Arabian gulf industry

Arabian Gulf nations have become a world industrial super powers, As march inexorably forward towards economic diversification, one sector is receiving particular attention.

 

Manufacturing is a growth-focus for several GCC governments because of its potential to grow non-oil GDP and steer countries toward a future free of petrochemical dependence.

 

 

The region has a strong tradition in heavy, light and high-tech industry. Steel, chemicals, engineering, ship building, aerospace, plastics, electrical goods, clothing, food-processing, furniture, microprocessors, semiconductors and fibre optics all make an appearance on the GCC’s national resumés.

 

And as oil prices remain below fiscal break-even levels, governments are nurturing these abilities through long-term growth commitments. The manufacturing sector is now Dubai’s third largest, and the emirate’s Department of Economic Development (DED) expects around US$19 million to be spent on R&D by manufacturing companies, as the sector expands from a current value of $11.2 billion to $16.1bn by 2030.

 

Of course, the region’s Economic Visions predate the current oil-price dilemma. What we have seen in the Gulf, over the past decade, is humanity’s Fourth Industrial Revolution in full swing. Technologies such as artificial intelligence, advanced analytics, robotics and the Internet of Things (IoT) are blurring the lines between machinery and software. Manufacturing solutions that empower employees, transform business models and optimise operations are delivered by the deft merger of the intelligent cloud and the intelligent edge. Among the region’s manufacturing players, everything from production lines to service delivery is being dialled up by digital transformation.

 

Every previous industrial revolution has had its winners and losers, and I believe our current epoch shift will prove to be no different. But let me make one thing absolutely clear – success or failure will not be determined by some arbitrary natural selection but by our decisions – principally concerning our technology mix.

 

 

The GCC has grown to become an epicenter of global trade. From the UAE’s globally recognized logistics hubs to Saudi Arabia’s groundbreaking developments in the renewable energy field, the GCC states have produced some of the world’s foremost hubs across multiple industries. Here’s a look at the top five sectors in which GCC states are establishing innovative, world-leading standards:

 

  1. ENERGY AND POWER

 

 

The GCC is home to Saudi Aramco. The oil and gas company is the world’s most valuable and the largest by revenue. Recent leaked figures have shown the company to be more profitable than Apple. While it continues to produce billions of barrels of oil each year, the Saudi Arabian government is however pursuing its plan of economic diversification as part of its Vision 2030 plan. As part of these efforts, Aramco is pushing ahead with multiple innovative projects that see the Kingdom leading the way in the sector. As part of its commitment to the development of the private sector, Aramco is currently working on building the King Salman Energy Park (SPARK) in the Kingdom’s Eastern Province. A global industrial hub for energy-related manufacturing services, it is expected to attract some of the world’s biggest -and most innovative- energy industry names. It is expected to contribute SAR22.5 billion annually to the Kingdom’s GDP by 2025.

 

With a strong awareness of the limited supplies of oil, the region has also invested in the development of the renewable energy sector. Within the region, the UAE has some of the most ambitious projects. Abu Dhabi’s Shams Solar Park, for example, is the first utility-scale solar plant in the Middle East, while the Dubai Electricity and Water Authority (DEWA) recently announced the world’s largest concentrated solar power facility, setting a world record with the lowest price ever for a CPS power plant at just 7.3 cents per kilowatt-hour. By 2050, the country plans to have 44% of its energy provided through renewable sources. Saudi Aramco is similarly committed to the renewable energy sector and earlier this year entered into a five-year $25 million collaboration with the Massachusetts Institute of Technology (MIT).

 

  1. TRANSPORT AND LOGISTICS

 

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Regarding transport and logistics, the GCC is a powerhouse within the global sector; its success owing to government diversification strategies. Taking advantage of trade routes between Asia, Europe, and Africa, the UAE’s investment in its infrastructure, from its ports to its airports and roads, has cemented its position on the globe as a leading logistics hub. DP World, founded in 1999, has today grown into the world’s fourth-largest port operator, largely through acquisitions. With a portfolio of upward of 70 marine and inland terminals across six continents under its operation in high-growth markets, the company continues to pursue its strategy of international expansion. Its profits rose by 7% in 2017 to reach close to $1.2 billion. In an example of how one GCC company is trailblazing ahead of the market, DP World announced its investment into the Hyperloop technology. The brainchild of Elon Musk, the new form of transportation can travel at speeds of up to 1,200km/h, offering revolutionary time saving on cargo shipments. If successful, DP World would be among the world’s first companies to operationalize the Hyperloop.

 

Other prominent logistics players in the market include Khalifa Port Container Terminal, operated by Abu Dhabi Terminals, which in 2015 gained second spot in the Alphaliner Top 110 growing ports in the world; and Kuwaiti logistics company Agility, which is among the world’s top ten. In the air too, the GCC leads the way in aviation. The success of Emirates, the world’s largest and best airline, and a recipient of several industry accolades, is well established. The airline was the first and only one to operate the Airbus A380 and Boeing 777 aircraft for its passenger flights. Etihad also has its fair share of industry accolades, and, together, these carriers combine to making the region a global leader in the sector, setting new standards in travel experiences and customer service.

 

 

Building on the rise of e-commerce, Aramex has become one of the leading courier companies in emerging markets. Its use of technology and outsourcing has allowed it to disrupt established players and grow faster than its competitors, to keep up with the demands of the ever more demanding e-commerce shopper.

 

  1. HEALTHCARE

 

Healthcare is a sector where societal issues are resulting in unique health issues. An ageing and growing population, combined with an increase in chronic diseases, is placing increasing demand on the sector, driving significant government investment to create transparent, streamlined, personalized and safe services that enable patients to make well-informed decisions to optimize their health. The three most prominent health issues in the GCC are:

 

Genetic diseases According to Dubai-based Centre for Arab Genomic Studies (CAGS), the Arab countries contribute approximately USD 30 billion per year to their populations’ suffering from hereditary genetic diseases.

Obesity Healthcare spending in the UAE is predicted to more than double to $47.5 billion by 2040 as obesity tightens its grip on the nation’s health according to the latest Global Burden of Disease study

Diabetes Figures from the International Diabetes Foundation revealed that in 2017 17.3% of the UAE population between 20 and 79 have type II diabetes, placing the country 15th worldwide for age adjusted comparative prevalence.

Today, the sector is working to keep up with digital transformation, and while much investment is required to deliver the services required, the government is looking ahead and working to implement 21st century technologies to improve diagnostics, treatment, and care. Examples of investments in the sector include AI, digital devices, and other technologies to enable remote service provision.

 

Related: Reinventing Healthcare In The MENA Region

 

  1. RETAIL

 

 

Thanks in large part to the petrodollars, combined with the demographic drivers in the region, the GCC has become a global center for consumerism. Arab consumers are reported to have spent $320 billion on luxury fashion alone in 2016, with that number expected to reach $490 billion by 2019. The region’s appetite for fashion is marked by the recent launch of fashion magazine Vogue Arabia. Arguably, no one has achieved as much success in the retail sector as Dubai. The city has, for decades, been drawing in shoppers from around the region. The establishment of the world’s premier shopping facilities such as The Dubai Mall attracts shoppers from across the world, with Chinese and Russian shoppers flocking to the malls in tour buses. Behind the success of the consumer sector lies several retail conglomerates from across the region. Kuwaiti retailer Al Shaya has brought over 90 brands into the region, including the likes of Starbucks, H&M, and Boots to name just a few. Serving the KSA and wider region, Fawaz Al Hokair has similarly brought numerous high-street brands to the region, from the likes of Zara, Bershka, Aldo and La Senza. The list goes on with the Apparel Group, Chalhoub Group, and many others.

 

  1. REAL ESTATE

 

Meeting the demand for both commercial space as well as residences, the GCC region is well known for its ambitious real estate projects. Dubai Mall developer, real estate company Emaar is one of the largest in the world, and in 2017, was valued at $14.6 billion. With a presence across the Middle East, North Africa, Pan-Asia, Europe and North America, it announced an increase in revenue for the first three months of 2018 of 37% to AED5.59 billion. Majid Al Futtaim, another key player in the real estate and consumer retail market, has a presence in the Middle East and Africa, owns 21 shopping malls across 15 markets and employs 40,000 people.