Apparel manufacturers in the UAE are increasingly looking to overseas factories to produce their goods in order to take advantage of US quota restrictions, it was reported on Monday.

Quoting industry sources, the Gulf News said output has fallen up to 20 per cent this year as the move to offshore plants was compounded by the axing of scores of smaller clothing factories.

The report said neighbouring nations such as Oman, Bahrain and Qatar have benefited from the shift overseas as they often have a substantial US quota surplus each year.

"There is no compelling case for UAE-based manufacturers to stay and hope that each year the US will grant higher quotas," the paper cited a senior industry source as saying."

"Unless the UAE does something about getting itself out of the quota system, markets such as Bahrain and Oman offer the best short-term solution for us to source production requirements."