The UAE government plans to redirect about 42 per cent of its spending towards locally based companies by 2025 and by year 2031, this is expected to increase to 50 per cent, hence adding more depth to the local market and making it more competitive for large as well as small and medium firms.
The increase in government spending is aligned with the expected rise in local demand. Industry estimates suggest internal demand for products and services is expected to increase from Dh33 billion at present to about Dh55 million by 2025. “This is an opportunity for the UAE-based companies to strengthen their industrial base and have an In-Country Value (ICV) certification now to be able to benefit from a burgeoning manufacturing and services sector,” says Peeyush Joardar, CEO, MBG Corporate Services.
The ICV program is one of the pillars of the National Strategy for Industry and Advanced Technology. It aims to support industry by redirecting the procurement practices of government and national companies to local suppliers who hold the program’s certificate, which can be attained by achieving certain criteria. Since the adoption of ICV program by the Federal Government, certified suppliers are at an advantage during the award of tenders and contracts based on their ICV score.
“The ICV program was started by Abu Dhabi National Oil Company (ADNOC) in early 2018 and it was later adopted by the ADNOC group of companies. In late 2019, the program was expanded to cover government and semi-government entities.
In September 2021, the Ministry of Industry and Advanced Technology (MoIAT) announced its expansion to the federal level in the UAE. Hence the ICV certification process is governed by MoIAT.
“The ICV score constitute major vendor selection criteria for supply of good and services and is part of the procurement policy of for each and every company and national companies prefer to deal with suppliers having ICV certification, whether they are tier 1 or tier 2 suppliers,” said Joardar.
This means, companies in the UAE are now keen to expand the procurement of goods and services and thereby reduce dependence on foreign supply chains and allowing better control over quality and logistics. This has arguably been one of the key learnings during the pandemic. Local content and manufacturing does not only add value to an economy, but makes it more efficient as well.
“A firm with a good ICV score will get the first right of refusal when participating in contracts and tenders. Further expanding the UAE’s industrial base through ICV certification provide suppliers with many competitive advantages, including provision of financing,” says Joardar.
Mass adoption of the ICV program will also promote knowledge transfer, self-sufficiency, business continuity and expands the variety of local supply options along with showcasing products and services to international audience and encourage partnership with international companies looking for competitive advantage of joint supply.
MBG Corporate Services was approved as one of the ICV certifying bodies in April 2019. It has offices in Abu Dhabi, Dubai, and Sharjah.
MBG has helped many companies in acquire ICV certification. The process of certification usually takes about 10 to 12 working days from the date of receiving complete set of documents/ information’s, and the certification is valid for 14 months from the date of the audit report. The main challenges for companies are understanding the process and getting all the required paperwork and financials in place. At MBG, we make our clients understand the ICV template, acquaint them with guidelines applicable to their nature of business, educate them on the importance of having suppliers who have ICV scores, eligible and ineligible expenses involved, help them to organise their documents.
MBG stands out for its competence in educating and guiding the suppliers on how to improve their ICV score as per the AUP guidelines issued by the committee. “We advise clients on way forward based on their business model, organisation structure, supply chain complexities, procurement policy, HR policy, outsourced policy etc. along with detailed analysis of their financials to identify the local content element in their operations. This way we are doing some sort of micro analysis before devising a process for our clients,” notes Joardar.
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