Industrial zones offer a range of competitive advantages

Some of the emirate’s most attractive opportunities for industrial investment exist in the industrial zones established by the Higher Corporation for Specialised Economic Zones (known as ZonesCorp). ZonesCorp has four industrial zones currently under operation, with three more in the pipeline. Its industrial zones are estimated to account for close to 50% of Abu Dhabi’s manufacturing GDP.

Strategy

These zones, located south of Musaffah, on the mainland near Abu Dhabi Island, and in Al Ain, offer a range of advantages to the investor. The focus is on providing installed infrastructure and a streamlined investment process, cutting down the number of separate licensing processes from different government bodies, allowing ground to be broken and production to commence more quickly. While there are financial incentives, the government is keen to enhance other competitive advantages and ensure that the zones become centres of industries that have a strategic fit with Abu Dhabi’s long-term development goals and provide knock-on effects for the broader economy. ZonesCorp is aiming to follow models of best practice and avoid the “stop-start” development that has characterised some free zones elsewhere in the region. While the zones are attracting international investors, ZonesCorp also aims to help support the development of small and medium-sized enterprises (SMEs). Through the cluster model, the organisation intends to encourage SMEs to set up downstream facilities, suppliers and service businesses around large manufacturers. This drive is garnering increasing support from financial institutions.

Competitive Advantages

The zones have installed infrastructure, a cluster-based zoning system allowing industry integration and promoting synergies and economies of scale, as well as full government backing. Products manufactured in the zones can be exported free of Customs duties to the five other GCC states and members of the Greater Arab Free Trade Agreement, which includes countries in the Levant and North Africa. Machinery and raw materials can be imported free of duty, and capital and profit can be freely repatriated. Tax exemptions are also available. On the labour supply side, vocational training centres provide skilled workers and large residential cities offer employee accommodation. Employment procedures are streamlined via foreign labour services.

Success Stories

The first zone, Industrial City of Abu Dhabi (ICAD) I, covers an area of 14 sq km. On top of infrastructure and utilities investments totalling Dh1.2bn ($326.6m), it has attracted industrial investment of Dh6bn ($1.6bn). Industries which ZonesCorp has focused on attracting to ICAD I include textiles, food processing, engineering, chemicals, plastics, construction materials and high-tech businesses. The adjacent ICAD II has installed infrastructure worth Dh450m ($122.5m) in contracts over an area of 11 sq km. It focuses on sectors including chemicals, plastics, construction materials, and oil and gas services.

The 12-sq-km ICAD III is under development through a public-private partnership, and the zone will focus on chemical compounds, construction materials and engineering industries. According to ZonesCorp, the industrial zone already seeing strong demand from local and international investors.

The 10-sq-km Al Ain Industrial City, divided into zones I and II, is located 20 km west of the centre of Al Ain City. After infrastructure investments worth Dh125m ($34m), the zones have attracted investment volumes of Dh1.4bn ($381.1m) across their 300 industrial plots. Sectors of focus include light manufacturing and maintenance businesses, agricultural and food processing (as befits an agricultural area), chemicals and plastics, and technology.

ICAD IV will occupy an area of 24 sq km, and will be dedicated to technology, light industry and logistics, as it lies both on the main motorway from Al Mafraq to Tarif, and the proposed freight railway connecting to the Etihad Railway, while ICAD V, on an 11-sq-km plot, will be dedicated to the automotive sector.