UAE Textile, Garments Sectors Set For Major Expansion
DUBAI - The UAE's garment and textile industry, which has grown remarkably since the formation of the federation under the visionary leadership of the late president Shaikh Zayed bin Sultan Al Nahyan, is set for a new phase of consolidation and vibrancy in the emerging global trade scenario.
The booming sector, a major contributor to the country's non-oil GDP, and currently accounting for nearly 40 per cent of the total AGCC market estimated at $7 billion, is gearing up for a dramatic transformation, thanks to the strong industrial infrastructure built under the pragmatic and far-sighted leadership of Shaikh Zayed, analysts point out.
"The outlook has never been brighter for the industry. Both textile and garment industries are getting into a take off mode after a brief period of stagnation. The setting up of the Textile City in Dubai and the liberalisation of the global textile and garment trade augur well for these sectors and promise to reposition them as key drivers of the nation's economic growth in the years to come," said a leading textile trader. "The imminent lifting of the US export quota restrictions, which for the past several years have been hampering the industry’s growth, will be a sure-fire catalyst to this drastic change."
The Textile City promises to reinforce Dubai as the trade hub for textiles and garments not only for the Middle East but also for the Indian subcontinent, China, Europe and even the US. Its free-zone status and tax-free nature will attract more major global players who will bring with them increased international goodwill and recognition for Dubai, industry sources believe.
Analysts believe that the country's $3 billion textile market, dominated by Dubai, is now ripe for a major leap next year. Apart from the scrapping of stringent US quota rules and the launch of the $60 million Textile City, they see the overall economic buoyancy in the Middle East acting as a spur to this upbeat mood. "In short, Dubai is set to further consolidate its position as the regional textile and garment trading centre while becoming a focal point of increased trade with China and India."
The UAE, which has become a major garment-manufacturing centre in the Middle East during the past two decades, is set to take advantage of the new global economic order. Although the sector had its ups and downs over the years, particularly in 1997 when the industry suffered one of its worst setbacks, indications are that in the wake of fast growing regional market demand and the current price stability in the global fabrics and yarn markets, it is poised for a period of sustained growth, " a Dubai-based industry analyst pointed out.
Dubai has never been short of strong re-export markets for its textiles and garment trade. When one market closes its doors, new markets seem to spring up to keep the trade afloat even during critical times. While demand from traditional re-export markets such as the CIS, some Middle East and African countries continue to drive the sector's growth, occasionally it is getting a shot in the arm with a sudden demand surge from new markets. Traders expect a significant surge in demand once the Iraqi and Afghan markets open up.
Recent estimates show the annual demand for textile products in the Middle East region at around $12 billion.
According to trade sources, there are at present some 150 ready-made garment factories operating in the UAE with a combined capital of $75 million while some 60 factories with a total investment of around $175 million operate in the textile sector.
Although the scenario in general appears quite optimistic for the textile trade and the garment industry, the sector has to undergo corrective phases several times in the past, a garment maker pointed out. "While the textile trade had been bedevilled by business failures and recurrent defaults, the labour-intensive garment industry, which once experienced a drastic growth in Dubai and Northern Emirates, suffered grave setbacks in the wake of new labour rules and other adverse market conditions that had resulted in the closure of several factories amid unpaid wages and huge debts," he said.
Analysts point out that all fundamentals are in place for a dramatic industry growth from next year when several new garment manufacturers will launch operations. "Given the abundant supply of low-cost energy, the Emirates is now a sought-after destination for investors. Coupled with that is the country's efficient port facilities and tax incentives and other investor-friendly rules."
By: ISAAC JOHN
Article originally published by Khaleej Times
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