The Gulf Organization for Industrial Consulting (GOIC) stated that GCC exports to Germany reached nearly 700 million USD in 2011 and the imports from Germany to GCC countries were worth 21.5 billion USD. GOIC pointed out that German exports to GCC countries are mainly cars, power plants, locomotives, rail parts, aircrafts, machinery and electrical and mechanical devices. As to German imports from GCC countries, they are mainly polymers and mining products.

GOIC put out the data during the participation of Secretary General Abdulaziz Bin Hamad Al-Ageel at the GCC-Germany Business and Investment Forum in Berlin from the 11th till the 13th of March 2014. The forum was organised by the German-Arab Chamber of Commerce and Industry in collaboration with the Gulf Research Centre (GRC) and the Federation of GCC Chambers (FGCCC). Nearly 400 GCC and German decision makers participated and discussed existing areas of cooperation, reinforcing business networks and establishing new partnerships.

Mr. Al-Ageel delivered a paper entitled “Economic diversification – investment and manufacturing opportunities in GCC countries” in which he tackled economic diversification through manufacturing and knowledge-based industries. He discussed the current status of manufacturing industries, missing industries and investment opportunities, knowledge-based industries in GCC countries and GCC-German industrial cooperation.

Mr. Al-Ageel stated that most German companies operating in GCC countries do business in the areas of energy and power, construction, chemicals, telecommunications and information technology. He added that the majority of German companies are based in the UAE, and strong opportunities still exist for these German companies to operate in other GCC countries.

GOIC Secretary General announced that UAE, Kuwait, Qatar and Saudi Arabia are home to some of the world’s largest sovereign funds set up to spread the excess revenues made by the GCC states across various investments around the world including the industrial sector. For instance, Kuwait Investment Authority (KIA) holds a 6.9 per cent stake in Daimler. The investment of KIA in Daimler started in In 1974.

 

Moreover, Qatar Holding LLC, the investment arm of the Qatar, retain 17 percent stake in Volkswagen after selling its 10% stake in Porsche Automobil Holding.

Mr. Al-Ageel added: “The International Petroleum Investment Company (IPIC ) and Mubadala Development Company had many direct investments in European Union states. In 2008, a subsidiary of Mubadala named ATIC, purchased the AMD semiconductor plant in Dresden Germany, as part of the industrial diversification policy of the Emirate of Abu Dhabi while Masdar acquired full ownership of a German photovoltaic production plant in 2007 for 230million USD, in preparation for setting up photovoltaic production facilities in the UAE.”

“TAWAZUN Holding acquired the full ownership of the German sport weapons manufacturer Merkel in 2007, through its firearms subsidiary Caracal. TAWAZUN directly aimed to add important know-how and expertise to its venture and has now successfully developed its own manufacturing facility in the UAE with the help of the foreign expertise”, Al-Ageel said.
As to German investment opportunities in GCC countries, GOIC Secretary General stressed that GCC countries are continuously working to improve industrial investment and promotion policies, privatization and Public Private Partnerships (PPPs), tax policies and administration, new SME projects and promotion, anti-corruption law enforcement, new business laws and commercial conflict resolution, industrial infrastructure, human workforce development and access to funding of industrial projects.

Nevertheless, Al-Ageel pointed out to some of the challenges to German investments in GCC countries, notably sector-specific investment restrictions (e.g. oil and gas, electricity, media, small business..), length of judicial proceedings and the overall high legal costs, limitations to foreign ownership through shareholding quotas (typically limitations to 49% foreign ownership), limitations to foreign ownership in land and access to real estate, nationality requirements on selected activities or industries (e.g. prohibition of foreign investments in some sectors, required local intermediary), agency, sponsorship and distributorship requirements, limitations to access to qualified staff and visa regulations.

GOIC Secretary General opined: “The shift towards manufacturing industry is an important strategic decision of the GCC states in their quest to build diversified and sustainable economies based on high value-added activities. Furthermore, GCC states must focus on sustainable economic activities especially manufacturing and knowledge-based industries. These industries are a strategic choice for economic diversification. Moreover, All GCC countries have recognized the importance of the industrial sector in terms of economic and income source diversification. They are endeavouring to implement ambitious strategies and plans in this area. This was clearly reflected through the economic diversification objectives they have set within national visions and development and industrial strategies that highlighted economic diversification and the important role of the industrial sector in this regard.

As for the current status of manufacturing industries in GCC countries, Al-Ageel stated that industrial investments were worth nearly 336 billion USD mainly in chemicals, refining of petroleum products, base metals, construction metals, building materials and food industries. In fact, 15165 industrial facilities have provided 1.34 million job opportunities.

Al-Ageel said that the industrial sector’s contribution to the GDP (including oil revenues) in all GCC countries ranged between 9.5 and 10.5% from 2001 to 2012, except for 2008 when it dropped to 8.5% because of the global financial crisis. He clarified that the percentages were different from one country to another, the highest being Bahrain’s 15.2% and the lowest Kuwait’s 4.6%.

GOIC Secretary General mentioned missing industries and promising future opportunities in GCC countries notably knowledge-based industries such as chemical catalysts, metallurgical industries, processed food industries and non-ferrous metallic industries.