The National In-Country Value (ICV) certification program was launched by the Ministry of Industry and Advanced Technology (MOIAT) in the UAE to promote local content and boost the contribution of suppliers to the national economy. Through this program, suppliers are issued an ICV Certificate UAE which evaluates their contribution to the local economy. Suppliers with a higher ICV score are then given preference in government contracts and purchases. This article focuses on the calculation of ICV scores in the UAE and ways for suppliers to improve their ICV scores during the calculation.
Calculation of ICV Score in UAE
The ICV score is calculated using the following formula:
ICV Score = (Total ICV Value + Emirati Cost + 0.6 x Expat Cost) / (Total Cost) x 50%
- Total ICV Value = Sum of ICV values for all goods and services procured from within the UAE
- Emirati Cost = Total cost of salaries and benefits paid to Emirati employees
- Expat Cost = Total cost of salaries and benefits paid to expatriate employees
- Total Cost = Total cost of all goods and services procured, including those from within and outside the UAE
Factors Affecting ICV Score
The following factors can affect a supplier’s ICV score:
- Local manufacturing/procurement: This includes the cost of goods manufactured or services procured locally from UAE-based companies.
- Third-party spend: Expenditure on local suppliers/vendors, utilities, rent, etc.
- Emiratization: Employment and salaries of UAE nationals, training expenditure.
- Expatriate skills transfer: Employment of ex-pats, their salaries, and training.
- Investments: Capital investments made by the supplier in the UAE.
- Revenue: Revenue generated from local and international customers.
- Bonus factors: Additional scores for revenue from exports, Emirati employment, investment growth, etc.
The contribution of each factor is calculated as a percentage of the supplier’s total eligible costs. These individual percentages are then added to determine the overall ICV score.
Ways to Improve ICV Score
Suppliers can improve their In-Country Value (ICV) score by taking several steps to increase their contribution to the UAE economy, which includes:
1. Increase Local Content
One of the most effective ways to improve the ICV score is to increase the percentage of goods and services procured from within the UAE. This can be done by:
- Sourcing from local suppliers
- Establishing joint ventures with local companies
- Manufacturing products in the UAE
By increasing local content, suppliers can reduce their reliance on imports and support the growth of the UAE’s economy.
2. Invest in the UAE
Suppliers can also improve their ICV score by making investments in the UAE. This includes investments in:
- Fixed assets, such as property, plant, and equipment
- Research and development
- Training and development
By investing in the UAE, suppliers can demonstrate their commitment to the country and its economic development.
3. Hire Emirati Employees
Increasing the number of Emirati employees and the percentage of Emirati employees in the workforce can also help suppliers improve their ICV score. This can be done by:
- Recruiting Emirati graduates
- Providing training and development opportunities for Emirati employees
- Creating a work environment that is attractive to Emiratis
By hiring Emirati employees, suppliers can contribute to the UAE’s goal of Emiratization and develop a more diverse and inclusive workforce.
4. Reduce Expatriate Workforce
Suppliers can reduce their ICV score by reducing the number of expatriate employees and the percentage of expatriate employees in the workforce. This can be done by:
- Hiring more Emirati employees
- Automating tasks that are currently performed by expatriate employees
- Outsourcing work to local companies
By reducing their expatriate workforce, suppliers can reduce their costs and contribute to the UAE’s goal of increasing Emiratization.
5. Increase Revenue from Outside the UAE
Increasing the percentage of revenue generated from outside the UAE can also help suppliers improve their ICV score. This can be done by:
- Exporting products and services to other countries
- Establishing a presence in other countries
- Attracting foreign customers
By increasing revenue from outside the UAE, suppliers can diversify their customer base and reduce their reliance on the domestic market.
6. Qualify for Bonus Points
Finally, suppliers can also improve their ICV score by meeting the criteria for bonus points. These criteria include having a high percentage of Emirati employees and investing in research and development.
The ICV Certification program is a valuable tool for businesses that want to increase their contribution to the UAE economy. By obtaining an ICV certificate in UAE, suppliers can demonstrate their commitment to the UAE and its economic development goals.
Suppliers who are looking to improve their ICV score should consider seeking the guidance of ICV Certificate Consultants in UAE. These consultants can provide expert advice and support to help suppliers navigate the process of obtaining an ICV Certificate UAE and implement strategies to improve their ICV score.
Read More: How to Calculate ICV Score?