The manufacturing sector in the United Arab Emirates (UAE) offers diverse opportunities across industries such as pharmaceuticals, rubber and plastics, machinery, and equipment. These industries benefit from the UAE's robust infrastructure, strategic location, and progressive policies.
With strong government initiatives fostering industrial growth and innovation, businesses can confidently look forward to a competitive and promising sector outlook. For manufacturers exploring opportunities in the UAE, this article outlines five key advantages of establishing a business in the region and provides valuable insights into the most strategic locations for setting up operations.
1. Stable economy
For starters, the UAE has a stable and reliable economic environment that can be appealing for manufacturers looking to start operations. The country is recognised as the most economically stable nation worldwide, topping the list of 89 countries in the assessment by US News & World Report. The UAE’s push for economic diversification has been a key factor of this.
For example, the UAE’s ongoing Operation 300bn strategy is targeting an increase in the industrial sector’s contribution to the gross domestic product (GDP), with a goal of AED 300 billion by 2031. For manufacturers, this means an increasingly supportive environment with funding opportunities to ease the setup and expansion of operations.
With a stable economy and potentially stronger industrial sector, companies in fields like machinery, petrochemicals, and renewable energy equipment may find more opportunities for growth.
2. Business-friendly environment
The ease of doing business here is also continuously improving, with the efforts of the Ministry of Industry and Advanced Technology (MoIAT). The ministry was established in 2020 through the integration of several entities. With responsibilities centralised under MoIAT, local and foreign manufacturing companies can expect a more efficient process when setting up in the UAE.
On top of this, there are various incentives available for manufacturers starting in the UAE. Under the "UAE Industry 4.0" strategy, which is part of the broader Operation 300bn plan, manufacturers can benefit from a range of incentives. These include customs duty exemptions, access to long-term residence visas like the Golden visa, and higher In-Country Value (ICV) ratings that help with securing government contracts.
Manufacturing companies may also have more confidence in the UAE, with its removal from the Financial Action Task Force (FATF) "grey list" in 2024. This demonstrates the country’s progress in reinforcing its Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) measures and can provide security to manufacturers keen on establishing a presence here.
3. Global trade connectivity
The UAE has potential to become a major manufacturing and export hub. It is strategically positioned within Asia, Africa, and Europe, connecting some of the world’s most vital markets. Complementing this, the country has a robust network of trade agreements both as a member of the Gulf Cooperation Council (GCC) and independently.
Within the GCC framework, the UAE benefits from free trade agreements (FTAs) with countries such as Singapore and the European Free Trade Association (EFTA) states, which include Switzerland, Norway, Iceland, and Liechtenstein.
On its own, the UAE is taking proactive steps in establishing Comprehensive Economic Partnership Agreements (CEPAs) on a bilateral basis. Its CEPA network includes countries like India, Indonesia, Turkey, and Cambodia. With enhanced market access, manufacturing companies can better distribute products across key regions and take advantage of the UAE’s connectivity to meet the demands of customers worldwide.
4. World-class infrastructure
Manufacturing companies may also find well-developed infrastructure in the UAE, where major airports like Dubai International Airport (DXB) and Al Maktoum International Airport (DWC) provide reliable air freight capabilities. DWC, in particular, is anticipated to handle up to 12 million tonnes of cargo annually and lead globally by capacity.
In addition to air freight, the UAE’s maritime infrastructure plays an essential role in supporting manufacturing and export operations. Khalifa Port, for example, serves all major shipping lines and provides direct routes to 70 global destinations. It will be the first UAE port connected to the upcoming Etihad Rail, adding a powerful new link in the transportation network here.
The UAE also has a robust free zone infrastructure, which enables manufacturers to operate with full foreign ownership, zero customs duties on imports and exports, and profit repatriation. Over 40 free zones across the UAE such as Hamriyah Free Zone (HFZ) offer these incentives, making it straightforward for manufacturers to set up and do business in the region. Many of these zones are located near airports and ports, ensuring efficient logistics and supply chain operations.
5. Skilled manufacturing workforce
With continuous efforts to improve its labour market competitiveness, there is a growing base of locally trained workers that manufacturing companies can tap on in the UAE. The ongoing “Industrialists Program” is a notable initiative in this regard.
Launched in collaboration with the MoIAT, the Ministry of Human Resources and Emiratisation (MoHRE), and the Emirati Talent Competitiveness Council (Nafis), this initiative focuses on equipping UAE nationals with specialised skills tailored to manufacturing and other industries.
Bear in mind for mainland companies with 20 to 49 employees, there is a requirement to hire one UAE national by 2024. By 2025, an additional UAE national must be employed. This applies specifically to businesses in targeted sectors, including manufacturing.
Other Emiratisation requirements apply for different employee counts, reflecting the UAE’s broader initiative to increase local workforce participation across key industries. Labour costs in the UAE also remain relatively low compared to other countries, helping manufacturers to manage costs while hiring skilled employees.
Top three locations for a manufacturing business
Companies have several location options when it comes to choosing a suitable setting for operations. Below are some popular choices for manufacturing in the UAE:
Ras Al Khaimah Economic Zone
Manufacturers may opt for the Ras Al Khaimah Economic Zone (RAKEZ) for its supportive business environment, strategic location, and cost-effective operational advantages. Located in Ras Al Khaimah, RAKEZ provides access to key markets across Europe, Asia, and the Middle East and North Africa (MENA) region. Five sea ports, including Saqr Port, enhance the connectivity it offers to companies.
Within RAKEZ, there are several designated zones to accommodate a wide variety of manufacturing companies. For example, its Al Ghail Industrial Zone is suited for large-scale manufacturing, while Al Hamra Industrial Zone caters to light and heavy industries.
RAKEZ also offers a simple and fast setup process, which can be especially valuable for smaller companies or international manufacturers entering the UAE for the first time. It has a competitive cost structure, with lower operational costs compared to other zones. This includes affordable rental rates for industrial land plots and warehouses. For manufacturers looking to minimise overhead expenses, this could be a key advantage for having a company in this location.
Khalifa Economic Zones Abu Dhabi
Alternatively, Khalifa Economic Zones Abu Dhabi (KEZAD) is also worth considering. KEZAD’s location places manufacturers close to the UAE’s capital and within easy reach of major markets like Dubai. This proximity is advantageous for manufacturers targeting the dense population centres and economic hubs of Abu Dhabi and Dubai.
KEZAD is well-connected to major highways, giving manufacturers efficient road transport options across the UAE and the wider GCC region. Its adjacency to Khalifa Port, one of the fastest-growing ports in the world, provides manufacturers with access to extensive maritime routes.
KEZAD’s key industry focus includes metals, automotive, food processing, life science, logistics, polymers, and speciality chemicals. Companies here are also organised into clusters and have the advantage of being in close proximity to complementary businesses. With a range of business facilities available to choose from, companies may have sufficient support to begin manufacturing activities in the UAE.
Hamriyah Free Zone
The Hamriyah Free Zone (HFZ) is strategically positioned in Sharjah, the only emirate with access to both the Arabian Gulf and the Gulf of Oman. Depending on market focus and operational priorities, this could be an appealing feature to manufacturers.
HFZ is also home to a deep-water port with a depth of 14 metres and an inner harbour with a 7-metre depth, enabling the accommodation of large vessels and efficient handling of substantial cargo volumes.
A variety of businesses can be established in the free zone, including those in building materials, machinery and equipment, as well as plastics. With competitive lease rates on industrial plots, prefabricated warehouses, and office units, HFZ provides manufacturers with an affordable entry point into the UAE market. This, alongside existing advanced infrastructure, may provide companies with a more streamlined path to expanding into the UAE.
Start manufacturing in the UAE
For entry into the UAE, the limited liability company (LLC) structure is widely chosen by manufacturing companies. To learn about this entity and other business structures, you can read more in our guide to starting a business in the UAE.
Here at Hawksford, our team offers end-to-end support to simplify your entry into the market, from entity formation to tax reporting. With extensive experience in helping companies set up in this jurisdiction, our approach is flexible and tailored to fit the specific needs and goals of each business.
Our commitment to quality gives our clients the confidence of solutions they can trust. To discuss how we can support your manufacturing business, get in touch with our team for more information.
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