Is the ICV Certifying Body mandatory in UAE

Is the ICV Certificate Mandatory in the UAE?

The United Arab Emirates (UAE) is well-known for its flourishing economy, progressive policies, and appeal as a business destination. The In-Country Value (ICV) Program is one of the UAE government’s major economic development projects.

The ICV  Program is initiated by Abu Dhabi National Oil Company (ADNOC) and currently managed and monitored by MoIAT. (Ministry of Industry and Advanced Technology). This program is a strategic initiative to strengthen the national economy, and boost the local industrial growth of the nation. However businesses are unsure whether they need an ICV Certification or is it mandatory to obtain an ICV certification. 

This blog discusses the ICV program’s importance, certification requirements, and whether organisations are required to earn the ICV certificate.

Understanding The ICV Program

The UAE Ministry of Industry and Advanced Technology (MoIAT) launched the ICV program as a strategic strategy to boost local enterprises’ contributions to the country’s economy. It encourages businesses to prioritise local suppliers, invest in local workers, and contribute to the overall growth of the UAE economy.

The ICV program assesses a company’s in-country value using numerous parameters, including:

– Local procurement

-Emiratization activities, including employing the Emiratis and investing in local manufacturing

– Spending on research & development

By getting an ICV certificate, organizations demonstrate their commitment to the UAE’s economic goals and their support to local economic development.

Is the ICV Certificate Mandatory?

Although the ICV certificate is not a must-have for all enterprises in the UAE, there are specific sectors that require ICV certification and certain scenarios that make acquiring the ICV qualification critical. Let us explain the significance of obtaining ICV certification for following divisions:

1. Government or semi-government contracts

The ICV certificate is required for enterprises bidding on contracts with government bodies.

– Semi-governmental organisations

– Companies that have implemented the ICV include ADNOC, Etisalat, and TAQA.

These organisations analyse tenders using ICV scores, providing preference to enterprises who contribute more significantly to the local economy.

2. Private Sector Participation

While private sector enterprises are not obliged to receive an ICV certificate, many choose to become accredited in order to form collaborations with government-linked organisations. This permits them to remain competitive and receive preferential consideration in tendering processes.

3. Free Zones and Mainland Companies

Businesses operating in free zones or under mainland licenses are generally not required to obtain an ICV certificate unless they do business with ICV-compliant government-linked enterprises. However, earning the accreditation might help a company’s reputation and business possibilities.

Why Should Businesses Consider Obtaining an ICV Certification?

The ICV Certificate is very essential for companies to be involved and have an edge in the tendering processes.

Here are some of the strong reasons why an ICV Certificate is advantageous for businesses:

1. Competitive Advantage:

An ICV certificate elevates your company’s position in government tenders. Organisations like ADNOC frequently prioritise vendors with high ICV scores, ensuring that these enterprises are given advantage during the procurement process.

2. Increased Business Opportunities:

Many significant commercial sector organisations, particularly those that support government projects, are implementing ICV concepts benefit substantially with the ICV Certification. Having an ICV certificate enables enterprises to enter these attractive industries with a preferential status in bidding for tenders and contracts.

3. Demonstrating Commitment to Local Development:

The UAE government values organisations that support the local economy. Businesses that earn an ICV certificate can demonstrate their dedication to Emiratization, local procurement, and sustainable development.

4. Attracting Foreign Investment: 

Businesses possessing an ICV accreditation demonstrate stability and consistency with UAE economic policies. This may make the company more appealing to overseas investors seeking to partner with complying entities.

Steps to Get an ICV Certificate

To acquire an ICV certification for your  business, the following procedures should be followed:

1. Find an Approved ICV-Certifying Body to Obtain Certification

The UAE government has authorised some certifying agencies to provide ICV certificates. Businesses must choose one of these organisations before beginning the certification procedure.

2. Prepare Financial Documents

A company’s ICV score is calculated using its audited financial statements. These must be prepared in accordance with international financial reporting standards (IFRS) and cover the most recent fiscal year.

3. Parametric Evaluation

The certifying body will analyse several indicators, including the percentage of local procurement.

– Emirati employee salaries and investments in local assets.

– Spending on research & development

4. Certificate Issuance

After the examination is completed, the certifying organisation will issue the ICV certificate, which is valid for one year.

5. Annual Renewal

Companies must renew their ICV certificate every year, depending on current financial accounts.

Challenges in Obtaining an ICV Certificate

While obtaining an ICV certificate is uncomplicated, organisations may face several challenges:

1. Understanding Complex Criteria

The metrics used to compute the ICV score might be complicated, particularly for businesses new to the UAE or unfamiliar with its regulations.

2. Maintaining Accurate Financial Records

Audited financial statements are required for certification. Any errors or non-compliance with IFRS can result in delays or rejection.

3. Aligning with Program Objectives

Some firms may struggle to match their operations with the goals of the ICV program, especially if they rely substantially on imported goods or services.

How to Maximize Your ICV Score?

Businesses can maximise the benefits of the ICV program by implementing the following strategies:

1. Focus on Local Procurement

Prioritise obtaining materials and services from local suppliers to improve your ICV score.

2. Invest in Emiratization

Hire and train UAE citizens to meet Emiratization quotas and contribute to local workforce growth.

3. Strengthen Local Partnerships

Collaborate with local manufacturers and service providers to improve your ICV results.

4. Commit to Innovation and Sustainability

Allocate resources to research and development, particularly in areas that are consistent with the UAE’s aims for innovation and sustainability.

ICV in Future: Impact in the UAE Economy in 2025 & Beyond

As the UAE’s economy diversifies, the ICV program is anticipated to become more integrated into company operations. Here are a few projected trends:

1. Expanding into New Sectors

While the program is now focused on oil and gas, telecommunications, and energy, it may eventually spread to other industries.

2. Increased Collaboration with the Private Sector

More private-sector companies are likely to adopt ICV principles, resulting in a ripple effect that promotes broader compliance.

3. Focus on Sustainability

The UAE’s dedication to sustainability and innovation may result in adjustments to ICV standards that prioritise green activities and technical advancement.

While the ICV certificate is not required for all firms in the UAE, it is a must for those wishing to engage with government and semi-government agencies. Obtaining the certificate is a strategic decision for private sector enterprises that can lead to new prospects, increased competitiveness, and a commitment to the UAE’s economic goals.

Businesses in the UAE should carefully consider their needs, industry, and ambitions before deciding whether ICV certification is appropriate for their growth strategy. 

Get Your ICV Certificate With An ICV Certifying Body – AbstractICV

With its multiple benefits, the ICV program is more than just a regulatory measure; it provides a pathway to long-term company success in the UAE. By aligning with the UAE’s economic agenda, your company may contribute to the country’s prosperity while also expanding its own.

As an  ICV certifying body, authorized by the Ministry of Industry and Advanced Technology (MoIAT), we help you with the ICV certification process and offer services such as ICV Consultation,  ICV Audit, ICV Identification and Validation etc. 

If you want to obtain an ICV certificate or need help with compliance, reach out to AbstractICV today!

What is a good ICV score in the UAE

What is a good ICV score in the UAE?

What is considered as a good ICV score in the UAE?

Achieving a good ICV score is more than just compliance for enterprises operating in the UAE; it is also about unlocking growth prospects, winning competitive government contracts, and supporting the UAE’s greater economic goal.

However, what is really considered as a “good” ICV score in the UAE?

In this blog, let us see what an ICV score is, why it matters, and how organisations might obtain a desirable result.

What is the ICV Score?

An ICV score is a percentage figure derived based on a company’s contribution to the UAE economy. This score is critical for organisations bidding for government or semi-government contracts because it frequently influences their competitiveness in procurement choices. 

The program examines organisations using audited financial accounts and certain criteria, which include:

Local procurement – refers to the amount spent on procuring goods and services from UAE based providers.

Emiratisation: The percentage of UAE nationals employed by the company.

Asset investments include contributions to local infrastructure, facilities, and operational capabilities.

Export Activity: Engaging in non-oil exports to diversify the economy.

Operational costs- refer to the total amount of money spent on UAE based services and resources.

Each of these elements adds to the final ICV score, which helps analyse a company’s alignment with the UAE’s economic goals.

What makes a good ICV score?

The concept of a “good” ICV score varies by industry and the specific requirements of the entity evaluating the score. However, the following broad criteria are applicable:

Above 40%: A strong ICV score that demonstrates a company’s significant contribution to the local economy. Such a number puts enterprises in a good position when competing on high-value government contracts.

30-40%: Competitive, particularly in industries with moderate local procurement and Emiratisation potential.

Below 30%: There is potential for improvement, especially in areas such as local sourcing, Emirati hiring, and local infrastructure investment.

While there is no minimum score to qualify for government tenders, better scores are always prioritised, so firms should strive as high as feasible.

Why is a good ICV score important?

Achieving a high ICV score is more than just completing regulatory standards; it’s a strategic advantage. Here’s why it matters:

1. Access to government contracts

A higher ICV score boosts your chances of receiving contracts from government and semi-government agencies. Organisations such as ADNOC, Mubadala, and Etisalat prioritise enterprises with high ICV scores in their procurement processes.

2. Market Competitiveness

In a competitive business environment, an exceptional ICV score distinguishes your organisation and demonstrates your dedication to assisting the UAE’s economic development.

3. Alignment with UAE Vision 2030

The UAE Vision 2030 focusses on economic diversification, innovation, and sustainability. A high ICV score demonstrates your alignment with these national ideals, which improves your reputation as a responsible corporate citizen.

4. Long-term Business Growth

By focusing on local procurement, Emiratisation, and infrastructure investment, you may create long-term growth prospects for your company while strengthening its foundation.

How to get a good ICV score?

Achieving a high ICV needs strategic planning, operational modifications, and constant efforts. Here’s a road plan to assist firms raise their scores:

1. Prioritise Local Procurement

One of the simplest methods to improve your ICV score is to increase your expenditure with UAE based suppliers. Form long-term partnerships with local vendors, and prioritise purchasing products and services from within the country.

2. Invest in Emiratisation

Hiring and maintaining UAE nationals is critical for raising your ICV score. Focus on recruiting Emiratis for specialised positions and providing training programs to help them advance in their careers. Offering competitive incentives and possibilities for growth can also help to increase retention rates.

3. Allocate Resources for Local Investment

Investing in operational assets like facilities, infrastructure, and equipment in the UAE has a substantial impact on your score. Evaluators value demonstrations of dedication to local development.

4. Expand Export Activities

Non-oil exports add to the UAE’s economic diversification. Engaging in export activities not only improves your score but also positions your company as a global leader.

5. Work With ICV Consultants

Hiring professional ICV consultants might be a game changer. These specialists will examine your financials, identify areas for improvement, and recommend actionable measures to raise your score.

6. Ensure Accurate Financial Reporting

ICV scores are based on audited financial accounts. Work with reputable auditors to ensure that your financial statements appropriately reflect your contributions to the UAE economy.

Industry Specific Considerations For ICV Score Calculation

The optimal ICV score varies per industry, as each sector faces unique problems and opportunities while completing the program’s standards.

1. Manufacturing

Manufacturers frequently receive higher rankings since they rely on local sourcing and invest in assets. In this industry, a score of more than 50% is normally desired.

2. Construction

Construction businesses may experience difficulties with local procurement, but they can compensate through Emiratisation and asset investments. A score of 30-40% is competitive.

3. Professional Services

Local procurement opportunities for consulting and professional services are restricted. A score of 25-35% is still deemed good, as long as the company excels in other categories like Emiratization and operational costs.

Common Obstacles in Achieving a Good ICV Score

While the ICV program has significant opportunities, companies frequently confront problems such as:

Limited Local Suppliers: Some businesses rely largely on imported items, which limits the prospects for local procurement. High turnover rates make it difficult to retain Emirati personnel in the absence of strong career development initiatives.

Lack of Awareness: Many organisations do not understand how to strategically coordinate their operations to increase their ratings.

Overcoming these obstacles necessitates a combination of strategic strategy and skilled coaching.

The Importance of ICV Certification in Achieving a Good Score

Companies that bid on government or semi-government contracts must have an ICV certificate. This certification requires presenting audited financials and undergoing a rigorous review of your operations. While certification does not guarantee a high score, it is an important first step in gaining access to the program’s benefits.

How AbstractICV Can Help?

AbstractICV specialises in assisting businesses with the complexity of the ICV program. Our team of professionals offers:

ICV Audit Preparation: Ensure that your financial statements match certification standards.

Score optimisation: Identifying areas for improvement and devising tactics to raise your score.

Compliance Support: Keeping your company in accordance with the most recent ICV norms and requirements.

Boost Your Business Credibility with ICV Score 

A high ICV score in the UAE demonstrates a company’s dedication to boosting local economic growth, promoting Emiratisation, and contributing to the country’s overall development goals. While the definition of a “good” score varies by industry, aiming for 40% or more is a decent starting point for most firms.

Companies who prioritise local sourcing, invest in Emiratisation, and collaborate with skilled ICV consultants like AbstractICV can not only obtain a competitive score, but also position themselves for long-term success in the UAE’s flourishing market.

Are you ready to enhance your ICV score? Contact AbstractICV immediately for experienced advice targeted to your company requirements.