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24 February 2024

$10m company to boost offset investments

By Nadim Kawach



The Offset Programme Bureau (OPB) is one of the largest establishments created by the UAE to secure foreign capital as part of its long-term strategy to diversify the economy away from reliance on oil.


The offset system requires foreign arms suppliers to invest part of the value of the order in the UAE. The system applies to the country’s latest aircraft deal with Lockheed Martin involving the purchase of several F-16 fighter jets.


The OPB has created more than 30 joint ventures with a combined value of nearly Dh7 billion. And more projects are expected as the country pushes ahead with plans to bolster its military capability. The OPB believes such schemes will create huge opportunities for both UAE and foreign companies.


There are no plans for the time being to extend the offset system to the civilian sector, the OPB’s CEO Mohammed Saif Al Mazrouei told Emirates Business. “We are satisfied with military contracts for the time being,” he said. “The OPB has greatly benefited the domestic economy by attracting foreign capital into various sectors.”


What is the total value of your projects so far?


—The OPB has implemented more than 30 successful joint ventures with a combined paid-up capital of Dh7 billion.


What measures have you taken to facilitate investment?


—To furnish additional options to contractors, the bureau has set up a $10 million (Dh36.7m) Alfia Investment Company. The aim of this fund is to enhance economic development. It has three core objectives: investing in public and private ventures, creating wealth to enhance the overall development of the country and creating ample employment opportunities. Focusing on the core objectives, Alfia has diversified its investment profile into endeavours ranging from third-party administration of medical insurance to the production of precast aerated concrete and supply of vehicle tracking systems.


Could you provide more details about some of these ventures?


—Nextcare Administration Services (NAS) was set up to run healthcare insurance companies in the UAE and other GCC and Middle East countries. The German-Emarati Company Bena, based in Abu Dhabi, produces precast aerated concrete and has a capacity of 1,000 cubic metres per day. Trakker Middle East is engaged in the sale, marketing and distribution of products and services related to wireless fleet management, tracking, telemetry and geo-fencing, including management of information and security systems supported by a 24-hour call centre. National Medical Solutions (Mahaleel), located in Mussafah, is building a facility to make intravenous products. Once completed it will produce all types of items, including plasma expanders, dehydration fluid, nutrition and electrolyte liquid in bottles. And the National Training (Tadreeb) aims to bring international standards to vocational and professional training throughout the UAE and the GCC.


Are these and other ventures profitable?


—Most of the projects set up under the offset programme have started to generate profits for their shareholders. In addition they are boosting and diversifying the national economy and creating thousands of job and training opportunities for UAE citizens. Other joint ventures are engaged in shipbuilding, district cooling, fish farming, aircraft leasing, medical waste management and business centres.


What projects are planned for the near future?


—We have several projects in the pipeline with more appearing all the time. Our projects team is currently adding the finishing touches to various joint ventures, ranging from industrial development, manufacturing and construction to financial services. Each project will be announced separately.


Does the offset system apply to the F-16 fighter deal with the UAE? 


—Lockheed Martin entered into negotiations with the government and the OPB and as a result of this, arrangements were made for them to fulfil their offset obligation to the UAE.


Do you plan to expand the offset programme to other areas apart from the military sector, and what is the present percentage required from international investors?


—We are satisfied with military contracts for the time being in view of the substantial amount of expenditure in this sector. As far as the required percentage, a company is required to add economic and commercial value to the UAE economy, equivalent to 60 per cent of the cost of a contract. Of course, under UAE commercial law a foreign contractor’s share in any single project must not exceed 49 per cent.


Which are the major companies you have set up and what is their role in the UAE economy? And what part has the programme played in the UAE economy and job creation?


—Recently we announced the establishment of Tawazun Holding, an investment company that targets the acquisition of companies offering innovative products and services through strategic partnerships. During the past five years more than 10 companies have been set up, including – in addition to those mentioned above – Trans Continental Industries, Danway Fusion Glass, Schmidlin, Gulf Turbines Services and Gulf Energy Maritime. The OPB also created four joint-stock companies with thousands of citizens as shareholders, bringing in technical expertise and knowhow to the country.


The 30-plus joint ventures created by the OPB also provided lucrative job opportunities, high-quality training and promising careers for thousands of UAE citizens. Living up to the OPB’s ultimate goal of adding value to the economy, the projects have had a significant impact on the UAE’s industrial capabilities and economic diversification drive.


What projects are Tawazun engaged in or planning?


—Tawazun is aggressive and upbeat on strategic, focused and commercially viable acquisitions and partnerships in both the industrial and commercial sectors. Tawazun already has many projects on the cards. It recently acquired the assets of Caracal International, the first national arms manufacturer in the UAE. And in late 2007 Tawazun joined Al Jaber Trading Establishment – part of Al Jaber Group – and Rheinmetall Munitions Systems in a venture to build the UAE’s first munitions factory to serve the needs of the armed forces in the country and the region with a total investment of Dh268m.


Do you have any plans to expand your activities to other countries and sectors?


—The OPB is currently focused on the UAE. However, some projects are now exporting their products to other markets. For example Trans Continental Industries, the UAE’s first facility for manufacturing buses and other components, is a joint venture implemented under the offset programme.


The company exports its products, including high-quality bus bodies, base structures for chassis, doors, seats, lamps and ventilation systems to Qatar and Oman. The facility began its production in 2006 when the first UAE-built buses rolled off the production line. Trans Continental’s first customer, Petroleum Development of Oman, took delivery of 10 air-conditioned coaches. A second batch of 20 coaches was shipped to customers in Qatar.


And Trakker Middle East, the first fleet management and vehicle location-based services company in the GCC, is considering a foray into other markets, including Saudi Arabia, Qatar and Jordan, after becoming a leader in the field in the UAE. NAS has already extended its network to include many healthcare facilities in Qatar, Kuwait, Bahrain, and Oman, all providing members with direct-billing facilities and therefore reducing the need for cumbersome reimbursement procedures.


Have you ever issued bonds or are there any plans to do so?


—There are no plans to issue bonds, but there are huge investment opportunities for defence contractors, such as Project Blue that structures the acquisition of aircraft.


Mohammed Saif Al Mazrouei



Mohammed Saif Al Mazrouei has been the CEO of the Offset Programme Bureau – formerly the UAE Offsets Group – since 2000. He joined as a projects manager in 1994 and two years later was appointed Deputy Chairman. He is a director of Mubadala Development Company and Chairman of the National Central Cooling Company. Al Mazrouei serves on the boards of Dolphin Energy Limited, the Abu Dhabi Tourism Authority, the Tourism and Development Investment Company, the Abu Dhabi Water and Electricity Authority, Al Ain Zoo and Ithmaar Bank of Bahrain. He has a degree in Business Administration from the Laverne University in the US. Before the OPB, he was human resources manager at the Abu Dhabi National Oil Company.


The Numbers



Total investment made in an  effort to build the UAE’s first munitions factory and serve the needs of the armed forces in the country and the region



Alfia Investment Company established to provide

additional options to

the contractors



Companies that have been set up in the past five years