UAE is a strategic zone for trade due to the advantages offered due to its strategic location. It offers a window to the world and as such is keenly targeted by the logistics firms worldwide for an entry. These are firms which are keen on establishing links and strengthening trade ties with Asia, Africa and Europe.
Another scenario that is fast shaping up is the decreasing share of oil trading in the overall trade in the GCC/UAE region. This rising share of non-oil trade is good news for the economy since the region is finally getting out of the oil-dependency trading scenario. This is in part due to the strategic policy decisions being taken by the government at the helm which is helping diversify the trading basket.
It is also interesting to note that the push for the logistics sector and infrastructure is helping Dubai’s economy immensely.
In this article, we will examine the logistics boom being witnessed in the region and specifically in the Jebel Ali Free Zone, which figures prominently in the government’s Vision 2021 document.
Investment in World-Class Infrastructure
Dubai boasts of some of the best infrastructure projects and stellar buildings. They claim that the most efficient logistics corridor in the world has linked the Jebel Ali Port and the free zone with the Al Maktoum International Airport. And, as the world economy shrinks and slows down, Dubai and the GCC region is witnessing an upward rise of the economy and healthy growth along with a diversified sectoral growth.
The reason the non-oil trade figures are rising upward is because Dubai has been successful in getting key accounts from across the world. Also, it is attracting the right kind of firms and big firms which are already established players elsewhere to enter their market. This has clear ramifications and works in a cycle. The more the investment in logistics and infrastructure, the more the number of companies interested in entering the UAE market, and better the growth prospects for the economy at large. At the same time, better infrastructure also means better RoI and more job generation, spread-out sectoral growth and lessening dependency on oil.
And, as the world economy stalls, Dubai and UAE’s market is showing no signs of slowing down or stagnating. Also, their strategy is simply amazing. Once, the ports and infrastructure are all in place, the UAE’s ports can offer their services and infrastructure for cheaper prices compared to their competitors. This helps trade, and offers an insurance against the falling oil prices which has hurt their economy. However, the reduction of oil price is good news for global trade growth, the share of which UAE is now ready to partake, thanks to the ports and world-class infrastructure.
The Jebel Ali Story
Truly, there is a warehouse boom in Dubai and the adjoining region. First, the big ports, the mega-housing projects and now, warehouse sheds being built across the region. The Emirates is gearing up for a new phase in the industrial warehouse construction, which is largely being spurred by the logistics boom.
To ensure that Dubai becomes the global business hub and cement its position further, a slew of projects are coming up which will actually add massively to the industrial and distribution space. The Dubai Logistics City combined with the Jebel Ali Airport City is the world’s showcase for the first multi-modal transport platform in the single customs-bonded and free zone area.
Dubai is targeting investments for a diversified market portfolio from international and domestic investors, hedge-fund capitalists, businesses, etc. And, to do this, the investment in infrastructure has also been increased immensely and nowhere can this be seen well than in the Jebel Ali Free Zone or the JAFZA.
To look at figures itself, the building and construction sector in JAFZA has seen a 74 percent growth in the last five years. This roughly translates as Dh 10.7 billion in 2009 to Dh 18.6 billion in 2014. In fact, trade pundits expect the growth to be doubled in the Free Zone in the next 3-4 years. This growth is primarily driven by mega and sustained investments in infrastructure.
Gauging the huge growth potential and boom in the building and construction sector, technology is being utilized in the JAFZA to create 3D constructable models for attracting further investment by showcasing it to the world, attracting people to the projects and making it a win-win situation for all.
All this and more is happening to support and spur the logistics movement in the region. Come be a part of it, invest and grow with Dubai!