Abu Dhabi industrial zone lures Asian investors

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ABU DHABI: Abu Dhabi’s mammoth new industrial zone is wooing investors from Asia to set up shop and help the emirate diversify its economy away from oil, its top official said.

Khalifa Industrial Zone Abu Dhabi (Kizad) at Taweelah, midway between Abu Dhabi and Dubai, spans an area of 421 square km (two-thirds the size of Singapore), and is the largest industrial area in the United Arab Emirates.

The $7.2 billion phase one development is set to be operational before the end of 2012, with other phases to follow amid plans to create industrial clusters around a new port.

In the meantime, top management has been busy marketing the project in Asia, and lining up collaborations with Asian banks to make future investments easier.

Earlier this year, Kizad held roadshows, launching in three Asian economic giants —India, China and South Korea, as well as in Germany.

"The response was positive and this is also about attracting foreign direct investment," said Khaled Salmeen, executive vice president, industrial zones at Abu Dhabi Ports Company (ADPC), which owns Kizad.

He added that Kizad plans to open offices in these countries, starting soon with India. The company has so far signed agreements with Industrial & Commercial Bank of China, Citibank, HSBC, and India’s Bank of Baroda.

"There is a need for industry to contribute to the non-oil GDP, we are confident Kizad will contribute up to 15 percent of Abu Dhabi’s non-oil GDP by 2030," Salmeen said.

Emirates Aluminum (Emal) is the first and anchor tenant. Some 30 companies have signed agreements to set up base at Kizad and nearly 100 more are awaiting approvals.

The agreements with private and government firms relate to projects in aluminum, steel, glass and logistics, he said.

Oil-rich Abu Dhabi is investing billions of dollars in industry, tourism, infrastructure and real estate to diversify its economy away from oil. Manufacturing accounted for 5.5 percent (in nominal terms) of the emirate’s GDP in 2010, according to latest figures.

With about 60 to 80 percent of goods manufactured in the industrial zone to be exported, investors can also seek finance from export credit agencies (ECAs), that are lending long-term at low rates, he said.

Kizad, which is fully funded by the government, is targeting eight industry clusters: aluminum, steel, engineered metal products, petrochemical’s and chemicals, pharmaceuticals and healthcare equipment, food, paper, printing and packaging.

The completion of the zone’s first phase at end-2012 will coincide with the close of the first phase of the Khalifa port’s infrastructure with an initial capacity to handle two million TEUs of container traffic and 12 million tones of general cargo annually.

By 2030, the port’s capacity is planned to grow to 15 million TEUs and 35 million tons of general cargo.

Industrial City of Abu Dhabi and Mussafah, the older industrial hubs of Abu Dhabi will remain independent and continue with plans of developing industry.

In neighboring Dubai, the Jebel Ali free zone has been well-established for over two decades, contributing some 25 percent to the emirate’s GDP.

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