Abu Dhabi Ports has signed a 50-year agreement with the Chinese Jiangsu Provincial Overseas Cooperation and Investment Company (JOCIC) that will attract investments of Dh1.1 billion to the Khalifa Port Free Trade Zone.
The deal comes amid efforts by Abu Dhabi to diversify its economy by boosting industry and relying less on revenue from hydrocarbons.
JOCIC will develop about 23.7 million square feet of the free trade zone for companies from the Chinese province of Jiangsu. The space that will be occupied by JOCIC’s new company, the China-UAE Industrial Capacity Cooperation (Jiangsu) Construction Management, represents about 2.2 per cent of the available free zone space in Kizad’s Khalifa Port Free Trade Zone. Kizad, an industrial park, is owned by Abu Dhabi Ports.
“We have worked hard to make Kizad not only the largest free zone in the region, but also one of the most sophisticated free zone areas in the world, particularly for the industrial and manufacturing sectors,” said Sultan Al Jaber, the chairman of Abu Dhabi Ports and the Minister of State.
“Today’s announcement reaffirms the longstanding partnership between our two countries, and signals to the world that Abu Dhabi and the UAE will play a critical role in the future of global trade.”
Five Chinese companies – Hanergy Thin Film Power Group, Jiangsu Fantai Mining Development (Group), Xuzhou Jianghe Wood, Jiangsu Jinzi Environmental Technology and Guangzheng Group – have already announced plans to invest in the leasing space. Such a move will bring the companies closer to the customers they serve in the region.
The agreement comes amid deepening ties between the UAE and China in the wake of a three-day official visit to China in December 2015 by Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces.
During that trip, Abu Dhabi’s Mubadala said it would launch a joint fund worth US$10bn with two Chinese state institutions to invest in sectors with strategic importance for the UAE and China.
China is the UAE’s second biggest trading partner after India and the UAE is the gateway to about 60 per cent of Chinese exports to regional markets.
It also comes amid increasing efforts by the UAE to boost its industrial base to diversify its economy.
“If we go back to the establishment of Abu Dhabi Ports it’s mainly to diversify away from the dependency on oil,” Captain Mohamed Juma Al Shamsi, Abu Dhabi Ports’ chief executive officer, told The National, speaking on the sidelines of the signing ceremony.
“Such a deal fits exactly to such a mandate, diversfying the economy and investing in things outside of oil. So leasing 2.2 square kilometers, attracting five factories with an investment of over $300 million fits exactly with our contribution to non-oil GDP.
The deal with the Chinese comes on the heels of a $700m investment by Cosco Shipping, the world’s largest container operator. In addition to its current capacity of 2.5 million TEUs (20-foot equivalent units), the deal signed with Cosco will boost its annual capacity to 6 million TEUs by 2019.
Separately, Mr Al Shamsi said that Abu Dhabi Ports was looking to expand its business in Africa but declined to say how exactly it planned to do it. He also said, responding to market speculation, that the company had no current plans to sell shares to the public in an initial public offering.
“Immediately we are not intending to go to IPO,” he said.