GOIC: Gulf markets focus on importation… there is a need to strengthen research and innovation capacity
The Gulf Organization for Industrial Consulting (GOIC) revealed that the GCC computer and electronic products manufacturing industry improved remarkably in the last few years. The private sector contribution was also significant to meet the growing demands on these products. In fact, the compound annual growth rate was 4.8% annually since 2011, estimated at a value of 395 million dollars and it increased to 476 million dollars in 2015. In spite of that this industry accounted for only a small percentage (0.12%) of the total investments in the GCC industrial sector for the same year, estimated at 393.7 billion dollars. These figures show that the computer and electronic products manufacturing industry sector is still relatively a new industry in the GCC industrial sector and it’s still in its early stages despite the presence of a huge domestic market in the Gulf countries.
The past few years were marked by an upward global trend for the establishment and improvement of communication networks, increase of the number of users of mobile phones, transfer of information devices and the Internet. This trend has resulted significantly and clearly in a growing demand for computer and electronic equipments, since they are considered as high-tech industrial products and among the technical industries constituting the backbone of the knowledge-based economy and relying constantly on technological advances and advanced studies and research.
In this context, His Excellency Mr. Abdul-Aziz Bin Hamad Al-Ageel, GOIC Secretary General, shed light on “the urgent need for the GCC countries to elaborate national plans and policies to strengthen the enabling environment for the information and communications technology that will increase the private sector investments in the information and communications technology like computers and electronic devices manufacturing industry. It is also important to promote joint investments and cooperation between GCC countries and to launch research and development projects relating to this industry on the regional level. In addition to that, GCC countries should focus on computer and electronic equipment to manage various activities related to economy, trade, production, finance, marketing and human resource management as well as education and training. Therefore, they become the pillar of the strategy aiming at achieving economic sustainable development in the GCC countries.
Computer Electronic products manufacturing industry is characterized by the wide range of uses in modern day lifestyles, to include: electronics, computers, communication devices and equipment, software, semiconductors and measuring and control equipment etc.
Saudi Arabia take the lead in investing in this industry
According to GOIC data, KSA is taking the lead among the rest of the GCC countries in investing in computer and electronic products manufacturing industry. These investments amounted to 376 million dollars in 2015, accounting for about three quarters of the total GCC investments in the computer and Electronic products manufacturing Industry in the Gulf. UAE ranked second with 14% of the investments.
On the other hand, the investments in computer and electronic devices manufacturing industry were distributed in 2015 among 75 factories out of 16890 factories in the GCC industrial sector, which represents 0.4% of the total number of factories. Computer and electronic devices factories showed an increase by 9.6% a year between 2011 and 2015.
KSA was at the forefront of Computer and electronic devices factories with 41 factories in 2015, followed by UAE with 21.3%.
The computer and electronic devices industry created 7.147 job opportunities in the GCC markets in 2015, which represents 0.4% of the total job opportunities in the gulf industrial sector amounting to 162.8 thousand job offers.
Therefore, KSA and UAE have a lot of investments in the computer and electronic devices industry sector and markets still present opportunities for Qatar, Bahrain and Kuwait for further investments in this domain.
Magnetic and visual devices at the forefront
The largest area of investment in the computer and electronic devices industry sector activities was the magnetic and visual devices industry with 132 million dollars, representing 27.8% of the total investments in this sector in 2015. Communication equipment industry ranked second with a total investment of 109 million dollars, representing 22.9% of the total GCC investments in this sector. Consumer electronics and electronic component industries were at the bottom of the list in terms of investments distribution.
As for the number of workers in computer and electronic products manufacturing industry, the communication equipment industry is hiring the highest number with 2.895 workers representing 40% of the total number of workers in this industry, followed by magnetic and visual devices industry with 1.669 workers, representing 23% of the total number of workers.
Foreign trade facts
Gulf market is considered a large consumer market for computer and electronic products. This sector’s imports in the GCC countries doubled during the period between 2007 and 2015. The compound annual growth rate reached 12.5% and the import value was estimated at 37.5 billion dollars in 2015 compared to 14.6 billion dollars in 2007. On the other hand, exports of computer and electronic products registered during the same year a compounded annual growth rate of 32.5%. The total value of exports was estimated at 2 million dollars in 2007 and increased in 2015 to reach 1.9 billion dollars. Therefore, the demand for these products is very high in the GCC countries, creating significant investment opportunities in the computer and electronic products manufacturing industry. It also probable that population growth, expansion of communication and phone networks and the internet and computer usage growth could also increase the demand in the future.
A quick comparison of the total value of imports from the computer and electronic products industry in the GCC countries in 2014, show that UAE and KSA are leading in terms of imports with close ratios respectively. The value of imports in UAE was estimated at 13.91 billion dollars representing 37.7% of the GCC countries total imports of computer and electronic products, followed by Saudi Arabic with 13.96 billion dollars representing 37.6%. Oman ranked 3rd with 4.2 billion dollars representing 11% of the imports.
On the other hand, if we compare the total value of exports of computer and electronic products industry in the GCC countries in 2014, we conclude that UAE ranked 1st with the total value of 1.2 billion dollars accounting for about three quarters of the total GCC exports. Bahrain ranked second with 338.2 million dollars representing 21.4% of the total exports.
Phone and communication devices, parts and accessories were at the top of the list of GCC countries computer and electronic products’ imports in 2014. The value of imports of this industry accounted for half of the total value of GCC imports and amounted to 16.6 billion dollars, representing 53% of the total value. Typewriters Calculators and photocopiers and their parts and accessories industry ranked second, followed by recorders, discs and tapes. Valves, tubes, transistors and electronic circuits were at the bottom of the list.
As for the GCC countries’ exports of computer and electronic products manufacturing in 2014, phone and communication devices, parts and accessories were on the top of the list. The value of exports amounted to 989 million dollars, representing 65% of the total value of GCC computer and electronic products manufacturing exports. Typewriters, calculators and photocopiers and their parts and accessories industry ranked second, with 327 million dollars representing 22% of the total value. Valves, tubes, transistors and electronic circuits were at the bottom of the list. A special attention should be given to specific products of computer and electronic products manufacturing industry by boosting production capacity and providing better marketing. This will enhance competitiveness and improve local and international markets access.
Challenges and difficulties
GOIC Secretary General shed light on the challenges and difficulties that GCC countries face in the computer and electronic products industry and that are the result of a gap of knowledge in all knowledge-based economy indicators. They are reflected in the following:
1- lower spending on research and development in the GCC countries compared to successful practices in the knowledge based investment domain.
2- Weak research, development and innovation culture in industrial companies
3- Current laws and regulations did not grant computer manufacturing industry exemptions and privileges to keep up with gulf trends to transition towards a knowledge-based economy.
4- Lack of a trained workforce in the Gulf. The gulf technical market still needs a lot of programmers, computer engineers and internet web designers.
Al-Ageel also talked about the future direction of this industry in the GCC countries, he said: “it is expected to see an increasing demand for computers and information technology with the gradual transition from the traditional economies to knowledge-based economies. In addition to that, there is a growing interest in building strategic partnerships with leading international companies to attract more computer industry technologies and to export computer products to the Arab countries and African markets.”
Al-Ageel added that GOIC recommended to adopt an action plan clarifying all the priorities and the work scopes of all the concerned parties in the domain of research and development in all GCC countries. A special attention should be given to scientific research and development in computer and electronic products and all the relating activities. It is also important to lay the foundations of scientific research and development through long term investments generating knowledge and to develop computer and electronic products industry by means of investments in public and private sectors. In addition to that, effective partnership should be established between research centers, scientific universities and the industrial sector.
GOIC also recommended to provide highly skilled human resources in order to activate knowledge-based economy and to pay greater attention to educational institutions and training centers to help an adequate number of specialists to graduate and to prepare them to work in information and communication industry project. Furthermore, it is vital to put in place legislations and institutional infrastructures including factories and scientific laboratories for local research centers. In addition to that, a gulf committee should be established to monitor computer and technology of information sector, to propose adequate policies relevant to this field and to follow up their implementation.