DED study on capital investment identifies sectors capable of further growth

The manufacturing sector attracted about 17.9 per cent of non-oil capital investment in the same period, followed by hotels and restaurants with 11.1 per cent and the trade sector with 7.7 per cent, while transportation, warehousing and communication sectors attracted about 22.9 per cent of total investments, revealed the study, which has been published by the Business Sector Development Division at the DED.

Construction, trade and finance however recorded higher economic returns posting greater contributions to the GDP as compared to the investment, said the report. The contribution of the Construction sector to the 2003 GDP stood at 8.1 per cent almost double the investment in the sector at 4.9 per cent. Trade, which attracted 7.8 per cent investment recorded higher economic returns at 17.2 per cent to the GDP while the finance and insurance sector with a meagre investment of 0.9 per cent contributed a massive 12 per cent to the GDP in the same year.

The booklet entitled, "Fixed Capital Formation in Main Economic Sectors," includes an analytical study of all economic and investment sectors in the Emirate of Dubai during the period 1996 to 2003. The study attempts to identify the sectors which had reached a high degree of investment saturation and finally to determine those sectors that yield high economic returns.

"A study of investment allocation in non-oil sectors during the period 1996 to 2003 reveals extremely interesting results and enables us to identify the sectors that have experience significant growth in this period," said Khalid Al Kassim, Deputy Director General, Development and Planning, DED. "The considerable growth experienced by the transportation, warehousing and communications sector comprising the logistics segment, is ample evidence that companies are constantly upgrading and enhancing their infrastructure development to ensure greater cost effective and time efficient services in Dubai," he added.

"This study has also enabled us to pin point sectors that are capable of further growth and have the ability to offer best economic returns. The DED would like to encourage investors to channel their capital investments into sectors like manufacturing, especially those utilizing advanced capital intensive methods to produce high value added output," he added.

The booklet is expected to facilitate investors by providing them with a comprehensive study of the market in Dubai, so that they can identify the sectors that yield high economic returns and have a rapid growth pattern.

"We are continuously working towards promoting Dubai as a major business hub in the region by improving the investment climate to attract new foreign direct investment. Our major focus will be to open new markets within the industrial sector, in addition to attracting investment in sectors like export trade, tourism and finance." said Mr. Al Kassim. "The DED also hopes to emphasise the increased importance of the agriculture sector, especially in view of the fact that the sector has registered steady growth from 11.02 per cent to 20.11 per cent during the period 1996 to 2003," he added.

The booklet, which is available at the Business Sector Development Division of the DED, highlights need for further research in the social and personal services sector, which registered a high annual rate of 28.29 per cent growth in the period under study. It also suggests a thorough review of all financial legislations and regulations to further enhance the investment climate in the Emirate.