IN-COUNTRY VALUE ( ICV ) PROGRAM
by the Ministry of Industry and Advanced Technology
Back in 2018, Abu Dhabi National Oil Company (ADNOC) introduced the In-Country Value Program ( ICV ) to derive the optimal value from Abu Dhabi’s Oil and gas resources. In 2019 and 2020, various Governmental and Semi- Governmental Companies have joined hands to broaden the ICV certification process as a Unified ICV program for Suppliers across various sectors in Abu Dhabi and UAE as a whole (called participating entities).By 2021, As part of “Projects of the 50”, the UAE government launched the National In-Country Value Program (ICV) on a federal level under the supervision of the Ministry of Industry & Advanced Technology.
The National In Country Value Program
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.
Who needs ICV Certificate?
Companies working directly as suppliers or indirectly as sub-suppliers to Participating Entities (Listed below).
Information to the suppliers
As part of the ICV program, the Companies are required to submit the ICV certificates and will be evaluated based on the ICV score achieved and are then given an access to participating entities procurements during the contract awarding process. The ICV Certificate is required to be certified by one of the Certifying Bodies on an annual basis.
Getting the ICV certificate
- Issue audited financial statement based on International Financial Reporting Standards (IFRSs) or using management accounts for new established entities less than 10 months.
- Fill in ICV Template (as per the guidelines).
- Approach one of the authorized certifying bodies for evaluation.
- Once ICV certificate is received, the same can be submitted to any one of the participating entities
Unified Supplier Submission Template
The suppliers are required to submit the Unified Supplier Submission Template provided by the Participating Entities (PEs) which should be filled based on the supplier’s audited financial statements based on which the ICV certificate will be issued.
Validity of ICV Certificate
The certificate is valid for a period of 14 months from the date when the supplier’s financial statements were issued
Official partners to National ICV Program
The official partners of National ICV program also called as the Participating Entities includes various governmental and semi –governmental entities including:
- Abu Dhabi National Oil Corporation (ADNOC)
- Abu Dhabi Department of Economic Development (ADDED)
- Aldar Properties
- Etihad Rails
- Emirates Nuclear Energy Corporation (ENEC)
- Sharjah Investment and Development Authority (Shurooq)
- Emirates Global Aluminium
The ICV audit is a pre requisite to obtain the ICV Certificate. The audit will assess the economic value added by the company to the local (UAE) economy. Undergoing the ICV audit will enable the companies to prove that they comply with ICV guidelines.
ICV Improvement Plan
ICV improvement plan carries more weightage during bid evaluation compared to the existing ICV Certificate. Therefore, even if a Company’s ICV Certificate is showing a good score, there are still chances to be at a competitive disadvantage if the improvement plan will not be showing notable improvement in ICV score in subsequent years covering the agreement year. The ICV Improvement Plan is a contractual commitment linked to payment against the achievement of actual ICV achieved with the ICV committed as per the ICV Improvement plan. The improvement plans can be either company based or agreement based. Having a sound improvement plan helps improve your ICV Score thus gaining greater edge in bidding process.
Frequently Asked Questions on ICV
What is the National In Country Value Program?
The National In-Country Value Program (ICV) is a UAE government program that aims to boost economic performance and support local industries by redirecting higher portion of public spending into the national economy.
Who are the Participating Entities in the National ICV Program?
Abu Dhabi Department of Economic Development (ADDED), ADNOC, ALDAR, MUBADALA, Etisalat, Emirates Nuclear Energy Corporation, Etihad Rail, Shurooq, and EDGE are the major PEs in this program.
What is an ICV Certificate?
It is a certificate issued by the Ministry of Industry and Advanced Technology (MoIAT) to suppliers in which their contribution to the local economy is evaluated. The certified suppliers are then given an advantage during the award of contracts and purchases based on their ICV score.
What is the benefit of having an ICV certificate?
Companies with ICV certificates will gain edge over the competition during the tendering process with the participating entities. Without the certificate suppliers will be considered to have 0% ICV.
Who issues the ICV certificates in UAE?
There are certifying bodies that are authorized by MoIAT to issue ICV certificate to companies that successfully pass the required evaluation test. We at ELEVATE BUSINESS SOLUTIONS coordinate for all ICV certification works.
What are the documents required for ICV?
- Audited Financial Statements complying with IFRS
- A list of the procured goods and services
- Wage protection system reports
How long does it take to get ICV certificate?
Once the certifiers prepares and approves the financial information of the supplier, ICV certificate is normally issued between three to fifteen business days. The size of the company undergoing the certification is a dependent factor.
How long is the ICV certificate valid for?
The certificate is valid for a period of 14 months from the date when the supplier’s financial statements were issued.
Do I need to obtain ICV certificate for my Company even if we are not supplying goods/ services directly to these participating entities?
Tier I suppliers (companies who are supplying the goods/ services directly to participating entities) who submit ICV certificate as part of their tender to the participating entities may have competitive edge to get awarded. To maintain a competitive edge, Tier I suppliers make all the efforts to improve their ICV score through various initiations and contributions to achieve the objective of the program. One such initiation includes procurement of goods / services from local vendors particularly from local vendors with a better ICV score. Accordingly, Tier II and downstream suppliers are also required to obtain and improve their ICV score to maintain competitiveness and support for the improvement of ICV score of Tier I suppliers.
How is the ICV score measured?
Following factors will be considered for the same:
- Goods Manufacture cost
- Third Party spend
- Investments in UAE
- Expat contribution
What does the ICV Score represent?
The ICV Score represents the Company’s value-add within the UAE economy.
How can a supplier improve its ICV Score?
A supplier can improve their score by localizing procurement, creating more employment opportunities for both Emiratis and Expatriates, and making investments in the UAE.
Is it mandatory to have the audited financial statements to obtain the ICV certificate?
Yes, it is mandatory to have the audited financial statements prepared under IFRS unless it is a newly established entity (which is less than 10 months old). ICV score is determined based on the information filled in the ICV certificate template and such information should tally to the Audited Financial Statements or from the supporting documents used to prepare the Audited Financial Statements.
Are there any specific factors to be taken into consideration in relation to Audited Financial Statements?
- Financial Statements should be prepared under International Financial Reporting Standards (IFRS) and the audit report should be signed by an auditor approved by Ministry of Economy, UAE.
- Financial statements should not be older than 2 years from the certification year, i.e. for ICV certification in 2021, the audited financial statements to be considered shall not be older than 2019.
- For newly established companies (less than 10 months old), who do not have audited financial statements, the Management accounts for a period of up to 9 months can be used in ICV calculations.
- ICV certificate shall be obtained for each license (legal entity) of the supplier. If the financial statements are consolidated / combined, then the management needs to segregate financial numbers for each entity/ license and prepare the ICV certification template.
- If the Company has multiple branches within and outside the emirates, then the financial information of branches in the same Emirate with identical activities and ownership are combined.
- For companies with manufacturing and commercial licenses, all the accounting records must be split between manufacturing and commercial activities; ICV certificate will be issued for each license separately.
Can the entity incorporated outside UAE obtain ICV certificate?
Yes, the entities incorporated outside UAE can very well obtain the ICV certificate based on the fulfillment of other conditions such as audited financial statements under IFRS, etc.
Can the entity incorporated in Free Zone obtain ICV certificate?
Yes, entities incorporated within Free Zones can obtain ICV certificate.
Is the ICV certificate limited to large companies?
No, the ICV certificate is not based on the size of the company. As such, any companies can go for the certification.
Is ICV certificate a mandatory requirement in UAE?
ICV certification is required for all companies that wish to apply to governmental and semi-governmental procurements. The ICV factor accounts for a certain weightage in tender evaluation. However, this is not a mandatory requirement.
If the company has four branches in 4 emirates, is it possible to issue one ICV certificate?
Branches can be combined if they exist in one emirate and their activities are similar. For the branches in different emirates, a certificate for each license must be obtained.
How much does it cost to obtain an ICV certificate in UAE?
The fee for an ICV certificate varies depending on the size of the company and the procedures required to be performed.
What Elevate can do for you?
- ICV Consultancy including making you understand about ICV and the factors affecting ICV score.
- Audit of financial statements based on IFRS.
- Guidance on how to improve ICV score and include the incremental effect of each step in our impact analysis report.This includes mainly, among other steps, the recommendation of restructuring in organizational processes to increase the ICV score.
- Drafting ICV template based on the relevant records relating to the financial year for which the certification is done.
- Drafting the ICV Improvement Plan that are required to be submitted along with the tenders to Participating Entities.
- Elevate First Accounting & Auditing has exclusive tie up with Al Raqamiya Management Consulting which is one among the Certifying bodies for ICV.