment and support the small and medium-sized enterprises ecosystem, which is at the heart of the country’s industrial sector growth strategy.
“The target of Dh300bn ... it’s a stretched target but it’s achievable,” Abdulla Al Shamsi, assistant undersecretary at the Ministry of Industry and Advanced Technology, told a panel at the Global Manufacturing and Industrialisation Summit in Dubai on Tuesday.
“SMEs are at the heart of the Operation 300bn and the next five to 10 years are very positive for SMEs in the UAE,” he said.
“We have demand growing exponentially in many sectors … I think it is really time for SMEs to be unleashed and growth unlocked in the UAE.”
The UAE is diversifying its economy and expanding its industrial base to reduce reliance on imports of industrial inputs and cut dependence on global supply chains after the pandemic that disrupted international trade last year.
In March, the Arab world’s second-largest economy announced plans to increase the manufacturing sector’s contribution to the country’s economic output to Dh300 billion ($87.4bn) from Dh133bn over the next decade, boost local production and create world-beating light and heavy industries.
The Operation 300bn industrial strategy supports spending towards local products and local suppliers, as well as promoting investment in research and development and incentivising implementation of advanced technology in the UAE.
The strategy will focus on expanding sectors, including petrochemicals, plastics and metals, and further develop food, water and healthcare industrial bases.
“There is a lot we can do within existing sectors to go to the next level to increase value,” Mr Al Shamsi said. “We have the capital, know-how and comparative advantages to help us develop new sectors.”
Co-ordinating efforts between government entities and national industrial champions, however, will be a “critical success factor in paving the way for industrial growth”, he said.
The panel at GMIS also included Saeed Al Remeithi, chief executive of Emirates Steel; Ahmed Al Naqbi, chief executive of Emirates Development Bank; Abdulnasser bin Kalban, chief executive of Emirates Global Aluminium; Khaleefa Al Mheiri, acting chief executive of Ta’ziz development in Abu Dhabi; and Saud Abu Al Shawareb, managing director of Dubai Industrial City.
The UAE’s industrial strategy also aims to establish 13,500 companies, increasing the R&D investment to Dh57bn by 2031 from Dh21bn currently.
Mr Al Naqbi said the country was looking to inject Dh30bn into the market by 2025 “to support this ecosystem, support this acceleration of growth”.
“We want to support the creation of 25,000 jobs and 13,500 companies here in the country.”
The targets set by the strategy are achievable, he said.
The strategy will not only support SMEs – that form about 95 per cent of businesses in the UAE and 80 per cent of employment in the private sector – it will also boost foreign direct investment, Mr Al Remeithi said.
Development of SMEs is at the top of the UAE’s economic agenda for the next 50 years. The government has launched incentives to boost their growth and nurture entrepreneurship and start-ups.
EGA, which is among the biggest non-oil sector industrial companies in the UAE, is already procuring 45 per cent of its total needs from SMEs at home, its chief executive said.
SMEs feed into your system. For us SME is [a] crucial [sector], Mr bin Kalban said.
The company, which has spent $1.6bn every year on domestic procurements, plans to increase the proportion of local supplies.
“Our strategy is to have a new ecosystem ... in our backyard,” he said.
Near-shoring of supply chain, he said, was possible with the support of institutions such as EDB that can help establish more local and international SMEs, and EGA can do longterm off-take agreements with them.
“It will take time”, but it is achievable, he said.
Ta’ziz, the chemical manufacturing centre within Ruwais industrial hub, also fits perfectly into the UAE’s industrial growth strategy, as it will create direct jobs.
“The chemicals sector also plays a vital role as an input to different industries and manufacturing sectors. There will be opportunity [for growth] down the value chain,” Mr Al Mheiri said.
“Currently, we are in a prefeed stage and we expect a final investment decision next year, while we expect operations [to begin] in 2025.”
Dubai Industrial City, an industrial hub situated close to the emirate’s Jebel Ali Port, is also collaborating with different entities to “complement the government agenda” and host industries from priority sectors defined in the Operation 300bn strategy, Mr Al Shawareb said.
The DIC expects to announce rail connectivity next year, which, he said, would add to its attractiveness for industries.
It is time for SMEs to be unleashed and growth unlocked in the UAE, says Abdulla Al Shamsi