Abu Dhabi will announce an industrial strategy in the coming weeks to boost the contribution of the sector to the overall economy, the chairman of the Abu Dhabi Department of Economic Development has said.
“The strategy will tell you that industry is an important pillar of the overall economy of Abu Dhabi because it acts as an important developer in different aspects,” Mohamed Al Shorafa told The National on the sidelines of the Make it in the Emirates forum on Tuesday.
The total contribution of the industrial sector to Abu Dhabi’s economy last year was Dh85 billion ($23bn).
The strategy will focus on some of the main sectors of the economy, including pharmaceuticals, machinery, electronics and electricals, chemicals and aluminium, and petrochemicals.
“All of this programme is aligned with the Ministry of Industry and Advanced Technology’s Operation 300 billion,” Mr Al Shorafa said.
Last year, the UAE launched the Operation 300bn strategy to increase the sector's contribution to the country's gross domestic product to Dh300 billion by 2031, from Dh133bn in 2021.
Mr Al Shorafa said Abu Dhabi’s economy continued to expand despite the coronavirus pandemic headwinds. The emirate’s GDP increased by 2 per cent and of that non-oil GDP expanded by more than 4 per cent in 2021 compared to the previous year.
“This tells a lot about how resilient the economy is during the Covid crisis ... now definitely, we are looking forward to more developments and this will give us a higher GDP in the next couple of years,” he said.
Abu Dhabi’s economy rebounded strongly last year as the pace of economic activity improved on the back of government measures to curb the Covid-19 pandemic and minimised its impact.
The momentum continued this year and the emirate’s economy is set to grow between 6 per cent and 8 per cent over the next two years, Mr Al Shorafa said.
Growth will be driven by the oil sector, government spending, financial services and foreign direct investment, he said at the time.
Oil prices have increased more than 56 per cent over the past 12 months and surged to almost $140 a barrel in March as a result of the war in Ukraine and an ensuing ban on Russian crude imports by the US. Prices have since retreated but remain above $115 a barrel.
S&P expects Abu Dhabi's GDP to accelerate to more than 5 per cent in 2022, with output reaching 2019 levels in 2023.
The public-private partnership (PPP) programme implemented by the Abu Dhabi government along with the Department of Economic Development is a central plank of Abu Dhabi’s economic strategy, Mr Al Shorafa said.
“This programme entails partnering with the private sector in developing infrastructure projects, either major infrastructure projects or creating communities within [the] Abu Dhabi emirate. We have already announced and awarded a number of projects as part of the PPP programme. We will be continuing to develop these PPP programmes.”
The government is going to announce a major PPP project worth Dh2.5bn “next month”, he said, without providing further details.
“We already awarded community malls, schools, street lighting of Abu Dhabi Island and Al Ain city, all through public-private sector partnership.
“The government has the capability in developing these projects, but we believe that it is important for the private sector to get involved because we believe the development of the economy has to be through the private sector.”
The emirate is pressing forward with measures that support small and medium enterprises that are a “foundation” of the economy.
“We already have some intervention programmes to support SMEs in specific sectors and sub-sectors that we believe are important for the economic development of Abu Dhabi,” Mr Al Shorafa said.
The Khalifa Fund for Development is funding SMEs and “Khalifa Fund 2.0 is coming up”, he said. The funding programme is “completely rebranded, refurbished to enable not only local SMEs but also residents of Abu Dhabi SMEs”.