Tawazun and Saab, the Swedish aerospace and weapons maker, have agreed to launch a joint venture that will be the region's first maker of radar systems.
Tawazun, a strategic holding company owned by the Abu Dhabi Government with assets spanning mortar to missiles, will own 51 per cent of the new company - Abu Dhabi Advanced Radar Systems (Adars).
"As we continue to grow as an organisation, diversify our product portfolio and extend our capabilities, it is imperative that we partner with like-minded entities who share our vision and who complement our values and ambitions," said Saif Mohamed Al Hajeri, Tawazun's chief executive. "This partnership with Saab will see us invest in advanced technologies to develop unique products for the defence market."
The radar joint venture is to focus on the local development and production of what the partners called "next generation" radar systems and will include sending 15 Emiratis to earn master's degrees in radar technology in Sweden.
"Creating Adars is part of our strategy to increase our presence in key markets," said Håkan Buskhe, the chief executive of Saab, which was spun off the eponymous car brand in the 1980s.
Shares of Saab were down 2.1 krona to 135.30 krona in mid-afternoon trading in Stockholm.
The deal, which the partners did not value, comes on the heels of other Tawazun joint ventures created in the past half-year, including a deal signed in September with Denel, South Africa's biggest defence company, to build precision-guided weapons.
In July, Saab, Tawazun and the Italian aircraft maker Piaggio agreed to develop a multi-role patrol aircraft based on an existing turboprop called the Avanti II. Abu Dhabi Autonomous System Investments, a Tawazun subsidiary, is financing the construction of prototypes that it hopes to have in the air by next year, which will be designed to fly at 41,000 feet for more than 10 hours.
Like other Tawazun subsidiaries, such as the pistol maker Caracal and the military vehicle specialist NIMR, the new partnerships are designed to cater to the needs of the UAE Armed Forces and contribute to the diversification of Abu Dhabi's economy.
Growing demand in the region is helping to fuel investment, said Theodore Karasik, the director of research and development at the regional security consultancy Inegma.
"Now we're going to see more agreements between Tawazun and other partners to beef up the UAE's defence industry," said Mr Karasik. "They're branching out into new areas of the defence industry that are critical for the region and where there will be plenty of customers who will buy these products."
The radar deal has been approved by Swedish regulators.