Diversification, FDI driving Sharjah’s economy to new heights
SHARJAH - Sharjah has been moving away from hydrocarbons towards a diverse economy coupled with measures to boost foreign investment flows and supported by competitive advantages, such as strong connectivity and a culture of entrepreneurship.
“The Report: Sharjah 2018” by the Oxford Business Group indicates that the emirate’s policy of diversification and its success in attracting foreign direct investment are driving the economy towards new heights.
Oil and gas contribute less than 6% to the GDP and no individual sector accounts for more than 20%.
Industry and manufacturing in Sharjah benefit from a low-cost base, along with a developed infrastructure and connectivity, the report stated. “As a result, Sharjah is one of the most important industrial and manufacturing centres of the UAE and the wider [Gulf Cooperation Council] GCC.”
Marwan bin Jassim Al Sarkal, executive chairman of the Sharjah Investment and Development Authority (Shurooq), said: “In the last few years, Sharjah has undergone a substantial transformation in its economy to servicing the growing investment opportunities and demands made by local and international markets.”
Invest in Sharjah CEO Mohamed Juma al-Musharrkh noted that “Sharjah’s holistic approach to economic growth is primarily focused on two factors, diversification and quality.”
An important point in the report is the dramatic increase in foreign direct investment (FDI) into Sharjah from $808 million in 2016 to $1.6 billion in 2017. “We enjoy a steady increase in volume of inward and outward capital across emerging markets within Sharjah,” Musharrkh said.
He said the contribution of the top emerging sectors in the emirate’s GDP as per the 2017 figures includes: manufacturing (16%), real estate (12%), wholesale and retail (11%), financial services (10%), construction (7%) and logistics and transport (5%).”
“Sharjah enjoys a healthy growth in FDI with mega real estate, retail, health care and hospitality projects being rolled out, which have already begun welcoming a number of new investment prospects, partnerships and entrepreneurial opportunities across different sectors,” Musharrkh said.
These indications justify Moody’s and the International Monetary Fund’s predictions that Sharjah’s annual growth is expected to rise to 2.7% in 2018 and 2019, with expansion driven primarily by trade and tourism and a more optimistic growth outlook for its GDP.
Musharrkh pointed to the emirate’s two largest free zones — Hamriyah Free Zone Authority and Sharjah International Airport Free Zone — which host more than 13,000 companies and small and medium-sized enterprises from more than 150 countries across many industrial sectors, with expansion projects under way in both zones.
In 2017, he said, the United States and Canada led the increase of strategic investments from the Americas into Sharjah. From the East, China, India and Pakistan were among the key investors.
“From Europe, we continue to witness steady investment growth from nations, as well as strategic investments from German, Italian, French, Dutch and British companies as well as others across the EU region. Investments are also coming in from Russia,” he said.
The emirate is home to six existing and in-development specialised free zones and industrialised zones, which act as main industrial bases of the Emirates. The Hamriyah Free Zone and the Sharjah Airport International Free Zone offer advantages such as 100% foreign ownership.
Sharjah has initiated new free zones with non-industrial focus — Sharjah Publishing City, Sharjah Media City, Healthcare City and Sharjah Research, Technology and Innovation Park — to further support the growth and diversification.
“These specialised networks influenced our current expansion processes, creating strong returns on diversified investments across eco-tourism, logistics, finance, education, light manufacturing, entrepreneurship and environmental projects,” Musharrkh said.
“It allowed state entities in Sharjah to work together as a strategic model for increasing investments from the private sector, operating with less dependency on government budget, which substantiated the upgrading on Sharjah’s credit ratings.”
“The emerging mega-real estate and commercial projects in Sharjah are attracting global hospitality brands as well as leading investment brands locally and globally.”
He said combining these elements in addition to specialised free zones would help sustain Sharjah’s flexible economy, which meets “the demands of investors worldwide, all operating in a business-friendliest environment in the region.”
“Our key economic goal is to strengthen Sharjah’s sustainable economy by promoting existing diversification in capital and share with our global partners new frontiers for profitability and national income,” Musharrkh said.
“We will continue to build on our existing strategy, which is travelling and promoting Sharjah’s investments opportunities in world-leading exhibitions, events, forums and discussion panels.”