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Industrial Development Report 2018
March 2019 Dubai Exports .Export Market Development
P.O.Box 13223 Dubai www.dubaided.gov.ae Ref4 Q1 2019
2
TABLE OF CONTENTS
Manufacturing GDP _______________________________________________
Foreign Direct Investment in Manufacturing ____________________________
Manufacturing Performance Indicators ________________________________
Manufacturing Trend in Dubai in 2018 ________________________________
Impact on Trade __________________________________________________
Global Industry Trends ____________________________________________
Dubai Future Business Outlook ____________________________________
3
DUBAI MANUFACTURING GDP
Manufacturing ranks in the fourth position in contribution to GDP after Wholesale and Retail
Trade ,Transportation and Financial and Insurance Services. Its contribution to GDP recorded
9.4% of total GDP in 2017
While Manufacturing GDP achieved a growth rate of 2% in 2017 on 2016,lower than the
total GDP growth of 2.8%
26.6
11.8
10.49.4
7.1
6.3
28.3
Wholesale and retail trade; repair ofmotor vehicles and motorcycles
Transportation and storage
Financial and insurance activities
Manufacturing
Real estate activities
Construction
Others
4
FOREIGN DIRECT INVESTMENT IN MANUFACTURING
Manufacturing FDI shares 4% of all sectors FDI stock in Dubai in 2016, It ranks in the fourth
position after ,Wholesale and Retail Trade and Repair(36.5%) , Financial and
insurance(24%),Real Estate (21.6%).However the growth of FDI manufacturing stock in 2016
on 2015 was minor at 1.4%
Total Stock of Foreign Direct Investment by Economic Activity
النشاط االقتصادي
2015 2016 نسبة النمو
Growth Rate %
Economic Activity القيمة
Value
%نسبة المساھمة Percentage
Contribution %
القيمةValue
نسبة المساھمة %Percentage
Contribution %
Manufacturing 1.4 4.0 11,553.5 4.2 11,396.6 الصناعة التحويلية
Source: Dubai Statistics Center
5
MANUFACTURING PERFORMANCE INDICATORS
Manufacturing Output The manufacturing annual output is estimated currently at about 119 Billion AED
Food sector leads manufacturing activities in annual output value, sharing 14%, followed by
Petroleum Refining(12%), Metal Fabrication (11%)
Top Value Added Activities
Five activities namely: Basic Metals, Fabricated Metals, Chemicals, Food and Non-Metallic
Minerals(typical is cement and crushers industry), lead in value added generation, among
them, they share 52% of the total manufacturing value added.
Here are typical sub-activities under these major activities :
-Basic Metal constitutes mainly Aluminum Smelting.
-Steel Fabrication include, aluminum downstream industries (typical is aluminum extrusion)
and Steel re-rolling.
-Chemicals include blending and mixing of chemicals for industrial and household use;
(typical are detergents, disinfectants, and paints)
-Food Products comprise Sugar and Confectionery, processed meats / vegetables
,and edible oils
6
Typical High Value Added Manufacturing Activities in
Dubai
1. Basic Metals
7
2. Metal Fabrication
3. Food Processing
8
4. Chemicals/Paints
9
Labor Productivityi
Labor employment in the manufacturing sector in Dubai is estimated at around 264,000
persons.
Overall labor productivity in industry remained at the same level in the recent years at around
450,000 AED output/employee with minimal growth ,if any, while for example EU28
countries industrial productivity growth(including energy) during 2016 2017 is estimated at
around 1.8% according to OECD
The most labor-intensive activities in Dubai are Metal Fabrication, Non –Metallic Minerals
(cement, stone crushers) and Food. The least labor intensive activities in Dubai with highest
output per employee are Petroleum Refining, Tobacco Production, Basic Metals(Aluminum
Smelting),Chemicals, Manufacture of Computers and Electronics
Paints Manufacturing
10
Diversification
Diversif icat ion in the manufacturing sector is reflected in export diversif icat ion It is clear from the table below that the number of 4HS Codes have increased in 2017 on 2016 by 19% indicat ing that good diversif icat ion is taking place in the manufacturing sector, though the diversif icat ion index in 2017 is sti l l less than what was in 2014, a year which must have been an excellent for the industrial product diversif icat ion
2013 2014 2015 2016 2017
MACROECONOMIC INDICATORS of Diversification
# of Markets delivering 80% of export value
21 26 25 25 26
# of4 HS Codes delivering 80% of exports by value
22 33 25 21 25
0
2
4
6
8
10
12
Out
put p
er e
mpl
u]ye
e in
Mill
ion
AE
D
Top Actibvities with higewst output per employee
Petroleum Refining, Tobacco Production, Basic Metals (Aluminum Smelting), Chemicals,
Manufacture of Computers and Electronics are the least labor-intensive activities in Dubai
with highest output per employee
11
12
MANUFACTURING TREND IN DUBAI IN 2018
According to a report by Oxford Business Group on Dubai Economy 2019 ,some industries
came up in Dubai in 2018 marking a trend of evolution towards new technologies typical
examples are:
The establishment of a chemicals and building materials plant by Sika Switzerland , with a
$10.8m production facility at Dubai Industrial Park ,having a capacity of 240,000 tons per
annum .The plant takes advantage of the strategic location of Dubai to supply the growing
regional market particularly GCC,and in the Pharma sector ,Wockhardt and India-based
company, opened a $40m factory to manufacture new chemical entities used to develop
antimicrobial treatments to fight superbugs..The factory is fully automated and comprise
warehousing and testing facilities. Similarly Pharmax , a UAE based company, started a
production of generic medicine in Dubai Science Park with nan investment of around 125 Mil
AED, a joint venture with UAE distributor Al Ittihad Drug Store and two Morocco-based drug
companies. The factory capacity is set at 200 mil tablets and capsules a year ,planned to rise
to 800 mil for 2021-2023
According to Oxford Business Group, there has been a trend in digitization of services in
Dubai ,indicated by falling costs of cloud data storage and the emergence of companies that
capitalize on intellectual property assets rather than physical properties like machines .
Some of the factors which are seen to drive the future investment in the manufacturing
include the increase in oil prices , the introduction of the 100% ownership onshore and the 10
year visa scheme
A NEW CHEMICAL AND BUILDING MATERIAL
FACTORY AND TWO PHARMA FACTORIES
OPENED IN DUBAI IN 2018
13
An earlier survey of DE manufacturing members showed that 12% of participants were
highly digitized ,35% are semi digitized and 53% have low digitization, currently the
biggest use is for cloud technology (58.8%) followed by Internet of things (47.1%), and
activities with top priority for digitization are product supply chain management and
engagement with customers , while lack of digital skills and resistance to changes were
considered ,relatively, the most important challenges facing digitization
14
IMPACT ON TRADE
Export increased by 0.3% in 2017 on 2016, while manufacturing GDP increased by 2.0%
during the same period, indicating manufacturing has depended more on the domestic market
than the export market in 2017 due to recession in world trade
Export Growth 0.3%
Manufacturing GDP
Growth 2.0%
“Manufacturing GDP grew at a rate higher than exports which was affected by international recession.”
15
GLOBAL INDUSTRY TRENDS
World Manufacturing Value Added Trendii Global MVA more than doubled between 1990
and 2016 to $12,316 billion (at constant 2010 prices).1
Developing and emerging industrial economies’ share
doubled over this period, rising from 21.7 percent to
44.6 percent, reaching $5,494 billion at 2010 constant
Prices
China has the world’s largest share of MVA. It
Doubled, from 12.6 percent in 2006 to 24.4 percent in
2016. The United States, whose share declined from
20 percent to 16 percent over the period, has the second-
largest share
World Manufacturing Share in GDP In industrialized economies the MVA share of
GDP declined from 14.7 percent in 1991 to 13.9 percent
in 2014 thanks to the increasing
importance of services. In developing and emerging
industrial economies, the share climbed from 15.4 percent
to 20.3 percent, thanks largely to the relocation of
manufacturing production from industrialized economies
to the developing world.
Productivity Growth in EU (Industry)
2014 2015 2016 2017 EU 28
countries 1.9 2.7 1.7 1.9
16
“Food, Chemicals and Electronics manufacturing have the largest shares in the world Manufacturing Value Added.”
17
18
DUBIA FUTURE BUSINESS OUTLOOK
According to the latest Business Survey conducted by Dubai Economy, the manufacturing
business community have a very positive outlook for Q1 2019 performance
The number of respondents who see an increase in sales was 70% against 15% thinking that
sales will decrease ... New purchase orders have showed a very positive sentiments by the
manufacturing community for Q1 2019,as 64% believes that new purchase orders will
increase while only 3% believe that orders will decrease.
Profit is also forecasted to increase by 48% of respondents against 9% of respondents
forecasting a decrease in profits.
Forecast Business Performance (Manufacturing Exporters) – Q1, 2019
Parameter Q1, 2018 Q4, 2018 Q1, 2019
Increas
e
Decreas
e
No
Chang
e
Net
Balanc
e
Increas
e
Decreas
e
No
Chang
e
Net
Balanc
e
Increas
e
Decreas
e
No
Chang
e
Net
Balanc
e
Sales
Revenue
38% 27% 35% 11% 63% 13% 24% 50% 70% 15% 15% 55%
Selling
Prices
31% 8% 61% 23% 33% 4% 63% 29% 12% 9% 79% 3%
Volumes
Sold
31% 23% 46% 8% 50% 25% 25% 25% 61% 12% 27% 49%
No. of
Employee
s
19% 15% 66% 4% 21% 4% 75% 17% 24% 3% 73% 21%
Profits 23% 38% 39% -15% 42% 17% 41% 25% 48% 9% 43% 39%
New
Purchase
Orders
38% 19% 43% 19% 54% 17% 29% 37% 64% 3% 33% 61%
Export
Sales
42% 23% 35% 19% 67% 8% 25% 59% 55% 9% 36% 46%
i Industry survey 2016,Dubai Statistics Center ii UNIDIO INDUSTRIAL DEVELOPMENT REPORT 2018