Gulf pumps $180bn in industrial projects

Gulf oil producers have pumped more than $180 billion into industrial projects as part of a long-term strategy to diversify their oil-reliant economies and take advantage of abundant energy resources, according to official data.

The investments at the end of 2009 are nearly $30 billion higher than their level at the end of 2008 and $53 billion above the 2007 level, showed the figures by the Doha-based Gulf Organization for Industrial Consulting (GOIC).

The investments last year boosted the total capital channeled by the six Gulf Cooperation Council (GCC) countries into the non-oil manufacturing sector to nearly $180.4 billion, said GOIC which advises on GCC manufacturing policies.

From around 7,500 at the end of 2000, the total industrial units in the 29-year-old Gulf alliance surged to more than 13,000 plants, GOIC Secretary General Abdul Aziz bin Hamad Alakeel said in press comments this week.

“The total capital pumped into the GCC industrial sector jumped to nearly $180.4 billion at the end of last year from $86.6 billion in 2000,” he said.

“This boosted the number of workers in this sector to over one million from around 600,000 while the sector’s contribution to GDP expanded to nearly $88 billion from $33.3 billion in the same period. It also boosted its share of GDP to around 18.1 per cent from nearly 16 per cent.”

Alakeel gave no breakdown but by the end of 2008 Saudi Arabia was the dominant industrial power in the GCC, pumping nearly $91.9 billion, more than 60 per cent of the total industrial capital.

The UAE came second with around $15.7 billion, followed by Qatar, which pumped $13.1 billion. Industrial capital was estimated at $10.3 billion by Oman, $10.16 billion by Kuwait and nearly $8.7 billion by Bahrain.

In terms of the number of factories, the UAE topped the list with 4,510 units, nearly 35.5 per cent of the GCC’s 12,316 factories at the end of 2008. The report showed Saudi Arabia accounted for 36 per cent, Oman for 8.4 per cent, Kuwait for 7.1 per cent, Bahrain for seven per cent and Qatar for 4.9 per cent.

A breakdown showed chemicals and plastic products were the largest beneficiary of GCC industrial capital, receiving around $81.9 billion. Investments were put at nearly $18.7 billion in non-metallic mineral products, $17 billion in basic mineral products, $13.5 billion in manufactured metallic products, machinery and equipment, and nearly $11.3 billion in food, beverage and tobacco.

In a recent report, GOIC expected industrial investment in the GCC countries to pick up in the future despite the repercussions of the crisis.

“Investments in the industrial sector in member countries are expected to sharply increase in the coming years while the sector will continue to play a pioneering role in domestic development in the future,” GOIC said.

“This is because this sector enjoys more advantages over other sectors given the high feasibility of such projects, the abundance of cheaper labour and energy, and availability of long-term funding for industries.”