The Sharjah Economic Development Department works to cultivate growth across the full range of industry sectors in the emirate while paving the way for new investors by easing the licensing process and providing its considerable assistance and know-how
What is driving growth in Sharjah and what is the emirate’s economic outlook for 2018?
Our growth has been driven by a large number of government investments in infrastructure, as well as private investments, notably in manufacturing, construction, wholesale and retail trade, transport and storage, accommodation activities, food services and health activities. These sectors have witnessed a large number of development projects, reflecting the large increase in the emirate’s population in the recent period. By sectors, construction has seen rises in building permits of 26 percent and 58 percent respectively in the past two years. The wholesale and retail sector recorded a growth rate of 3.5% in 2017, while the increase in real estate and business licenses was about 3 percent. There has also been an increase in infrastructure investment, including real estate projects and new markets. So, we are confident about the size and strength of the emirate’s economy, which has achieved significant rates of sustainability over the past five years. The economic situation is characterized by sustainability and optimism in Sharjah, Sharjah’s gross domestic product (GDP) reached AED92.7 billion ($25.2 billion) in 2017, increasing by an average of 4.7 percent, compared to 3.8 percent in 2016. The emirate’s non-oil GDP increased by 3.6 percent compared to 2016, and total production volume in the emirate exceeded 161 billion dirhams, up from 155 billion in 2016. The non-oil production area grew by 3.5 percent. Besides, it’s also important to consider the various, diversified and promising economic sectors that civil defense and social security achieved, with a growth rate of 9.5 percent in 2017 compared to 5.1 percent in 2016. The emirate has invested heavily in the past year in the fight against fires in both industrial and residential areas, as well as extending the social security network for citizens and expatriates. Likewise, most of the economic sectors within the GDP structure grew by 5.4 percent in 2017 compared to 5.1 percent in 2016. The manufacturing sector grew by 3.5 percent in 2017, and each of electricity and gas, construction, wholesale and retail, transportation, warehousing, information and communications, real estate, occupational, scientific and technical, administrative services, education, health, social services, art, and the entertainment and promotion sectors all registered healthy growth. Additionally, one of the main pillars of sustainability is the fact that the industrial sector remains the one with the largest relative weight in the structure of the emirate’s economy with 16.9 percent. The industrial sector continued to grow by 15.6 billion dirhams ($4.2 billion) in the same year as well as the wholesale and retail trade sectors also increased by 11.1 billion dirhams ($3.02 billion) after the recent expansions in the emirate’s commercial centers and due to the increasing purchasing power of the population. Real estate activities remain one of the most attractive markets for investment and attracted 12 billion dirhams in 2017. After industry, the emirate’s economy depends on three other main sectors: real estate activities with a relative weight of 13 percent, wholesale and retail trade making up 12 percent, and financial and insurance activities at 10.3 percent.
What are SEDD’s main priorities and goals for this year and in which direction are they designed to take Sharjah’s economy?
The Emirate of Sharjah is pursuing a revitalizing policy aimed at maintaining economic growth and attracting foreign investments. It also faces increasing demand for residence and employment in the emirate through a large number of economic and service projects, specifically in the establishment of commercial centers, increasing the number of hotels, improving the licensing sector, expanding the base of health and education sectors so as to meet increased demand. Therefore, one of the main objectives to be completed this year is to expand infrastructure and improve the procedures that will enable increased investments. At the macro level, the emirate continues to control operational expenses and increase capital expenditures in its general budget with increased revenues. The FDI flow into Sharjah more than doubled in 2017 from the previous year to $1.62 billion, with China as one of the top international investors.
How important is FDI for the emirate’s continued economic growth and what explains that massive improvement?
For many years, Sharjah held two main characteristics as an attraction for individual investments, especially for families. It was the land that acquired the first airport in the region, the first educational institutions, the first libraries, and the largest and oldest commercial port, Khor Fakkan Port, which enjoys a high rate of public handling. It is worth mentioning that the Emirate of Sharjah’s industrial areas, established at the end of the 1970s, has attracted considerable foreign investment. So an investor can be offered a huge base on which to establish their new project, and the emirate can thus attract the largest possible foreign direct investment, which in turn contributes significantly to the growth of national income. We are attracting investors not only from China but from all over the world, something that is demonstrated by the growth achieved recently.
Which sectors of the economy present the most potential for Chinese investors?
We are so pleased with the extent of Chinese investment in the Emirate of Sharjah and the increase in the number of activities involving Chinese investors as seen through the four-percent growth of license renewals in 2017, with the total number of license transactions reaching more than 406. Chinese transactions have surpassed those related to other nationalities, such as Saudi Arabia by 133%, double the transactions by Kuwaitis and four times those of Russia, as well as surpassing those of the major industrial countries such as Britain, France and even the U.S. In addition, we are also pleased that the Chinese investor is very interested in industry; the number of industrial licenses for Chinese investments also increased by four percent in 2017, reflecting the growth in trade between China and the Emirate of Sharjah. It should be noted that the number of Chinese investors increased by 0.6 percent last year and their commercial transactions in the emirate also grew, providing new investment opportunities, especially in the infrastructure, real estate, transport, energy and water sectors. With all this evidence, we believe that Chinese companies can build a solid base, be it in manufacturing or for re-exportable goods and services.
Sharjah offers a number of advantages for Chinese entrepreneurs, including tax-free opportunities, a free zone and a strategic location. Why should companies consider coming to Sharjah as opposed to other emirates or countries in the region?
The figures show that trade between Sharjah and China has increased recently, especially in the last three years, due to the exchange of official visits and the number of meetings attended by the Sharjah Economic Development Department and continuous communication with Chinese provinces. These visits included the visit of a delegation from Shandong Province in 2014 and the communication with the deputy governor responsible for the province’s economy. These meetings were held as part of several trade exchange initiatives, including support for bilateral exports, participating in mutual exhibitions in China and Sharjah, and exchanging information on the economic performance of both parties.
Chinese companies COSCO and Hutchison Ports have recently been awarded important contracts in Sharjah’s ports. What other infrastructure projects could present opportunities for further bilateral collaboration?
We are pleased to have well-known and huge companies in UAE such as COSCO and Hutchison Ports to work in infrastructure, transportation and international trade projects. We believe that there is a common benefit between the two countries. The Emirate of Sharjah owns the oldest and most important ports in the Gulf region. In addition, the arrival of companies such as Hutchison is a major boost, with China as a key partner in foreign trade with the UAE. We believe that all fields are open to Chinese investment and infrastructure projects will undoubtedly be followed by investment in other industries.
According to the property consultancy Knight Frank, the UAE has been ranked third in a global index of nations that stand to benefit most from China’s Belt and Road Initiative. How do you see China’s $1 trillion foreign development program increasing trade and what is your vision for Sharjah’s role in the project?
We are delighted to be ranked third in the world index of countries that benefit greatly from the Belt and Road Initiative. Such a thing is normal due to the economic growth achieved in the UAE, as well as the existence of advanced infrastructure that helps the UAE act as a trade exchange station – something which is also enjoyed by the Emirate of Sharjah as the movement of exports is one of the pillars of our strong economy. Sharjah has a long history in terms of re-export platforms, especially in sectors including cars, clothing and electronic devices. The main vision for the development of Sharjah’s role in China’s initiative comes through the creation of additional Chinese platforms within Sharjah to help semi-finished products from China to export or re-export via this route.
Overall, the UAE is rated the 21st best country in the world in terms of ease of doing business. How would you describe the overall ease of entering Sharjah or doing business here, and what is the SEDD doing to make it even friendlier to entrepreneurs?
Sharjah’s economic indicators represent one of the main pillars of the drive to facilitate business and that there is a gross domestic product growing and developing by 9.1 percent, 6.7 percent, 8.1 percent and 5.7 percent respectively in 2013, 2014, 2015 and 2016. This indicates the ease of conducting business in Sharjah, and SEDD looks forward to boosting it still further through the adoption of a large number of initiatives from the reduction of standard business time and completion of procedures to greater electronic connectivity with government departments and the issuance of licenses and electronic transactions through foreign business offices. Also, it seeks to attain this through the strict control of markets, the application of competitive indicators in the department, the accreditation of indicators related to conducting business, and the transparent disclosure of all data through statistical publications. It is worth mentioning that SEDD has established two new departments: Commercial Affairs and Industrial Affairs, established due to the wise directives of HH Sheikh Dr. Sultan bin Muhammed Al Qasimi, Supreme Council Member and Ruler of Sharjah, who is personally following the development of economic initiatives in Sharjah and pays great attention to the outputs achieved.
Sharjah has been considered the country’s cradle of education and of culture for centuries. How has the emirate’s education and talent creation contributed to its economic success and diversification?
Sharjah has been chosen as the Capital of Islamic Culture thanks to its efforts in various cultural, intellectual and educational endeavors and according to the wise vision of HH the Ruler of Sharjah. International institutions pay great attention to the standards, procedures and policies that Sharjah applies. Besides being known as a capital of Arabic and Islamic culture, Sharjah works to strengthen a spirit of dialogue between civilizations. The emirate attained the title of Capital of Arab Culture in 1998 and the Capital of Islamic Culture in 2014. It is worth mentioning that the emirate hosted the first educational institutions in the region and remains an outstanding university city for the region. Likewise, the emirate is known for its beautiful buildings, designed in the Islamic architectural style. Besides, Sharjah founded Sharjah Publishing City and a company for the marketing of university innovations to combine culture, education and innovation in a single crucible.
How has that culture contributed to the tourism industry, and what else makes Sharjah an ideal tourism destination or place to live?
The tourism sector is one of the most important components of Sharjah’s economic development. It is an unconventional sector that depends on culture and knowledge, which are competitive advantages that the emirate is blessed with. Thus, culture and tourism have become well-known industries in the Emirate of Sharjah with a heritage comparable to that of international capitals such as Paris and Prague. Sharjah is known for its historical places and regions such as Mleiha and the Eastern Region. This is supported by the emirate’s recent investments in heritage and culture, as evidenced by the strong growth in the tourism and hotel sector, which grew by 7.5 percent, 5.1 percent and 5.4 percent in 2015, 2016 and 2017 respectively. Also, the weight of the hotel and services sector has been around 3.5 percent to 4 percent of GDP over the past five years, as well as increases in investments in this sector by 5.4 percent, 8.9 percent and 5.4 percent respectively in 2015, 2016 and 2017, up from 3.4 percent and 3.3 percent in 2012 and 2013. These figures indicate that there has been a big leap in the tourism sector in the Emirate of Sharjah.
As Chairman of SEDD, what do you see as your biggest challenges and achievements, and what is your overall vision for the future of Sharjah’s economy?
The annual reports issued by SEDD indicate that during the last five years the department has achieved a qualitative leap in overall performance, bringing it up to the standards of the largest international bodies working in the field of economic development. This is evidenced by the number of awards received by the department in recent years, in addition to our obtaining a large number of ISO certificates – a unique achievement, not only at the level of the emirate, but also in terms of the UAE. During these past years, SEDD has achieved many milestones, being rated at 95 percent in the area of customer satisfaction, and hitting 92 percent in terms of employee satisfaction. Besides, the department has a developed and advanced information management system. Also, we have increased the creative balance of the department by more than 600 suggestions and the growth of utilization rates of smart services by 108 percent. In addition, SEDD has e-linking with various local and federal entities to ease procedures for investors and it is known to possess the best technical services in the emirate. We have the best inspection teams and commercial officers, who work together to ensure the security and welfare of markets and guarantee the rights of consumers, for which these teams have received international awards. Furthermore, we have worked through our department to save investors time and effort by providing our services electronically. Also, we cannot forget the significant developmental role that the department plays in supporting university students, transferring knowledge and supporting design, innovation and investment for business initiatives in universities. Through such great performance, boosted by continuous economic growth, we believe that SEDD and Sharjah are on the right path. The future may be full of economic challenges, but we will work to maintain the level that SEDD and Sharjah’s economy have achieved, as well as the competitive advantages within the framework of a federal and global economy that is developing significantly.