Abu Dhabi launches smart manufacturing index

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• Index to help private sector transition to industry 4.0 technologies
• Aims to enhance a smart, circular and sustainable economy
• Industrial sector is a pillar of economic diversification strategy

A new smart manufacturing index will boost Abu Dhabi’s emergence as a key industrial hub in the Middle East as major international players continue to move into the emirate.

The Abu Dhabi Department of Economic Development (Added) has announced the launch of the index to help facilitate private sector players’ transition to industry 4.0 (fourth industrial revolution) technologies, applications and methods as part of the Abu Dhabi Industrial Strategy, which was launched in June.

The push by the government to expedite adoption of industry 4.0 across all manufacturing and industrial players aims to transform the sector, including its targeted growth to AED 172 billion ($46.8 billion), creating 13,600 new jobs and increasing the emirate’s non-oil exports to AED 178.8 billion by 2031.

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The launch of the Abu Dhabi Smart Manufacturing Index provides a critical framework for assessing capabilities of industrial facilities, identifying gaps and recommending practical steps for reaching the targeted industry 4.0 maturity.

It aims to give manufacturers the necessary knowledge and training so they can start their “industry 4.0 transformation journey”. 

Mohamed Ali Al Shorafa, chairman of Added, said: “The Abu Dhabi Industrial Strategy has ushered in a new era, not only for the manufacturing sector, but for the whole economic landscape in the region.

“To further enhance a smart, circular, and sustainable economy, we are forging ahead with taking the manufacturing sector to the next level by empowering industrial facilities to keep pace with latest trends and solutions.”

He added: “We believe it is of paramount importance to equip manufacturers with vital, seamless, and effective mechanisms to transition to industry 4.0 technologies and applications to drive future growth, and to pre-empt for shifts in demand and supply.”

Faisal Durrani, partner and head of Middle East research at Knight Frank, told AGBI: “The industrial sector is rapidly emerging as a core pillar in Abu Dhabi’s economic diversification strategy and the last 18 to 24 months have seen a raft of new occupiers establishing large-scale facilities at Kezad, while others have been quietly expanding. 

“The move by the authorities to help industrial occupiers close operational and efficiency gaps through the new Smart Manufacturing Index forms part of a wider framework that is aiding the emergence of Abu Dhabi as a key industrial and manufacturing hub in the region”.

Since the launch of Abu Dhabi Industrial Strategy, Added has been rolling out initiatives and partnering with leading global institutions to carry out the strategy’s ambitious objectives.

It recently launched a land incentives programme, which offers long-term lease contracts for industrial land through rental rebate, with rates as low as AED5 per sq m.

Added also expanded the energy tariff incentive programme by offering preferential rates for gas and electricity to the industrial sector based on eligibility criteria that include economic impact, Emiratisation rates and energy management efficiency.

Media Office Abu Dhabi

During the first six months of 2022, Added’s Industrial Development Bureau, which will manage the new index, has assessed readiness of 76 facilities to transition to industry 4.0 technologies.

According to CBRE, the UAE’s industrial and logistics sector continues to see a significant level of activity, despite a lack of quality stock hampering the market.

As a result, occupiers increasingly need to concede to requirements and timetables set out by landlords, and incentives offered are very limited. 

In the year to Q3, average industrial sector rents in Abu Dhabi increased by 2.6 percent. “We expect the rate of rental growth to continue to increase, particularly with available stock continuing to lag significantly behind demand. We expect this to be the case in both Abu Dhabi and Dubai,” said Taimur Khan, Mena head of research at CBRE.

The smart manufacturing index launch follows an announcement in September by AD Ports Group to set up a new business, Kezad Group, to expand its economic cities and free zones offering.

Kezad, which stands for Khalifa Economic Zones Abu Dhabi, merges the operations of Khalifa Industrial Zone Abu Dhabi (Kizad) and Specialised Economic Zones (ZonesCorp).

It operates 12 economic zones with a total area of 550 sq km, including 100 sq km designated as free zones, as well as over 300,000 sq m of pre-built warehouse facilities and more than 40 staff accommodation complexes.

The group has more than 1,750 clients from 17 industrial and economic sectors including pharmaceuticals, metals, automotive, food and agtech, retail and logistics, green energy, life sciences, gas, chemicals and oil.

“With the industrial sector in the UAE accounting for over 10 percent of GDP, it remains a critical growth area,” added Durrani.

Investment in Abu Dhabi’s active industrial sector has tripled over the past year, according to the latest figures released by the Industrial Development Bureau.

The total value of factories that switched to the in-production stage rose to AED3.1 billion ($844 million) during the first six months of 2022, compared to AED1.03 billion ($280 million) in the same period last year.

There were 136 new industrial licences in H1 while the number transitioning to the construction phase was 62, the bureau said.