Sharjah is revitalising its efforts to expand industrialisation in a bid to stem slowing non-oil business and ease the debt burden it is facing.

Ratings agency Moody’s believes the emirate could face a debt burden exceeding 15 per cent of GDP next year with government revenues slipping on the back of weak business activity.

Sharjah’s fiscal deficit at Dh3.58 billion ($975 million) or 4.3 per cent of GDP last year was its highest since 2008 and more than double the 2.1 per cent forecast in the budget. Moody’s warns government debt could escalate if economic growth slows over a protracted period.

“Persistent deficits have caused Sharjah’s government debt burden to rise, albeit from a very low base, and we expect it to exceed 15 per cent of GDP by 2017,” Moody’s said.

Sharjah is currently ranked by the agency as A3 stable, at the bottom of the third highest investment grade, compared to Abu Dhabi’s ranking of Aa2 in the second highest investment grade.

The emirate anticipates a 39 per cent increase in revenues and stable expenditure to keep fiscal deficit at Dh2.5 billion.

A strong market response to the Sharjah government’s first US dollar Islamic bond of 2016 underscored market confidence in the economy and fiscal management. Standard & Poor’s noted that the four largest sectors in Sharjah’s economy are real estate and business services (accounting for about 21 per cent), manufacturing (16 per cent), mining, quarrying, and energy (12 per cent); and wholesale and retail trade (12 per cent). Despite a slowdown in the mining and energy sector, the agency expected to see continued growth across all other economic sectors in the emirate.

INITIATIVES

Sharjah has rolled out a wide range of initiatives to help develop the local economy and encourage inward investment including allocating 45 per cent of its 2015 budget to economic development and backing a variety of new schemes to help encourage start-ups and SMEs. A third economic free zone, Sharjah Media City, was established this year, while two other free zones – Hamriyah Free Zone (HFZ) and Sharjah Airport Free Zone (Saif Zone) – are flourishing with about 13,500 companies already registered there.

The emirate’s free zones are redoubling efforts to gain new tenants and new investments, the Hamriyah hub holding seminars in Malaysia and Singapore and Saif Zone reaching out to potential investors in Portugal. After the Malaysia-Singapore events, Saud Salim Al Mazrouei, director of the two free zones, commented: “The flexibility of investment regulations and the tax-free investment scheme, as well as Sharjah’s modern infrastructure and geographical position, are all elements that were received with a great deal of interest from investors during the talks.” 
 

Al Mazrouei: hubs’ positive elements attract interest

At the culmination of visits to the Portuguese cities of Lisbon and Porto by a Saif Zone team, Al Mazrouei remarked: “We value our Portuguese investors who are operating from Saif Zone and we are sure the number will go up.” The Saif Zone team interacted with investors from the food and agriculture, textile and IT sectors.

The enclave was recently honoured for its Geographic Information Systems (GIS). It received the Excellence in GIS Implementation (EGI) Award during the Gisworx (GIS Workshops & Exhibitions) 2016 gala dinner in Dubai.

 “We have been developing and growing GIS within Saif Zone. Today, it is an integral part of our operations,” said Al Mazrouei. He added that the service kept abreast of the latest standards. 

But Sharjah, the first emirate in the UAE to industrialise, is not resting on its laurels, believing the more it develops its manufacturing and logistics base and promotes a range of other services the better it will be for its economic growth and a reduction of its debt burden.

Sultan Abdullah bin Hadda Al Suwaidi, chairman of the Sharjah Economic Development Department (SEDD) highlighted that the department’s  focus over the past several years was on directing huge investments for the diversification of the economy, while Amal Jassim Habash, a deputy director of commercial affairs at SEDD, said another objective was to build the knowledge economy towards achieving sustainable growth.

In one of its efforts to woo North American investors, the Sharjah Investment and Development Authority (Shurooq) held a roundtable conference in collaboration with the Canadian Business Councils in Dubai and Abu Dhabi. 

Marwan bin Jassim Al Sarkal, CEO of Shurooq, apprised the gathering, which included several Canadian businessmen, of Sharjah’s long record of entrepreneurship. Shurooq presented specific business opportunities that Canadian business parties could consider.

THE PRIVATE SECTOR 

The private sector is pitching in its contribution for business development. It launched a growth platform called shJSEEN to encourage entrepreneurs to set up their ventures in the emirate. Sharjah Chamber of Commerce and Industry chairman Abdullah Al Owais is optimistic the initiative will work well and spread the notion that Sharjah is an ideal regional and international destination for innovation and entrepreneurship. For shjSEEN, the chamber signed partnerships with Twitter, Forbes Middle East, Brag Events and Careem.

“Sharjah’s strength has always come from the people who share a love for the city, so it’s only natural that we continue to encourage business opportunities and economic growth as we strive to build the next entrepreneurial ecosystem in the emirate,” said Sara Al Madani, a chamber board member and member of the shjSEEN board of trustees.