United Arab Emirates

The UAE Armed Forces have grown significantly over the years and currently are equipped with some of the most modern and sophisticated weapon systems. In order to achieve this, the UAE has allocated significant amounts of funds in the directions of defence and security in recent years. According to a report published by the US International Trade Administration, UAE’s defence expenditure in 2016 was expected to increase by 7.4%, reaching some 23.5 billion US dollars, from 21.8 billion in 2015

As part of its economic diversification strategy, the UAE government is working towards the expansion of the local defence industrial base. The aim is the progressive production of an ever increasing amount of military equipment by the local industry, in a bid to reduce foreign dependence and promote national industrialisation. In order to achieve this, the indigenous defence industry relies on the assistance of foreign companies in order to manufacture advanced and sophisticated defence equipment. Under this context, several joint ventures (JVs) between international Aerospace & Defence Prime contractors and UAE-based entities have been established.

The main vehicle enabling such ventures, are offsets/industrial cooperation, which are regulated by the Tawazun Economic Program (UAE’s industrial participation program), overseen by the Tawazun Economic Council. Tawazun was created in 2007 to develop ventures through industrial partnerships (offsets) and strategic investments that would add value to the UAE’s industrial manufacturing sector, across a number of areas, namely defence & aerospace, automotive, munitions, metals and technology.

Overall, up to February of 2015, through the UAE Offset Program, over 70 new local business ventures were successfully launched (4 of which later became listed on the UAE Stock Markets), investing more than 10 Billion AED (USD 2.7 billion) in total. The range of activities of these companies varies from shipbuilding, to district cooling, to aircraft leasing, to fish farming, to healthcare, to agriculture, and even banking and education. Some of the most prominent such JVs created through the programme include:

Name of JV

Partners in the JV

Scope of Work

Advanced Military Maintenance Repair Overhaul Centre (AMMROC)

Initially established by the Mubadala Development Company, Sikorsky and Lockheed Martin

Military aviation Maintenance, Repair and Overhaul (MRO)

Tawazun Dynamics

Tawazun Holding and Denel Dynamics

Design, assembly and manufacture of guidance kits for airborne munitions

Etihad Ship Building

Initially established by the Al Fattan ship yard, Fincantieri and Melara Middle East

Military and civilian vessels and boats

Another company created through offsets, is Caracal International. Caracal was founded in 2007 and is currently the region's leading manufacturer of firearms, sniper rifles and other light weapons for the civil, military, law enforcement and sports market. The company also offers a variety of arms accessories, full weapon repair, as well as maintenance & servicing work packages. Finally, it is worth mentioning that all of Caracal’s products are designed, developed and manufactured in Abu Dhabi. Caracal is a fine example of a company created through offsets that has managed to further enhance its national and international status. Among other success stories, Caracal signed a deal with the UAE Armed Forces to provide 80,000 modern assault rifles of the CAR 816 type, simultaneously covering local demand and providing self-sufficiency to the country in this respect.

Offsets are one of the predominant pillars of the UAE’s defence industry. A second pillar was created in 2014 when the Emirates Defence Industries Company (EDIC) was founded. EDIC was established through the integration of assets owned by the Mubadala Development Company, Tawazun Holding and the Emirates Advanced Investments Group. The company brings together the combined capabilities of the UAE’s defence industries, into a single integrated platform. EDIC comprises of companies across the manufacturing, autonomous systems, maintenance, repair and overhaul, communications, logistics and technology development sectors.
 
It is further worth noting that UAE’s defence industry has already established export activities. It is indicative that at the beginning of 2016, Abu Dhabi Ship Building (ADSB) signed an agreement with the Kuwaiti Ministry of Defence to build and supply landing crafts and high speed protection vessels worth over 260 million AED (70.8 million US dollars). On the other hand, aiming also at exports to Eastern European countries, NIMR Automotive signed a new joint venture at IDEX 2017 with the Czech manufacturer VOP CZ for the marketing, distribution, and production of NIMR armoured vehicles for the Czech Republic, Hungarian, Polish and Slovakian markets.

Finally, it is worth mentioning that the space technologies industry of the UAE has started to develop rapidly. The country’s investment in the sector as discussed previously has exceeded AED 20 billion (USD 5.4 billion) so far. The main local companies active in the domain are Thuraya, Al Yah Sat and the Mohammed Bin Rashid Space Centre (MBRSC).