What an In-Country Value (ICV) certificate is and why your company needs it for business
Having the document in question will prove to be beneficial while submitting tenders or negotiating a business deal, say experts
In 2018, the Abu Dhabi National Oil Company (Adnoc) introduced a procurement led In-Country Value (ICV) programme to encourage Emiratisation, GDP diversification and strategic considerations.
Then, earlier this year, following the success of the programme and in line with the economic goals of the government accelerator programme, Ghadan 21, the Abu Dhabi Department of Economic Development (ADDED) joined hands with Adnoc and launched the concept of a unified ICV certification process for suppliers in the UAE.
Aldar Properties and Abu Dhabi Ports had last year joined the unified ICV certification process and, along with Adnoc, and ADDED, are now referred to as Participating Entities. Adnoc has also signed agreements with Mubadala Investment Company and Emirates Nuclear Energy Corporation (ENEC) to partner on the programme. More entities are expected to join the ICV certification platform soon.
The unified ICV programme aims to consolidate the ICV certification process in a single ICV certificate that can be used by a supplier who intends to be part of the procurement process of the Participating Entities, whether as a primary or secondary supplier.
“The main objective of the ICV Certificate is to improve participation of the private sector, facilitate the diversification of Gross Domestic Product (GDP) and localise critical parts of the supply chain. In simple words, the supplier's spend that remains within the UAE or contributes to the UAE is calculated and considered as In-Country Value,” says Peeyush Joardar, Partner – ICV & Audit at MBG Corporate Services, one of the approved certifying bodies in the UAE.
As of December 2019, the Adnoc ICV programme has driven more than Dh44 billion ($12 billion) back into the UAE’s economy and has put more than 1,500 Emiratis in the private sector. More than 3,000 companies in the UAE are ICV certified.
Areas considered for ICV certification include goods manufactured, investment, Emiratisation, expatriate contribution, revenue from outside the UAE, and growth in investment, among others. The ICV programme has therefore evolved a new business line and has to be provided from the UAE.
The ICV certificate also helps companies and grants them the opportunity for the first right of refusal in the tender process. While companies who do not possess the ICV certificate will still be allowed to participate in Adnoc Group tenders, their ICV score will be considered as zero in the bid evaluation and they will be at a disadvantage compared to those with a higher ICV score.
“We can help you obtain your unified ICV certificate within a short turnaround time and have a team of experts with a track record of issuing ICV certificates across multiple industries,” he says. “Our job is to first make clients understand the ICV programme and determine factors that affect the ICV score. We then suggest steps for improving the score, including making recommendations about restructuring in organisational processes, legal entity consolidation, investment planning, supply chain optimisation and manpower rationalisation.”
ICV certification is based entirely on the audited financial statements of the company as per International Financial Reporting Standards (IFRS). Financial statements should not be older than two years from the certification year. And for companies with multiple entities, each licence within a group is considered an independent legal entity even if ownership is the same.
“But if a company has different branches in the same emirate with identical activities and ownership listed on the licences, then one combined ICV certificate is allowed for the company in that emirate,” he explains.
Once attained, the ICV certificate is valid for a period of 14 months from the date of issue of audited financial statements. The supplier can get re-certification done 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 the same.
MBG Corporate Services has set up dedicated in-house teams in Abu Dhabi, Dubai and Sharjah to help and arrange ICV certification. Established in 2002, MBG Corporate Services provides solutions and strategies that drive business transformation. With its headquarters in Singapore, and more than 150 staff working in its UAE office, the company works with clients across Asia, Europe and the Middle East. It has 16 global offices spread across six countries.
Updated: October 18, 2020 09:46 AM