The UAE's industrial sector will receive financial backing from the government to support the operations of local companies and improve their competitiveness in export markets, in line with the country's strategy to double the sector's economic output over the next decade.
The Ministry of Industry and Advanced Technology and Etihad Credit Insurance agreed to back local manufacturers through capital injections, the ministry said on Tuesday. The partnership "is an important step in boosting the global competitiveness of the UAE’s industrial sector", said Dr Sultan Al Jaber, UAE Minister of Industry and Advanced Technology.
“The array of financial incentives and facilities offered through the new partnership will help stimulate innovation and entrepreneurship among the UAE’s leading industrialists as they seek to fully integrate advanced technologies and Fourth Industrial Revolution solutions into their production lines.”
The agreement comes after the UAE revealed its strategy to double industry's contribution to national gross domestic product to Dh300 billion by 2031, from Dh133bn currently. Called Operation 300bn, the plan was unveiled earlier this year, with government setting a target of 13,500 industrial companies that it intends to support over the next decade.
“Co-operation with a major national institution such as the ECI will make products made in the UAE easier to access for new global markets while enhancing their competitive advantage and improving the performance of local industry," said Dr Al Jaber.
“It will also help forge new economic sectors and consolidate the UAE’s position as a global hub for innovation and a leader in industries of the future."
Through the partnership, the government will offer a package of financial incentives to support UAE exports, including financing arrangements for manufacturers and advanced technology projects, guarantees for industrial loans, umbrella insurance for small and medium enterprises and assistance to help start-ups secure intellectual property rights.
Under the terms of the agreement, the two entities aim to provide products and finance arrangements to support the industrial sector, with a focus on the priority areas of the Operation 300bn strategy.
They will also form a permanent task force that will come up with initiatives to drive the growth of the industrial and advanced technology sectors in the UAE.
As part of the partnership, the ministry will promote the ECI’s trade solutions – including trade, export and project finance, trade credit insurance, loan repayments, equity insurance for start-ups and micro-SMEs and "Click & Cover" online solutions for SMEs – through the Make it in the Emirates campaign.
Products manufactured in the UAE fall under a unified industrial brand identity for which the slogan Make it in the Emirates was unveiled as part of the Operation 300bn strategy.
On the other hand, the ECI will contribute to attaining Operation 300bn’s goal of improving the competitiveness of UAE industrial companies in international markets.
The partnership will also involve other financial institutions and development banks in improving the current offerings and developing innovative products that meet the needs of the industrial and advanced technology sectors, the ministry said.
“Easing access to trade and project financing will help advance Operation 300bn and Make it in the Emirates to generate more than double the value of the output of the national manufacturing and industrial sector in the next ten years," said Thani Al Zeyoudi, Minister of State for Foreign Trade and Deputy Chairman of the ECI's board of directors.
“We believe this collaboration will play a crucial role in boosting the confidence of UAE businesses, thereby enabling them to increase the contribution of the industrial sector in the country's non-oil GDP."
As of May, the ECI had issued 4,039 revolving credit guarantees worth more than Dh2.5bn – the equivalent of Dh7.5bn worth of non-oil trade to more than 85 countries – and had eased trade and project finance through Dh1.16bn in guarantees.
The sectors that benefitted the most from the ECI's guarantees include cable, steel, petrochemicals, building materials, packaging, automotive, energy, utilities, health care and food.
The partnership is "a great stimulus in the UAE's vision to enhance industrial sector and attract local and international investment", said Massimo Falcioni, chief executive of ECI.