ME countries could attract $125bn in investment

According to a recent report by a researcher in the Middle East, localising the production of high-tech goods offers governments in the region a $125 billion economic opportunity.

The result of the report by Strategy&, a division of global consulting firm PwC, shows that three key product categories—advanced materials, advanced components, and advanced products—are anticipated to spur investments, economic growth, and diversity. As part of the result, it was predicted that three goods in particular — semiconductors, sensors, and robots for general-purpose or industrial applications — will generate $25 billion in revenue by 2025.

“The Covid-19 pandemic threw into sharp relief the susceptibility to supply chain disruptions and questioned the region’s resilience. It was difficult or impossible for companies to secure all the essential components on which they now heavily depend,” said Alessandro Borgogna, partner with Strategy& Middle East.

“Localising tech and digital is, therefore, vital as it secures the supply of parts and products that are integral to economic and business activity.” With a number of initiatives already launched in that regard, the Middle Eastern economies are stepping up their efforts to become significant players in the global technological landscape.

The UAE has an Industry 4.0 plan that intends to increase manufacturing by 30%, increase productivity and the development of innovative products, and add Dh25 billion ($6.8 billion) to the country’s economy by 2031.

The largest economy in the Arab world, Saudi Arabia, is now building the $500 billion megacity known as Neom, which will be powered by smart technologies. Both nations are making significant investments in technology businesses and services to advance and complete their goals.

Governments in the Middle East that want to diversify and localise their economies must understand how important a manufacturing base is in technology, according to Strategy&. Given “the visibility of massive projects already underway, the growing wave of industrialization and digitisation region-wide, and the potential to secure captive in-country demand,” it was stated that this was the case.

According to the report, the regional markets for industrial and service robots, as well as Internet of Things devices, could each generate $4 billion and $1.5 billion by 2025, respectively.

“As a result, competition among countries — to stake claims on tech segments, gain first-mover advantage and attract as tenants global tech companies looking to establish a regional foothold — will be fierce,” it said.