UAE’s defence sector expected to attract more FDI amid localisation push

More than 400 defence companies currently operate in the country, a senior official from Tawazun Council says

There are more than 400 defence companies in the UAE producing small components to big entities for munitions for military vehicles. Antonie Robertson / The National

The UAE's defence sector is expected to attract more foreign direct investment in the coming years amid government initiatives on domestic production and sustained economic growth, a senior official from the Tawazun Council said.

Companies “find the UAE an attractive place to set up their business due to the stability, economic growth, location and G to G [government to government] relations that it enjoys with other countries”, Matar Al Romaithi, sector chief of defence and industrial affairs at Tawazun Council, told The National in an interview.

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The council based in Abu Dhabi is the country’s defence and security acquisitions authority, and also supports the growth of the defence sector though new projects and policies.

Last month, it launched its strategic plan 2025-2028 to strengthen the UAE’s defence network, with a significant focus on industrial localisation and development of new industrial zones.

“We are working on attracting international players to enable the industry. So it's not just what the UAE buys, it's more of what the UAE can offer to international players,” Mr Al Romaithi said.

“We have multiple industrial parks that will be established in the coming five years to attract FDI and a supply chain that supports the UAE and the region. We have more of a global and forward-looking strategy and make sure that whatever is produced in the UAE is of high international standard that is exportable.”

There are more than 400 defence companies in the UAE producing small components to big entities for munitions for military vehicles.

Abu Dhabi-based Edge is a defence conglomerate with more than 35 entities under its umbrella, including small arms manufacturer Caracal, military vehicles producer Nimr, and Halcon, which produces missiles. International companies have also set up operations in the country.

Matar Al Romaithi, sector chief of defence and industrial affairs at Tawazun Council, says defence parks will be created in the UAE to attract new investment from overseas. Antonie Robertson / The National

RTX, formerly Raytheon Technologies, from the US, as well as Swedish company Saab and France’s Thales, are manufacturing defence products for the UAE market and to export globally.

"We started with a concept called 'landed company', which is a fully owned subsidiary for international companies in the UAE," Mr Al Romaithi said. "They are expanding by building certain products locally and also targeting international markets."

Last week, RTX announced the opening of a new advanced industrial unit at Tawazun Industrial Park in Abu Dhabi for the production of Coyote counter drone interceptors as part of UAE plans to localise advanced defence manufacturing.

"Raytheon will be producing US technology," Mr Al Romaithi said. "The commitment they have is to reach 40 per cent of localisation through our local suppliers."

Coyote provides security and protection for personnel, critical infrastructure and military assets from hostile drones.

Tawazun also signed an initial agreement with RTX and Emirates Global Aluminium to explore setting up a gallium production unit in Abu Dhabi.

Exhibitors at Make it in Emirates event in Abu Dhabi. The UAE is focusing on developing its domestic defence production. Antonie Robertson / The National

Gallium, a critical mineral, has applications across many different sectors, including in the production of semiconductors, electric vehicles, medical devices and telecom infrastructure.

"It will be the second largest after China and it's going to supply gallium to the local market as well as to international markets," the senior executive said.

The industrial base that exists today will "enable more partnerships" to support the defence sector, Mr Al Romaithi added.

The UAE has been focusing on industrial growth as it diversifies its economy from oil. The Emirates launched its industrial strategy, Operation 300bn, in 2021 to position itself as an industrial centre by 2031.

The 10-year strategy focuses on increasing the industrial sector’s contribution to gross domestic product to Dh300 billion by 2031, from Dh133 billion in 2021.