The UAE is proactively fostering economic growth and attracting both domestic and international investment, positioning itself as a prime location for business ventures. A key initiative in this strategic direction is the In-Country Value (ICV) Certification programme, launched by the Abu Dhabi National Oil Company (ADNOC) in 2018. This initiative aims to bolster economic diversification by amplifying local content across numerous sectors. In collaboration with the Ghadan 21 accelerator program and the Abu Dhabi Department of Economic Development (ADDED), the ICV certification has evolved into a universal framework applicable to all UAE-registered suppliers.
If you are an entrepreneur eyeing business opportunities here, you may be wondering if your company needs ICV certification. This article will discuss some of the most common questions about ICV certification and its effects on businesses in the UAE. Let’s get started!
What is an ICV Certification in UAE?
The certificate is valid for 14 months and can be renewed thereafter. During this period, the certifying body will periodically assess the business’s commitment to in–country value.
What is an ICV Score?
A business in the UAE is assigned an ICV score which reflects the percentage of local content in its goods and services. This value is determined by criteria such as product value, employed national workforce, R&D expenditure and contribution to regional economic development.
Factors That Contribute to ICV Score
The ICV score is calculated based on several criteria which play a major role in driving economic growth and development in the UAE. These are:
- Manufactured Goods and Third Party Spending: These refer to the cost of goods and services incurred by the company compared to the total cost. These are the most important factors that influence an ICV score.
- Investments: This refers to the net book value of assets in the UAE, such as property and equipment.
- Emiratisation: This refers to all costs related to hiring, training, and employing UAE Nationals.
- Expat Contribution: This refers to the number of expatriates employed by the business.
- Bonus: This covers other factors like revenue outside the UAE, investment growth, and Emirati headcount.
How ICV Score is Calculated for an ICV Certificate
Check out the ICV formula preview here. Download the template directly from MOIAT’s website.
Is an ICV Certificate Mandatory?
Having an ICV certification is not mandatory, yet for those aiming to bid in government tenders it’s highly recommended. This is because most public sector contracts and tenders assess a business’ ICV score as part of their evaluation process.
Companies with higher scores have greater opportunities of being awarded government deals, while companies without a certificate may be at a disadvantage compared to other bidders who do.
What are Government Tenders?
Government tenders are contracts for large–scale projects administered by government departments or entities, such as infrastructure development and the provision of services and supplies.
To ensure they award the right bid, government entities typically invite bids from companies who meet their project requirements, including a company’s ICV score.
Why Opt for Public Sector Contracts?
Public sector contracts provide businesses with a wealth of benefits, from competitive rates and long–term stability to access to resources and funding.
The government may even offer additional support, such as financial assistance or preferential treatment to those who secure them.
Benefits of the ICV Programme
The ICV programme offers numerous advantages to the economy of the UAE. To comprehend why government entities in this region pursue an ICV certificate, here are some of its most noteworthy benefits:
1. Localisation and Development
The ICV program incentivizes businesses to up their game in terms of locally–sourced goods and services, aiming to jumpstart the domestic economy. To maximize their ICV score, companies should make every effort to prioritize local suppliers for all goods and services.
2. Foreign Investments
Foreign investments are drawn to the country due to this influx, helping to further develop the nation’s economy.
3. Employment Opportunities
The ICV programme generates employment opportunities for the citizens of the UAE, where organizations need to hire local talent in order to maximize their rating.
An organization’s ICV score considers both the number of UAE Nationals employed and expats – with a mix of both being allowed as long as they meet criteria set out in the programme.
4. National GDP Growth
The ICV programme motivates businesses to increase local content, thereby helping to drive up the UAE’s national GDP. By procuring and producing more goods and services domestically, companies are actively contributing towards economic growth in the country.
5. Research and Development
The ICV program incentivizes businesses to engage in research and development, driving innovation and enabling them to become more competitive on the global stage.
6.Increased Private Sector Involvement
The ICV programme promotes private sector involvement in the UAE economy, fostering a more diversified and stable economic landscape that is not as reliant on oil revenues. This also contributes to job creation and improved incomes for local residents.
Who Can Apply for an ICV Certificate?
In the UAE, a wide array of businesses are eligible to apply for an ICV Certificate, significantly enhancing their prospects when seeking government contracts. This certification is particularly advantageous for businesses registered within the UAE, spanning across various sectors.
Although obtaining an ICV Certificate is not mandatory, it is strongly recommended for entities aiming to participate in government tenders. The certification is especially beneficial for manufacturing companies and suppliers, as it enables them to leverage their ICV score effectively in public procurement processes.
Moreover, service providers and companies involved in the oil and gas sector, as well as those engaged in research and development, construction, and engineering services, stand to gain from being ICV certified. This certification underscores a company’s commitment to contributing to the UAE’s economy, emphasizing the employment of local workforce, investment in local goods and services, and fostering in-country innovation.
To navigate the application process for an ICV Certificate, companies must first ensure they meet the stipulated requirements, which include having a valid trade licence in the UAE and submitting detailed financial statements among other documentation. The process involves a thorough evaluation of the company’s operations and contributions towards local content.
Entities that successfully attain ICV Certification not only gain a competitive edge in securing government projects but also demonstrate their alignment with the UAE’s strategic vision of economic diversification and sustainable development. For businesses considering ICV Certification, it’s advisable to consult with certifying bodies recognized by the Ministry of Industry and Advanced Technology (MoIAT) for guidance and to ensure compliance with all necessary criteria.
How to Get an ICV Certificate in UAE
The MOIAT has streamlined the ICV certification process into four easy steps. To obtain your ICV certificate, simply follow these instructions:
Step 1: Issue audited financial statement.
Prepare audited financial statements in accordance with International Financial Reporting Standards (IFRS) that are no more than two years old from the year of certification.
Companies with multiple entities or business licences, such as manufacturing and commercial, must apply for ICV certification for each one; the certifying body will issue an ICV certificate for each licence.
Step 2: Fill in the ICV Certificate template.
Ensure you accurately complete the ICV template, available on the MOIAT website, as previously demonstrated.
Step 3: Get evaluated.
For an ICV certificate, approach one of the certifying bodies authorised by MOIAT. They will review your financial statement and ICV template before issuing the certificate, provided all requirements are satisfied.
Step 4: Get an ICV certificate.
Once the assessment is done, a ICV certificate will be issued by the certifying body. This can then be presented to government agencies, employers and other relevant parties as proof of your contribution to the UAE’s economy.
Should You Get an ICV Certificate?
Navigating the ICV certification may appear complex due to its detailed data requirements. Although obtaining this certification is not mandatory, its benefits are significant, particularly for businesses aiming to participate in government tenders and secure contracts.
Having an ICV Certificate elevates your business profile, distinguishing you from competitors in the procurement process. It signals to potential clients your commitment to contributing positively to the UAE’s economic landscape, showcasing your dedication to local content enhancement and economic diversification.
For businesses that align with the ICV program’s criteria, seeking ICV Certification is a strategic move. It not only boosts your chances of winning public sector projects but also aligns your business practices with the UAE’s vision for sustainable economic growth. If your company is poised to meet the certification requirements, obtaining an ICV Certificate in the UAE is a step toward opening new doors of opportunity and demonstrating your investment in the country’s future.
Fast-track Your ICV Certification
If you are considering obtaining ICV certification, then you must pass a thorough assessment conducted by the relevant governing bodies. This entails submitting documents such as financial statements and other business–related records to verify your local content.
At Virtuzone, we can provide assistance with the entire business setup process in the UAE. From gathering all necessary documents to providing guidance and advice on how best to maximise your score for the assessment process, we have you covered.
We can also help you secure other certificates, important documents and visas needed. Contact us today for a consultation!
FAQs
What is ICV Certification, and why is it important for businesses in the UAE?
ICV, or In-Country Value Certification, is a program initiated by the Abu Dhabi National Oil Company (ADNOC) aimed at fostering economic diversification and boosting local content in the UAE’s oil and gas industry. It’s crucial for businesses because it evaluates their contribution to the local economy through operations and activities, focusing on local spending, employment, and investment. Being ICV certified can give businesses preferential treatment in contract bidding processes, enhancing their competitiveness and supporting the UAE’s economic growth strategy.
Is obtaining ICV Certification mandatory for all companies in the UAE?
Obtaining ICV Certification is not mandatory for all companies in the UAE. However, it is highly recommended for those looking to engage in government tenders and contracts, especially within the oil and gas sector. The certification demonstrates a company’s commitment to supporting local content and can significantly impact their ability to win bids and secure contracts with entities that prioritize ICV scores in their evaluation criteria.
How can a company apply for ICV Certification in the UAE, and what is the validity period?
To apply for ICV Certification, a company needs to undergo an evaluation process that assesses its contribution to the local economy based on specific criteria set by ADNOC. This includes preparing and submitting audited financial statements and completing an ICV certificate template. The process involves getting evaluated by one of the certifying bodies authorized by the Ministry of Industry and Advanced Technology (MoIAT). Initially, the certification is valid for two years and can be renewed through a re-evaluation process. Companies are advised to check the official ADNOC or MoIAT websites for detailed application procedures and requirements.
