The UAE needs to create a mega fund or bank to provide long-term loans for manufacturing projects to encourage investment in the sector and support an ongoing drive to diversify the oil-reliant economy, the Abu Dhabi Chamber of Commerce and Industry (ADCCI) said yesterday.
Although the UAE has made substantial progress in its industrialisation drive, more efforts are needed to expand this sector, which constitutes the backbone of the diversification programme, Chamber's Chairman Salah Al Shamsi said.
"Despite such progress, we believe there are other basic issues that should be considered to ensure the creation of an advanced industrial base with the participation of the private sector," Shamsi said at the Industrial Investment Opportunities Forum, a seminar organised by ADCCI.
"One of the most significant elements for a successful industry is the need to create a fund or bank with a large capital to finance manufacturing projects by extending long-term loans with competitive interest rates and a repay period that conforms to the nature of industrial investment, which requires a long period (of time to show returns)," said Al Shamsi.
He said such an institution, which should be in co-operation with the private sector, would allow investors to shun costly bank loans that usually have difficult terms and "are not compatible with industrial investment".
He also urged the federal government to fully enforce previous decisions to give priority to national industries and a preferential treatment of 10 per cent.
Mohammed Omar Abdullah, Undersecretary of the Abu Dhabi Department of Plannning and Economy, said industrial investment in Abu Dhabi Emirate jumped by around 29 per cent to $12 billion (Dh44 billion) to push the sector's contribution to the gross domestic product to a record nearly 10 per cent in 2007.
"The manufacturing sector in Abu Dhabi is steadily growing and will continue to grow in the coming period. Its value added swelled by more than 20 per cent last year," Abdullah told the one-day seminar.
"Despite such an achievement, our ambitions remain much bigger. The next period will see quicker growth rates in this sector but there must be efforts to further improve the investment environment, upgrade the quality of national industries, support small and medium enterprises, encourage technology and introduce more accurate and comprehensive industrial data," he added.
Meanwhile, Al Shamsi said 100 per cent foreign investment in industrial projects in Abu Dhabi would be welcomed by the chamber. Speaking to Emirates Business yesterday on the sidelines of the seminar, Al Shamsi added: "The percentage of foreign ownership should be decided according to the nature of each sector and its needs."
He said a survey should be conducted to find out the opinion of industrialists and foreign investors on the percentage of ownership.
"We welcome foreign investments with open arms and want a real partnership between Emarati and foreign investors. Abu Dhabi has perhaps the world's best investment climate. In the emirate, it is easy to obtain land and process papers for industrial projects. Energy supply is abundant and raw material are considered cheap compared to international prices," Al Shamsi said.
Important sectors requiring foreign investments, he said, were transformational industries, plastics, petrochemicals, aluminum, and iron and steel industries. Projects in these sectors are huge and need a skillful labour force as well as giant capital inputs. He said though Abu Dhabi is currently in an unprecedented industrial boom, industries spread in Abu Dhabi Industrial City and Al Ain Industrial City do not compete with those in Dubai or any other in the region. "The market is in urgent need of these industries. We have huge potential to produce and great opportunities for export to the emerging economies of India and China and the Middle East," he said.
Citing the building material industry as an example, Al Shamsi said the UAE in general, and Abu Dhabi in particular, need many such new ones. "Unfortunately, we are forced to buy cement, iron and other raw materials and equipment (from abroad) at high prices. If we established these industries here, we will generate big profits," he said.