Building and construction sector together with the real estate and business services sector (BCRE) contributed about 20.1% to RAK’s GDP in 2005, rising from 19.0% of GDP in 2004 and all the preceding years till 2001. While the GDP grew at a CAGR of 10.0% during 2001-’05, the said sectors’ contribution grew at a higher CAGR of 11.2% during the period, underscoring their increasing contribution to the Emirate’s GDP. In contrast, these two sectors made up 14.6% of UAE’s GDP in 2005. The Emirate’s BCRE sector was a lowly 2.6% of that of UAE that year.
RAK’s construction activities got a further shot in the arm during the last few years thanks to the rising demand for residential properties, in addition to the growing infrastructure needs of the Emirate. The BCRE sector in RAK is likely to continue to witness increased activity during the coming years as the Emirate is undertaking massive building plans involving a large number of major projects. Projects worth over AED17bn (US$4.7bn) are currently in various stages of development across the Emirate. The projects span residential, commercial and tourism developments.
Manufacturing Sector
The manufacturing sector contributed 8.8% of RAK’s GDP in 2005. The sector’s contribution to the Emirate’s GDP grew at a CAGR of 14.6% during the period 2001-‘05 and stood at AED814mn in 2005, as against AED472mn in 2001. In 2005, the number of manufacturing establishments in RAK increased to 101, compared to 81 in 2001. These establishments had combined investments of AED3.2bn and total workforce of 12,662 in 2005, up from AED2.9bn and 10,303 respectively, in 2001. The manufacturing sector in RAK is witnessing increasing activity as observed from a large level of fixed capital formation in the sector. Gross capital formation in the sector amounted to AED300mn in 2004, a growth of 33.3% over the previous year – the highest across all sectors that year, and representing 15.0% of the total gross capital formation in the Emirate that year.
RAK, with the largest deposits of limestone in the UAE, is the largest cement producer within the country. The four plants in RAK currently have a combined clinker capacity of 4.5mtpy (50% of total capacity in UAE) and cement capacity of 6.0mtpy (41% of total capacity). The Emirate produced 45% and 39% of UAE’s total clinker and cement production, respectively, in 2005. Two of the cement companies are increasing their combined clinker and cement capacities by 5.7mtpy and 3.3mtpy, respectively, by early 2007. RAK also has one of the largest manufacturers of ceramic tiles and sanitaryware in the Middle East – RAK Ceramics, while Julphar is a leading pharmaceutical company in the region.
Agriculture, Livestock & Fisheries Sector
The agriculture, livestock and fisheries (ALF) sector contributed 10.1% to RAK’s GDP in 2005, down from 12% in 2001. In contrast, this sector made up 2.3% of UAE’s GDP in 2005, showing the relative importance of this sector in RAK’s economy. The Emirate’s ALF sector made up 8.5% of that of UAE in 2005. From AED759mn in 2001, the sector’s contribution to the Emirate’s GDP rose to AED938mn in 2005, having grown at a CAGR of 5.4% during the period. The sector employed almost 15.99 thousand workers in 2003 which represented almost 15% of the Emirate’s total workforce. Gross capital formation in the ALF sector in RAK witnessed a rise from AED14mn in 2001 to AED17mn in 2004, at a CAGR of 6.7% over the period, and representing less than 1% of RAK’s total gross capital formation in 2004.
Total poultry herd in RAK declined by a CAGR of 5.1% during the period 1999-03, while milk production declined at a steeper CAGR of 8.3% during the period due to a decline in productivity of cattle over the period. RAK witnessed a drop in its total fish catch from a peak of 20.2 thousand tones in 1999 to 9.9 thousand tones in 2002, before the catch rebounded slightly in 2003, with a growth of 3.8%, which helped the total catch reach 10.3 thousand tones that year. Overall, though, there was a compounded average annual decline of 15.5% over 1999-2003.
Oil & Gas Sector
Out of the UAE’s 97.8bn barrel of proven oil reserves, RAK holds a minor portion of 0.1%. Thus, RAK’s share in UAE’s oil and gas reserves is miniscule. Although its contribution to the economy of RAK is minor (3.9% in 2005), the oil and gas sector’s contribution has grown at a CAGR of 18.6% during the period 2001-‘05. In contrast, this sector contributed a huge 35.7% of UAE’s GDP in 2005, showing the importance of this sector in the country’s economy. RAK has an estimated 100mn barrel of crude oil and condensate reserves, while it produces only 500 barrel/day from its only hydrocarbon structure, the Saleh field. There has been a surge, of late, of exploration activity in RAK, to increase the output of this commodity.
Tourism Sector
Although the contribution of tourism sector (represented by Restaurants & Hotels in RAK’s GDP by economic activity) to the Emirate’s GDP is small – 2.1% in 2005, the sector’s growth at a CAGR of 16.1% was the second highest (after oil’s) during the period 2001-‘05. As against this, the sector made up 1.8% of UAE’s GDP in 2005. The Emirate’s tourism sector made up 2.2% of that of UAE that year. The sector, building on RAK’s unique geographical position and many tourist features like mountains, desert and beautiful beaches, has the potential to grow at a much higher clip during the coming years. The Emirate is also likely to benefit from the high influx of tourists to the UAE, complementing the tourism industry of Dubai. The government of RAK considers the tourism sector, together with the manufacturing sector, as cornerstones in its future development plans. More tourism projects are on the anvil. The number of hotels in the Emirate is expected to reach 25 in the coming few years. The newly established Ras Al Khaimah Airways is likely to add to the government’s tourism push.
Financial Institution & Insurance Sector
The contribution of the financial institution and insurance (FII) sector to RAK’s GDP has grown at a CAGR of 11.7% during the period 2001-’05, to reach 6.0% in 2005, as compared to 5.7% in 2001. The sector contributed a similar 5.9% of UAE’s GDP in 2005. The Emirate’s FII sector made up 2.0% of that of UAE that year. RAK had one national bank – RAKBANK, in addition to 19 branches of other national banks at the end of 2004. RAK also had 6 branches of foreign banks, and 2 head offices and 4 branches of moneychangers at the end of that year.
