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- Dubai 04:50 06:04 12:14 15:39 18:19 19:33
Gulf oil producers pumped a record $23.1 billion (Dh84.77bn) into industrial projects in 2008, taking advantage of the economic boom resulting from the surge in oil prices to their highest ever level, according to an official report.
The investments last year boosted the total capital channelled by the six Gulf Cooperation Council (GCC) countries into the non-oil manufacturing sector to nearly $150bn, the Doha-based Gulf Organisation for Industrial Consulting (GOIC) said in its annual report.
Saudi Arabia, the largest Arab economy and the oil superpower, dominated industrial investments in the 28-year old Gulf alliance, pumping in nearly $91.9bn, more than 60 per cent of the total industrial capital.
The UAE came second with around $15.7bn, followed by Qatar, which pumped in $13.1bn into its economy. Industrial capital was estimated at $10.3bn by Oman, around $10.16bn by Kuwait and nearly $8.7bn by Bahrain.
In terms of the number of factories, the UAE topped the list with 4,510 units, accounting for nearly 35.5 per cent of the GCC's 12,316 factories. 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 beneficiaries of GCC industrial capital, receiving around $81.9bn. Investments were put at nearly $18.7bn in non-metallic mineral products, $17bn in basic mineral products, $13.5bn in manufactured metallic products, machinery and equipment and nearly $11.3bn in food, beverages and tobacco.
"The GCC economy reached the peak of its activity in mid-2008 over the past years but the process of development slowed down in the second half because of the global financial crisis," said GOIC, which advises on non-hydrocarbon industrial policies in the GCC countries.
"Despite the decline, the industrial sector recorded a sharp increase in 2008 compared with the previous year, with investments rising by $23.1bn or around 18.2 per cent to exceed $150bn."
In another report released last month, GOIC expected industrial investment in the GCC to pick up in the near 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."
GOIC said such industrial projects as aluminium, steel, building materials and engineering industries are far more feasible in the GCC than in many other areas given the region's massive oil and gas wealth, its relatively cheap labour and its location midway between the east and the west.
"Such industries in the GCC have already achieved great success and are therefore expected to record substantial growth in the near future despite the recent decline in the prices of some commodities worldwide as a result of the global financial crisis, but prices are expected to start picking up after the global economies begin their recovery," the report said.
The heavy investments in the manufacturing sector have sharply boosted its contribution to the GCC's gross domestic product over the past two decades.
From only around $14bn in 1990, the sector's contribution to the GDP jumped to nearly $33.3bn in 2000 and a record $88bn in 2008.
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