Page 59 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

Think Again: Addressing Misconceptions about the GCC 43

INDUSTRY AND MANUFACTURING

GCC governments have identified industry and manufacturing as
critical to long-term economic competitiveness, and investment is
flowing into these sectors through both public and private chan-
nels. Perhaps the most prominent current industrial project is the
King Abdullah Economic City, off the Red Sea in Saudi Arabia. The
initiative, considered Saudi Arabia’s largest private-sector invest-
ment, is a massive project costing over $25 billion. The Economic
City is designed to include industrial, financial, educational,
tourist, and residential areas. The first stage of the project is
expected to be ready in two to three years.
Industrial “free zones,” allowing full foreign ownership,
freedom from certain regulations, and no taxes, have appeared in
several GCC countries. The UAE, renowned for its free zones across
multiple sectors, has spawned a remarkable number of light
manufacturing and distribution firms in its Jebel Ali Free Zone
(Dubai). Plans for Abu Dhabi’s Saadiyat Island free zone are focused
on commodities trading, storage, and transportation. Sharjah’s free
zone concentrates on heavy industry and airline cargo. Bahrain has
an industrial free zone in North Sitra, a free port called Mina Salman,
and plans for another industrial free zone in Hidd. The Kuwait Free
Trade Zone offers industrial, commercial, and service licenses to
foreign investors, along with facilities such as on-site banking and
24-hour support designed to attract foreign industrialists.
Direct investment in industrial projects is significant.
Aluminum Bahrain (Alba) has recently completed an expansion
estimated at $1.7 billion. Dubai has also signaled its ambitions in
the aluminum sector through Dubai Aluminum (Dubal). Oman has
announced a $2 billion aluminum smelter project in Sohar. These
investments leverage the region’s core industrial advantages: cheap
energy, low-cost labor, access to shipping lines, central location, and
attractive tax regimes.

TOURISM AND HOSPITALITY

The tourism sector is a strategic industry for the region. Dubai
today has over 300 hotels—including the world-famous Burj al-
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Arab—and attracts over 6 million visitors each year. Dubai has
become a major destination for tourists from Europe—especially