The National ICV Program facilitates diversification of the economy by attracting foreign direct investment in the domestic industrial sector. At Crowe UAE, the senior leaders believe that it also enhances the competitiveness of companies, besides bringing the much-appreciated discipline to the financial ecosystems of private companies.
“The ICV program is creating value for the economy and expanding it by allowing the money to circulate within the economy. It is pushing suppliers to procure goods from the local market, and encouraging players to set up industries locally,” said Umesh Narayanappa, Partner at Crowe UAE.
Advantages of ICV Program
The scale and scope of this program has been expanding with time. Last year, the UAE’s Ministry of Industry and Advanced Technology and the Ministry of Finance implemented the ICV program for the procurement policies of all 45 federal government entities, including ministries, federal authorities and institutions. Twelve national companies also require ICV scores and certificates from all their suppliers. The ICV program is notably a part of ‘Projects of the 50’ initiative, which will allow it to expand its coverage more over the coming years.
This essentially means tier one firms in the UAE will give preference to suppliers with ICV scores and certificates for sourcing of products and services.
There are several merits of this program that are being realised. Certified small and medium enterprises, for instance, are able to streamline their business practices and grow well with the expansion of the local economy.
“The ICV program is helping shift the procurement strategy from overseas to the local market. But this program isn’t just about securing a certificate or a score. The ICV program is designed to become an integral part of businesses by streamlining a company’s investment decisions, hiring strategies, procurement processes, and supply chain mechanism. The benefits of such exercises are immense and will be visible to companies in just a few years,” said Narayanappa.
The ideal fit
Crowe is among the leading firms providing audit, tax, and advisory services in the UAE and the region for over four decades. The company is among the handful ICV-certifying bodies in the UAE and has helped several hundreds of companies in implementing the program.
“We started providing ICV-related services in June 2019, and in the last 30 months, we have helped the government and private sector firms across industries, including oil and gas, trading, hospitality, education, construction, and contracting companies. These include firms based in the UAE as well as outside the country,” added Zayd Maniar, International Liaison Partner.
“Clients should start preparing for this certification from day one of the financial year and focus on embedding the right processes into their business for a sustained growth,” said Maniar. He further added that Crowe helps its clients audit financial reports, prepare and achieve certification, and also provides guidance along the way by knowledge sharing.
We notice many companies taking various action towards the ICV program and improving the ICV score and benefitting from the ICV program. Many of such actions include:
- Hiring and training of Emirati nationals.
- Procurement of goods / services from local vendors particularly from local vendors with a better ICV score.
- Encourage suppliers to obtain the ICV certificate and improve the score.
- Encourage suppliers based outside the UAE to establish their operations in UAE.
- Make necessary updates to ERP / accounting system to extract supplier wise cost reconciling to the financial statements.
- Local investments in fixed assets and expand the operations.
- Having all the resources under the visa of the company and process salary through WPS only.
- Maintaining relevant documents for export of goods/ services (with value addition) and collection of amount from outside the country.
In order to achieve that, companies are required to make committed efforts to improve the ICV score by contributing towards achievement of objective of the ICV program.
The criteria for the ICV program is uniform for all firms, big and small, private or government. “A small company that is, say, two-day old can also apply for this program. The program allows companies that are less than nine months old to get the certificate based on management accounts.
“Many start up companies with hardly a week’s maturity and with a very limited transactions have come to us for certification. With the ICV certificate, they are able to register themselves with the participating entities / customers and start participating in the tenders,” said Narayanappa.
Crowe UAE is a member of Crowe Global, one of the top 10 accountancy networks in the world.
Crowe UAE has assisted several entities in implementing ICV program through providing necessary guidance on updating the policies and procedures to incorporate the principles of National ICV program.
Companies can also refer to the FAQs on ICV program prepared by Crowe for the benefit of companies in implementation of ICV program (www.crowe.com/ae/services/audit/faq-on-national-in-country-value-program).
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