Abu Dhabi $7.2bn industrial zone lures Asian investors

Kizad sees foreign investment interest from China, India, says top official
Abu Dhabi $7.2bn industrial zone lures Asian investors
The $7.2bn phase one development of Kizad is set to launch before end-2012 (Image for illustrative purposes only)
By Reuters
Mon 26 Sep 2011 07:46 AM

Abu
Dhabi's mammoth new industrial zone is wooing investors from Asia to set up
shop and help the emirate diversify its economy away from oil, its top official
said.

Khalifa
Industrial Zone Abu Dhabi (Kizad) at Taweelah, midway between Abu Dhabi and
Dubai, spans an area of 421 sq km and is the largest industrial area in the
United Arab Emirates.

The
$7.2bn phase one development is set to be operational before the end of 2012,
with other phases to follow amid plans to create industrial clusters around a
new port.

In the
meantime, top management has been busy marketing the project in Asia, and
lining up collaborations with Asian banks to make future investments easier.

Earlier
this year, Kizad held roadshows, launching in three Asian economic giants - India,
China and South Korea, as well as in Germany.

"The
response was positive and this is also about attracting foreign direct
investment," said Khaled Salmeen, executive vice president, industrial
zones at Abu Dhabi Ports Company (ADPC), which owns Kizad.

He added
that Kizad plans to open offices in these countries, starting soon with India.
The company has so far signed agreements with Industrial & Commercial Bank
of China, Citibank , HSBC , and India's Bank of Baroda .

"There
is a need for industry to contribute to the non-oil GDP, we are confident Kizad
will contribute up to 15 percent of Abu Dhabi's non-oil GDP by 2030,"
Salmeen said.

Emirates
Aluminium (Emal) is the first and anchor tenant. Some 30 companies have signed
agreements to set up base at Kizad and nearly 100 more are awaiting approvals.

The
agreements with private and government firms relate to projects in aluminium,
steel, glass and logistics, he said.

Oil-rich
Abu Dhabi is investing billions of dollars in industry, tourism, infrastructure
and real estate to diversify its economy away from oil. Manufacturing accounted
for 5.5 percent (in nominal terms) of the emirate's GDP in 2010, according to
latest figures.

With
about 60 to 80 percent of goods manufactured in the industrial zone to be
exported, investors can also seek finance from export credit agencies (ECAs),
that are lending long-term at low rates, he said.

Kizad,
which is fully funded by the government, is targeting eight industry clusters:
aluminium, steel, engineered metal products, petrochemical's and chemicals,
pharmaceuticals and healthcare equipment, food, paper, printing and packaging.

The
completion of the zone's first phase at end-2012 will coincide with the close
of the first phase of the Khalifa port's infrastructure with an initial
capacity to handle two million TEUs of container traffic and 12 million tones
of general cargo annually.

By 2030,
the port's capacity is planned to grow to 15 million TEUs and 35 million tons
of general cargo.

Industrial
City of Abu Dhabi and Mussafah, the older industrial hubs of Abu Dhabi will
remain independent and continue with plans of developing industry.

In
neighbouring Dubai, the Jebel Ali free zone has been well-established for over
two decades, contributing some 25 percent to the emirate's GDP.

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