The National In-Country Value (ICV) Program in UAE

The National In-Country Value (ICV) Program by the UAE government aims to boost economic performance and support local industries by redirecting higher portions of public spending into the national economy.

The National In-Country Value (ICV) Program by the UAE government aims to boost economic performance and support local industries by redirecting higher portions of public spending into the national economy. The program takes into consideration local expenditure on manufacturing, local products and services, investments, and the hiring and development of Emiratis. It aims to support the national industry and redirect expenditure on procuring goods and services into the national economy. Basically it evaluates the contribution to the local economy.

Strategic objectives of ICV program

  • Localization of supply chains and the development of new local industries and services
  • Stimulating and attracting foreign investments and diversifying the economy
  • Creating valuable job opportunities in the private sector
  • Increasing exports
  • Contributing to the growth of GDP
  • Increase the private sector’s contribution to national GDP.

ICV Services:

  • ICV CERTIFICATION
  • ICV CONSULTANCY
  • ICV IMPROVEMENT PLAN
  • ICV PROGRAM IMPLEMENTATION

Back in 2018, the In-Country Value (ICV) certification program was born in Abu Dhabi, thanks to the Abu Dhabi National Oil Company (ADNOC). The ICV certification program was meant to meet the following key objectives:

  • To increase Emiratis’ employment opportunities within the private sector
  • To enable GDP diversification
  • To transfer knowledge of technology to local companies
  • To strengthen local supply chains

Essentially, the ICV certificate a company determines a contractor or supplier’s In-Country Value contribution to the economy of Abu Dhabi. The program was met with remarkable success. By December 2019, the ICV certification program helped over 1,500 Emiratis find employment opportunities within the private sector, as well as drove AED 44 billion back into the UAE economy. As such, in early 2020, the Abu Dhabi Department of Economic Development (ADDED), Aldar Properties, and Abu Dhabi Ports partnered with ADNOC to establish a unified ICV certification process for suppliers in the United Arab Emirates (UAE). If you are a supplier or contractor, having an ICV certificate can give you significant advantage over rival companies during the tendering process.  Interested in securing your company’s ICV certification? Here are important things you need to know about getting an In-Country Value certificate.

The ICV certification process can be divided into two parts

Gathering the required documents

The supplier or contractor must put together the following important documents:

  • The supplier’s audited financial statements
  • A comprehensive list of the goods and services that they procure
    Wage Protection System reports

Selecting and working with an authorized Certifying Body
To apply for the ICV certificate, the supplier must take the following steps:

  • Contact potential Certifying Bodies and obtain quotations
    Select the Certifying Body to be awarded, based on the presented quotations
  • Sign an Engagement Letter

From here, the Certifying Body will then evaluate the supplier using the gathered and submitted documents and the ICV Certification Template.

The ICV Certification process follows a specific template or formula

The ICV Aligned Certification Formula includes the following:

This is for the cost of goods and services incurred in the United Arab Emirates, compared to the total cost

This is for the volume and direction of the net book value of the assets owned by the supplier

This is for the cost of the training, salaries and benefits received by Emiratis and for the donations made to the Emiratis’ development

This is for the number of expatriate employees hired by the supplier

This bonus is for other factors such as investment growth, any revenue generated by the supplier outside of the UAE, and a headcount of Emiratis

There are also Enhancements in Considerations for the ICV Certification process:

To issue an ICV certificate, all financials used must be based on IFRS and by a licensed Ministry of Economy auditor.

If a supplier has more than one branch operating in the same Emirate and having the same ownership and business activities listed in their licenses, these branches are eligible for one combined ICV certificate.

If the supplier makes payments to government-licensed entities and governmental free zone regulators, they will be considered 100% ICV.

If a supplier is based in mainland UAE, they will be awarded a 10% ICV score automatically (for the purpose of ICV calculation).

A supplier’s employees in a year will be counted on an average basis.

If there are Emirati owners who are part of the Wage Protection System, their salary can be included. It will be capped to AED120,000 per month per owner.

All of a supplier’s internal costs, except for depreciation cost, will not be included in the calculations.

The ICV certificate is valid for 14 months starting from the date the supplier issues their audited financial documents, or after new financial statements have been issued (whichever is earlier).

WHO NEEDS ICV CERTIFICATE?

Companies working directly as suppliers or indirectly as sub-supplier with the following Implementing Agencies are required to acquire the ICV certificate. The Implementing Agencies for the National ICV Program are gradually increasing in numbers to ensure observing ICV Program across the country.

 

  • ADNOC Group Companies
  • Abu Dhabi Department of Economic Development
  • Aldar Properties
  • Abu Dhabi Ports
  • Mubadala
  • Etisalat
  • Emirates Steel
  • TAQA Group
  • Edge
  • Etihad Rail
  • Sharjah Investment and Development Authority (Shurooq)
  • Emirates Nuclear Energy Corporation
  • Emirates Global Aluminium (EGA)
  • Companies submitting tenders through Musanada (Abu Dhabi General Services Company)
Vendors of Implementing Agencies who do not possess the ICV Certificate are allowed to participate in the tenders of Implementing Agencies, however, their ICV score will be considered as “Zero” in the bid evaluation and hence may be at a disadvantage to those holding ICV Certificates.

ICV Certification for Group Companies

Each license of a Company is considered as an independent legal entity even if the ownership is the same. However, if a Company has different branches in the same Emirate with identical activities and ownership listed on the licenses, then one combined ICV certificate is allowed for the Company in that Emirate.

Managements Accounts for Newly Established Companies

For newly established Companies (less than 10 months old) that do not have audited financial statements, the Management Accounts for a period of up to 9 months can be used for ICV calculations. Any management accounts greater than 9 months will be required to be audited.

IFRS Based Audited financial statements

For newly established Companies (less than 10 months old) that do not have audited financial statements, the Management Accounts for a period of up to 9 months can be used for ICV calculations. Any management accounts greater than 9 months will be required to be audited.

Unified ICU Certification Validity

The ICV certificate shall be valid for a period of 14 months from the date of issuance of Audited Financial Statements. The supplier can get recertified during the validity of the ICV certificate if he chooses to, using the same audited financial statements, but the validity of 14 months from the first issue will remain same.

Not all businesses in the UAE need to get an ICV certificate

The ICV certificate is mostly meant to benefit suppliers of the Abu Dhabi government, Abu Dhabi Ports, ADNOC, and Aldar Properties. That means that companies, regardless of their size and operating in Abu Dhabi in the area of governmental or semi-governmental procurements with the above mentioned entities, are eligible to undergo the ICV certification process.

Suppliers need to partner with specific vendors to get an ICV certificate

Presently, there are 22 Certifying Bodies that are authorized to issue ICV certificates. MBG Corporate Services is one of the first and highly sought-after vendors of ICV certification in the UAE.

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