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Abu Dhabi, UAEWednesday 12 December 2018

Tawazun Economic Council, the organisation that helped create Mubadala, Etihad Airways and Adwea, celebrates 25 years

Council at the heart of UAE's diversification efforts helped bring economic benefits to the country from its defence procurement activities

The institution at the heart of the country’s diversification efforts for a quarter of a century reaffirmed its commitment to the development of key industries, the creation of thousands of high-tech jobs and the growth of the country's defence manufacturing exports.

The Tawazun Economic Council celebrated 25 years last night at a gala event in the capital which highlighted both its historic support of the growth of the UAE’s economy and its continuing lead role in country’s commitment to push ahead with the development its defence and security industry over the next five years.

The Council, originally created in 1992, is responsible for the Tawazun Economic Program, formerly known as the UAE Offset Program, which creates additional economic value from the country’s extensive defence procurement activities. According to the World Bank, the UAE’s defence spending in 2014 was equivalent to about 5.6 per cent of its GDP and it has been the world’s third largest defence equipment importer during the 2012-2016 period, according to the Stockholm International Peace Research Institute.

The investment commitments required from global defence contractors such as through local joint ventures and work packages have helped to provide the seed capital and expertise for the creation of new companies across various sectors. What has resulted from the Council’s activities over the course of the last 25 years is nothing less that the foundation of the UAE’s 21st century economy – as of 2015 70 per cent of the country’s GDP came from non-oil sectors. The Council has been responsible for the initiation and development of, or direct investment in, some of the country’s household names such as Mubadala Investment Company, Dolphin Energy, Etihad Airways and the Abu Dhabi Water and Electricity Authority, as well as key sectors including its stock markets, defence manufacturing industry and renewable energy. The list of former and current executives and board members reads like a who’s who of Abu Dhabi business. The Council has also created 95,000 jobs in the UAE over the last 25 years.

“The UAE is embarking on an ambitious plan to reinforce its industrial and technological offerings for the future through the talents and skills of its people. There is no doubt that Tawazun Economic will have a large role to play in that direction,” said Tareq Al Hosani, who became chief executive of the Council in August.

The Council is currently considering 53 new projects in defence and security manufacturing as it ramps up the development of local capabilities, he said.

“I expect that some of these concepts will be fully operational facilities within the coming five years,” said Mr Al Hosani.

The Council’s work is in line with the Abu Dhabi Government’s Vision 2030, particularly through the transfer of technology and technical know-how and giving young Emiratis the necessary skills and knowledge for future success.

A notable example of this has been Al-Tariq precision guided weapons system, jointly developed with Denel, and for use on UAE Air Force aircraft as well as potentially for export.

Charles Forrester, senior defence industry analyst at Jane’s said that going forward great things should be expected from the UAE defence sector thanks to the work of the Council.

“At its core, an offset programme’s concept is about helping to build a knowledge-led economy as technology changes and as more procurement is made,” he said. “The UAE has been the best in the region at employing an offset strategy to build a local defence industry.”

For example, there is potential in the local development of unmanned aerial systems, according to Mr Forrester.

The defence industrial base that the Council has helped develop includes Dh26 billion worth of assets across 40 projects employing 9,600 people. The next phase of this, according to Mr Forrester includes ramping up its exports.

Last month, the Council showcased the UAE defence industry at an industry exhibition in London, promoting made in the UAE products and services such as NIMR Automotive and its armoured cars. NIMR has already struck deals to build light armoured vehicles for Algeria and the Czech Republic. The security consultancy Etimad Holdings was also part of the UAE's delegation at the London conference to promote its border and city surveillance systems. It plans to export its services worldwide.