Abu Dhabi diversifying from oildependency and luring foreign companies to its industrial zone
As the oil-rich Gulf ports realize the danger of their asymmetric dependence on oil and gas, whose reserves are rapidly depleting, they are increasingly diversifying their economies and turning to other forms of revenue-generating sectors.
Abu Dhabi, the capital of the United Arab Emirates, is aggressively marketing its ports and the industrial zone set up near the ports. At the recent Hannover Industriemesse, the world’s biggest trade fair for manufacturing and technology, the emirate’s Khalifa Industrial Zone Abu Dhabi (Kizad) was aggressively courting German and international companies to set up operations at its site equipped with huge logistics network and other facilities.
Khaled Salmeen Al-Kawari, the executive vice president for industrial zones at the Abu Dhabi Ports Company (ADPC), charged with Kizad’s development, was bullish about the industrial zone with its dedicated Khalifa Port which is being built in phases and will be the “region’s first semi-automated port”, according to Al-Kawari.
Khaled Salmeen Al-Kawari – Executive VP for Industrial Zones at the ADPC
“More than 92 percent of Kizad’s infrastructure is complete. We are far ahead of our original schedule. We are targeting heavy to low industries. Being just 25 kilometres away from Abu Dhabi airport, and in the proximity of Khalifa Port, which is 97 percent complete, Kizad will offer some excellent advantages for shippers and others as far as transportation of goods is concerned,” Al-Kawari said in an interview with the American Journal of Transportation in Hannover.
Al-Kawari said that an investment of US$ 7.2 billion had been allocated for the new infrastructure. “Besides offering a viable and state-of-the-art infrastructure, Kizad offers electricity at very low rates that make a company’s operations here very competitive indeed. We have already signed 30 agreements with companies that are going to operate here,” he disclosed.
The Abu Dhabi government is pursuing its so-called “2030 Vision” seeking to quadruple Abu Dhabi’s GDP from US$ 108 billion in 2008 to US$ 416 billion in 2030 at an annual 7 percent growth rate. “In 2008, 60 percent of Abu Dhabi’s revenue was generated by oil and gas, while the remaining 40 percent from non-oil and gas. By 2030, we want to reverse this ratio,” Al-Kawari said.
Under the “2030 Vision”, major industry clusters such as aluminium, steel, engineered metal products, petrochemicals and chemicals, pharmaceuticals and healthcare, food processing, paper, printing and packaging, trade and logistics, and mixed/or other industries, will be promoted for the Kizad site.
Al-Kawari described the UAE as “the hub” of the Gulf. “We have JAFZA (Jebel Ali Free Zone in Dubai) transportation route. We have increased our business in the cruise business, and have also developed our berth facilities nearby. Zaid Port, in close proximity, will be the hub. This port has developed along with very modern lines. The port, 16 ½ metres deep, is considered to be the most automated container port in the region. The Gulf Cooperation Council (GCC) is jointly building a rail network. The Etihad rail is responsible for the development and operation of the international network of railway. Phase 1 has already been awarded for construction. The engineering for phase 2 is underway. Phase 3 will link the rest of Northern Emirates with the completion of the rail in 2015,” he maintained.
The number of containers handled by Mina Zayed port in 2011 rose to 767,713 TEUs, posting a 47% increase over the previous year. According to Abu Dhabi representatives at Hannover, Mina Zayed Port had more than tripled its container volume from 250,000 TEUs in 2006 to more than 767,000 TEUs in 2011.
Al-Kawari pointed out that Abu Dhabi’s central location would allow Kizad-based companies to access a market of more than two billion consumers within four time zones. Europe, Russia, India and Africa, were easily accessible as well as the markets of the Far East - Korea, China and Japan.
Khalifa Port is being developed to accommodate the largest ships to ensure easy import of bulk raw materials and export of finished goods. However, the port is already active, receiving construction cargo as well as alumina at a dedicated berth, even though phase 1 will be officially opened for business in the fourth quarter of 2012; Kizad tenants will have direct access to the deep-water loading and unloading facilities, enabling easy import of bulk raw materials and export of finished products. Following a flexible Masterplan for development, Khalifa Port will be developed in stages and will initially offer two million containers a year plus eight million tons of bulk and break-bulk cargo, with the capacity rising, eventually, to 15 million TEUs and 35 million tons bulk and break-bulk cargo.
“Kizad has direct links to the markets of the UAE and the Middle East. Both Kizad and Khalifa Port have easy access to the UAE’s highway network which links to the GCC and the wider Middle East. Besides, Abu Dhabi International Airport and Al Maktoum International Airport in Dubai are both just 30 minutes away, while the emerging freight and passenger rail networks will link the Kizad tenants to other parts of the Arabian Peninsula. Abu Dhabi International Airport and Al Maktoum Airport in Dubai have a combined air-freight capacity of 14 million tons a year,” Al-Kawari said.
Abu Dhabi representatives at the Hannover Industrial Fair said that the emirate’s railway was constructing the UAE part of a broad-based Pan-Arabian rail network linking Yemen, Oman and Saudi Arabia with the European Union and Russia, offered the opportunity to integrate rail freight facilities into the operating plan of customers’ plants. “Kizad is keen to facilitate such bulk-handling capabilities into the zone’s infrastructure,” Al-Kawari added.
A warehouse and logistics park are being developed in Kizad’s “Area A” dedicated to logistics units, comprising pre-built warehouses and leased land plots for occupiers and third party logistics providers to build their own facilities.
Kizad first major tenant for the logistics cluster was Sharjah-based Al Batha Trading & Industry Group with which Kizad signed an agreement in March on land for setting up cold stores, temperature-control and ambient warehouses to store and distribute pharmaceuticals, food and other products.
At the Hannover show, Kizad was able to sign machinery manufacturer Binos GmbH of Lower Saxony as the first German company to set up operations at Kizad. The UAE Minister for Foreign Trade, Sheikha Lubna bint Khalid Al Qasimi, who witnessed the signing of the agreement, told the American Journal of Transportation that she was “very happy” that Abu Dhabi had been able to attract Binos. (End)
Dubai’s JAFZA to benefit from infrastructure expansion and strengthening of feeder services
By Manik Mehta, AJOT
Dubai, devoid of neighbouring Abu Dhabi’s rich oil and gas reserves, has been resorting to commercially imaginative ways to prop up its economy. Its Jebel Ali Free Zone (Jafza) is expected to benefit from the expansion of ports and feeder services in Dubai.
Dubai officials at the recent Hannover Industrial Fair in Hannover, Germany, touted Jafza as the “world’s largest and fastest growing free zone”, claiming that it is home not only to some 6,700 companies from 150 countries but is also the leading economic driver of the emirate. The port infrastructure is also going to be modernized and expanded, including facilities for distribution of goods and strengthening existing feeder services.
“Its outstanding logistics infrastructure is its key strength. Situated between Jebel Ali Port in Dubai, the world’s 8th largest container port and the upcoming Al Maktoum International Airport, a major air-cargo hub, Jafza is possibly the only free zone in the world located between the two major logistics enablers,” Adil Al-Zarooni, senior vice president at Jebel Ali Free Zone, told the American Journal of Transportation at Hannover.
Dubai, Al-Zarooni went on, had assumed “great significance” as a logistics hub in the region. “Logistics is not just about cargo … it is also about people. The customer base we serve extends beyond logistics and encompasses some 2.4 billion people, stretching from South Asia to the MENA (Middle East and North Africa) region. Our reach goes into the African continent,” he maintained.
Some 44.5 million TEUs were handled by Dubai Port which is by far the busiest seaport in the region. Jafza, located at the seaport, is just 30 minutes away from the airport. “This distance will be further reduced to 17 minutes by the end of next year, facilitated by additional road connections,” Al-Zarooni said.
Jafza’s infrastructure expansion will soon be completed. “We are building bridges, roads and highways, and other facilities to help speed transportation and distribution of goods. This will, of course, provide a strong impetus to the feeder services,” he added.
Juggling with figures, Jafza’s executive vice president said that more than 125 Fortune 500 companies currently maintained a presence in the Jafza area. Jafza, he added, contributed some 20.1% of Dubai’s GDP or about US$ 77 billion of the emirate’s GDP of US$ 205 billion in 2010.
Al-Zarooni highlighted the fact that Dubai offered “cultural similarities” to the people of the Indian subcontinent whose companies were increasingly establishing a base at Jafza, attracted by “100% foreign ownership, zero tax and zero customs tariffs for both imports and exports”. Dubai had pitched at Hannover with Jafza because of its “historic ties” with Germany whose corporate sector had maintained a strong presence in the Gulf region through Dubai.
“We have about 230 companies from Germany maintaining a base at Jafza with a trade volume of some US$ 1.53 billion. Indeed, we have discerned keen interest at the Hannover Industrial Fair from representatives of German companies,” he added.