The garment industry in the UAE
Emirates Business 247
Shakheel Alam, Marketing Manager of Sara Textiles at Umm Al Quwain Free Zone, said: “Many of the garment units which operated in the UAE have converted their premises to other businesses such as bulk construction materials like timber and steel.”
New labour welfare measures have increased salary and benefits costs. Alam added: “While a worker in Bangladesh earns $50 per month one in the UAE costs $500 – including food, accommodation, travel and other items. Chinese and Indian companies have a huge advantage in terms of volume and labour costs. We export 70 to 80 per cent of our production. Many units which moved their operations to Jordan, Egypt, Kenya or Bangladesh save 30 per cent duty in the US and EU markets.”
A report on the UAE’s garment industry by the Emirates Industrial Bank said the decline in the number of factories began in the run-up to the abolition of the international quota system.
The fall began in 1998 and by 2004 the number of garment units in UAE had come down to 151, employing about 27,000 people. In 2006 the number of operational firms was around 100. The report said: “Several firms have relocated while maintaining offices in UAE. Garment production is easy to relocate without major transportation and/or installation costs. The choice for relocation destinations are Jordan and sub-Saharan Africa, areas which are receiving preferential treatment from the US in the form of duty-free access to the American market.”
The quota scheme, which nurtured the industry by guaranteeing small nations access to the US and Europe, was abolished to provide consumers in the West with cheap imported products. The system had enabled the UAE industry to flourish despite lacking raw materials such as textile yarn and fabrics, cheap labour and a large domestic market to support manufacturers.
Hundreds of garment units in the UAE were started by investors from India, Pakistan and southeast Asia. Now most have shifted their operations to other countries to take advantage of free trade agreements with the United States.