Can the Middle East become a manufacturing hub?

Posted on 14 Aug 2017 by The Manufacturer

When most people think of the Middle East and the industry that dominates it, they think of the oil industry.

But can the Middle East also become a hub for manufacturing like so many other parts of the world, especially with bankers and lenders like Fahad Al Rajaan leading the way towards innovation and new businesses? Keep reading to learn more.

Manufacturing in the United Arab Emirates

About 40% of the United Arab Emirate’s GDP is made up of the oil and gas industry, but the nation is also facing shrinking profits because much of the world is looking towards alternative energy sources. As a result, the government recently undertook a few steps that will allow the country to shift its focus to other areas, such as manufacturing. In fact, Dubai has already set up one of the biggest industrial centers within the area as a means to attract new manufacturers and get them working in new plants.

The UAE’s manufacturing sector

The Department of Economic Development in the United Arab Emirates has already made it clear that manufacturing is growing in that part of the world. In fact, it accounts for roughly 80% of Dubai’s trade that does not involve oil. This makes it the second biggest contributor to the nation’s economy. Sub-sectors within the manufacturing sector include rubber, plastics, processed foods and drinks, base metals, printing and publishing, precious stones, metals, pearls, chemicals, and electrical equipment and machinery.

Saudi Arabia and the growth of manufacturing

Another country in the Middle East that has been focusing on manufacturing is Saudi Arabia. In fact, it is set to become the region’s biggest manufacturing hub, particularly because IT spending there has been growing at a faster rate compared with other countries in the Middle East, Africa, and Central Europe. Experts have predicted that IT and software services will be the quickest growing segments of the nation’s manufacturing industry, with IT spending expected to continue increasing through 2018.

To prove just how serious it is, Saudi Arabia has invested a whopping $70 billion in order to build as many as six cities that would have the regulatory adjustments and infrastructure to not only attract but also support manufacturing companies in the long run. Some of the brands that have already taken notice are Mars (the food manufacturer) and Jaguar Land Rover.

The pros and cons

Both Saudi Arabia and the United Arab Emirates claim that their countries are centrally located between Asia and Europe, giving them an advantage when it comes to attracting manufacturing companies. However, manufacturers still have concerns regarding being able to access talent in the area, and they feel that the social norms there make it hard for them to leverage the talent that they already have.

Middle Eastern countries, such as the United Arab Emirates and Saudi Arabia, are hoping that they can keep going strong as demand for oil products decreases globally. They have already invested in their efforts to prove to global manufacturers that they have what it takes to establish high-quality manufacturing plants; now it is a matter of businesses taking notice.