x Abu Dhabi, UAEWednesday 26 July 2017

Changing face of the UAE's exports

The UAE has raised exports of manufactured goods in recent years, shipping more aluminium and polymers alongside goods such as gold and minerals.

Aluminium featured in the 10 most valuable commodities exported from the UAE the first seven months of last year. Christopher Pike / The National
Aluminium featured in the 10 most valuable commodities exported from the UAE the first seven months of last year. Christopher Pike / The National

The UAE has raised its export of manufactured goods in recent years, shipping more aluminium and polymers alongside goods such as gold and minerals.

Polymers used to make packaging, car parts and piping; unwrought aluminium; and copper wires all featured in the 10 most valuable commodities exported in the first seven months of last year, according to data released by the Federal Customs Authority (FCA) last week.

None of those items featured in the top 10 exports in 2008, the earliest year for which detailed non-oil data is available.

But in the coming years, the Government is keen to raise the level of sophistication of exports to include more capital goods. Used in the manufacture of other products, capital goods - such as machinery, components and tools - require a higher degree of technology and expertise to make. Their added value usually generates a higher return for an economy than more basic exports.

"The more you can tap into a higher value-added economy, the more you can create jobs and higher growth," said Jean-Michel Saliba, an economist at Bank of America Merrill Lynch. "The UAE and the GCC started in a capital and labour-intensive way to build the supply side of the economy and now need to create higher value downstream."

The UAE has already made progress in building a manufacturing presence in energy-intensive industries where it has a competitive advantage. Borouge, a joint venture between Abu Dhabi National Oil Company and Austria's Borealis, has established itself as the country's largest producer of plastics since its creation in 1998.

Emal, a joint venture between Dubai Aluminium and Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, is building the world's largest single-site smelter at a 6 square kilometre location in Taweelah.

But steps to build a capital-goods base are at an earlier stage. It is a similar trend throughout the region. Capital goods account for only 6 per cent of exports in the Middle East and North Africa, according to the IMF. The bulk of exports are made up of primary and consumer goods - accounting for 64 per cent of goods traded.

Some steps to overturn that trend are being taken, however.

Both Borouge and Emal are moving to build out the downstream process of their industries, which will create more jobs. The Mubadala-owned Strata supplies components to aircraft makers, including Boeing and Airbus.

Gold was by far the leading export in the first seven months of last year, accounting for Dh52.8 billion (US$14.37bn) of the total Dh94.7bn in exports, the FCA data showed.

tarnold@thenational.ae