Made in the UAE

By Simon West

For the United Arab Emirates, 2021 is turning out to be an “annus mirabilis.”

The 50th anniversary this year of the UAE’s unification has already seen the start-up of commercial operations at the nation’s sole nuclear power plant and the arrival of its first space mission to Mars. Both feats were milestones for the Arab world.

Also launched this year, albeit with less fanfare than the Hope space probe, was Operation 300bn, touted as a major driver in the UAE’s bid to diversify its hydrocarbon-dependent economy and usher in a new era of economic and environmental sustainability.

Spearheaded by the Ministry of Industry and Advanced Technology, or MoIAT, and backed by the state-run Emirates Development Bank, or EDB, the 10-year strategy is seeking to fire up the nation’s industrial base and more than double the sector’s contribution to gross domestic product from 133 billion dirhams (about US$36.2 billion) to 300 billion dirhams by 2031.

“The strategy will achieve a giant leap in the UAE’s industrial sector to become the main driving force of the national economy and lead the journey of our next 50 years with greater confidence and speed,” Sheikh Mohammed bin Rashid Al Maktoum, Dubai’s ruler and UAE vice president, said at the launch in March.


Project Focus

Operation 300bn will put into action a series of initiatives that aim to raise the country’s profile beyond oil and gas to a hub for advanced technology, innovation and clean energy.

Research and development will boost the efficiency of supply chains, with the MoIAT planning to roll out fourth industrial revolution technology, or 4IR tech, to support productivity. An in-country value, or ICV, program will direct spending towards local products stamped with “Made in the UAE,” while digital processes will be upgraded to simplify registration, licensing and fee procedures.

The country’s industrial law is being overhauled, meaning overseas investors will enjoy a more favorable regulatory environment and a chance to own 100 percent of their onshore companies, doing away with previous rules stating that 51 percent of shares had to be held by one or more UAE nationals.

“Investors will be attracted by the expected easing of complex setup structures and remaining regulatory barriers to entry, so there will be a boost to foreign investment, supported by complementary government incentivization schemes,” said Neil Quilliam, an associate fellow with the Middle East and North Africa program at Chatham House in London. “The UAE is among the leaders regionally in this regard.”

Operation 300bn is zeroing in on a number of industries, including petrochemicals, plastics, renewable energy, machinery and equipment, metals, space technology, food, agriculture, pharmaceuticals and water desalination.
The strategy has already got the thumbs up from industry executives.

“The country is always jumping from one initiative to the other, so they never rest on their laurels, and this is another example. I think it is a great thing,” said Roger Clasquin, CEO of RAK Ports, a network of ports located in the UAE’s northernmost emirate, Ras Al Khaimah. “The UAE is seven emirates of which we are one of the smallest, so typically these exercises are very Abu Dhabi-Dubai centric. But there will definitely be a positive spin-off for us as well.”

“If you have seen the development of Abu Dhabi and Dubai in the last 40 years, it has been really quite staggering. And now they are moving on to the next phase, not being renowned for just skyscrapers and for winter tourism and for producing oil, but really for other things. So they are quite clever and keen to profile themselves and change course and strategy.”


Change of Fortunes

The unveiling of Operation 300bn has brightened the prospects for an economy still recovering from Covid-19 and the slump in oil prices.

The nation has also had to contend with rising competition from its neighbors in the Gulf Cooperation Council, or GCC, who are keen to poach foreign talent and money from the region’s main business and logistics hubs in Dubai and Abu Dhabi.

Rivalry with Saudi Arabia in particular has been building, coming to a head in early July after the two nations fell out amid a dispute over oil production levels within OPEC.

This followed an announcement from Saudi Arabia in February that it would no longer work with foreign companies whose Middle East headquarters were located in any other country in the region, a move seen as a challenge to the UAE.

“Saudi Arabia has made some ambitious announcements in recent months with a view to gaining the upper hand over regional competitors. But for both the UAE and Saudi Arabia, and even other GCC states such as Qatar, developing a viable alternative energy and industrial strategy will require time and significant capital investment, both state-led and foreign,” Quilliam said.

“The UAE already appears more advanced with efforts to diversify income sources, but has also accelerated government-led initiatives and legal and regulatory changes to improve the business and operating environment. The momentum around national strategies such as Operation 300bn and the recently approved National Agenda for Non-Oil Export Development (a plan aimed at breaking in to 25 new markets and boosting exports by 50 percent over the next decade) is strengthening.”


Breakbulk Boom Expected

The MoIAT’s focus on “future industries” is likely to benefit breakbulk and project cargo, with the buildout of clean energy infrastructure calling for significant logistics support.

The Abu Dhabi National Oil Co., or ADNOC, has already set its sights on becoming a major force in blue hydrogen, a cleaner form of hydrogen created when carbon is captured and stored during the processing of natural gas feedstock.

ADNOC is developing its first world-scale blue ammonia facility at the TA’ZIZ chemicals plant at Ruwais on the Middle East Gulf coast, with start-up slated for 2025. The state-controlled energy giant, which already produces more than 300,000 tonnes per year of regular hydrogen, would use locally sourced blue hydrogen and nitrogen as feedstocks.

Mandar Apte, an Abu Dhabi-based project manager at engineering, procurement and construction firm TechnipFMC, said green hydrogen – derived from renewable energy sources such as wind or solar – could also play a key role in achieving the goals of Operation 300bn.

“The cost of today’s expensive green hydrogen is expected to decline by up to 85 percent by 2050 and to cost less than natural gas by 2050. One can only imagine the possibilities and opportunities,” Apte said.

“If we have to reach there by 2050, efforts must be made today. One aspect is installing industrial capacities to produce large quantities of hydrogen and achieve economies of scale. This includes the cycle of setting up industries, construction, production and supply and distribution. Second is to redouble the efforts towards R&D to ensure that the requisite technological achievements are not just made but bettered.”


Financing to Lift Project Demand

A further potential source of breakbulk work stems from the EDB’s allocation of 30 billion dirhams to UAE-based companies over the next five years. Financing packages will be offered to 13,500 new small-to-medium enterprises, or SMEs, a move that is expected to create 25,000 jobs in the industrial and manufacturing sectors.

“Our expectation is to see an increased volume of heavy-lift and out-of-gauge cargo movements coming out from newly established or expanded engineering and fabrication yards,” said Rajesh Damodaran, business development manager at Dubai-based Polaris Shipping Agencies.

Ports in the UAE could also benefit from the strategy.

The nation is already home to several world-scale ports, including Jebel Ali in Dubai, the Middle East’s busiest shipping destination, Khalifa in Abu Dhabi and Fujairah on the Gulf of Oman coast.

RAK Ports, which has invested more than US$250 million in infrastructure upgrades and plant equipment, controls four world-scale ports in Ras Al Khaimah.

The largest of those, SAQR Port/Free Zone, located 50 kilometers north of the city of Ras Al Khaimah and strategically located near the Strait of Hormuz, handles some 60 million tonnes per year of cargo, mainly bulk exports of aggregates, limestone, cement and clinker from the emirate’s extensive rock quarries.

According to Clasquin, RAK Ports is keen to attract more project cargoes from Ras Al Khaimah’s large fabrication cluster, which until now has imported and exported mostly through other UAE ports.

The group wants to diversify its port activities and is in the process of building a new port on a tract of land currently used by quarry companies. The new facility’s first usable infrastructure is slated to be ready by early 2024 and would be used to handle non-bulk such as project cargo or liquids.

“The quarries, they have a lot of surplus material, which they basically have to dump. And we have decided that we could actually reclaim an area of land and diversify our port activities,” Clasquin said. “(The port would also handle) commodities like agri bulk, grains, making sure that we are in time for the food security program.

“In that sense, Operation 300bn ties in very nicely with our own port developments.” 


Colombia-based Simon West is a freelance journalist specializing in energy and biofuels news and market movements in the Americas. 

Image credit: RAK Ports