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The Middle East’s advanced materials, components and products market could reach around $125 billion in revenue by 2025, according to a report.
According to a new report from Strategy & Middle East, part of the PwC network, titled “Localizing High-Tech Industries to Build Resilience and Economic Growth,” Middle Eastern countries should seek to localize this value wherever possible, rather than import it.
“The Covid-19 pandemic has greatly eased the susceptibility of supply chain disruptions and has called into question the resilience of the region. It is difficult or impossible for companies to protect all the essential components they now rely heavily on,” said Alessandro Borgogna, Partner at Strategy& Middle East Say.
localization technology
“Therefore, localizing technology and digitization is crucial as it ensures the supply of components and products that are indispensable to economic and commercial activity,” he added.
Chady Smayra, Partner at Strategy& Middle East, said: “As competition intensifies to build national tech manufacturing ecosystems and meet proprietary and global needs, Middle Eastern governments should make the right choices about where they can succeed.”
These ecosystems include:
Financial Incentives: The program will take full account of the cost of ownership over a 5- to 10-year planning horizon. Incentives for potential tenants may include direct subsidies to lower up-front capital expenditure requirements for new-build projects.
Global Supply Chains: Governments also need to ensure seamless integration with global supply chains through reliable modern road, sea and air physical infrastructure and digital network capabilities.
Regulatory and policy support: Reforms to import, export and customs regulations are likely to further support efficient logistics systems. Requirements for emerging technologies may include policies to support IoT adoption, security protocols to prevent hacking and protect user data, AR/VR content regulations, strong intellectual property protection frameworks and conflict resolution mechanisms, and encourage ethical use of products framework and define product liability.
reliable utility
Reliable and cost-effective utility infrastructure: Reliable utilities are an important prerequisite for localization. Governments can also take advantage of the Middle East’s natural advantages in wind and solar to meet the demands of manufacturers committed to renewable energy as part of their decarbonization strategies.
Talent: The government can work to develop the national talent pool while streamlining the visa process to make it easier to hire foreign workers. To encourage foreign workers with the required skills to migrate to the region, the government can provide quality of life services that meet international standards, such as world-class schools, health care and recreation centers. It could also provide manufacturers with talent-related financial incentives, including tax credits for hiring qualified domestic talent, and grants for employee training.
Supporting business and trade policies: To boost investor confidence, governments must take steps to ensure investors can conduct business easily and safely. This work may include developing regulatory policies that allow 100% ownership of the company; streamlining the process of repatriation of profits; providing long-term land leases; passing favorable intellectual property protection laws; and ensuring high financial recovery rates for shareholders in the event of bankruptcy.
“Companies that invest heavily in R&D require special consideration; given the rapid pace of change in the tech industry, these companies are more inclined to maintain their leading positions and remain viable over the long term,” said Maha Raad, head of Strategy & Middle East.
digital infrastructure
Already in the Middle East, NEOM Tech & Digital Company, established in 2021, is the first subsidiary established outside NEOM and is building an advanced digital infrastructure. Likewise, the UAE’s industrialization and innovation strategy, led by the Mubadala project, also focuses on the localization of high-tech products.
“To increase the likelihood of a localisation strategy being successful, the government should target either start-ups using cutting-edge technology to innovate or tenants with leading positions in their industry who, by virtue of their prominence, can attract other companies into their operating sphere, ” Ladd concluded. arab trade news agency
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