The UAE government has implemented an extensive strategy to enhance In-Country Value (ICV), aiming to promote economic diversification and boost the involvement of local businesses in the economy. The primary objective of this strategic initiative is to ensure the effective diversification of the economy, enabling local enterprises to capitalize on economic growth. This approach is intended to foster the expansion of regional businesses, maintaining the UAE's competitiveness globally. This blog aims to highlight the significance of the ICV Improvement Plan and its role in sustaining the ongoing economic prosperity of the nation.
The ICV Improvement Plan is an all-encompassing strategy that fosters collaboration among various stakeholders, including the government, business sector, academia, and civil society, to enhance the value of goods and services offered within the country. Importantly, this plan is not merely a conceptual outline but a legally mandated obligation, with financial commitments contingent upon meeting the specified ICV targets. This underscores the economic benefits for local businesses and ensures a tangible dedication to advancing in-country value.
ICV Improvement Plan for Sustainable Growth
The objective of an organization's ICV Improvement Plan is to raise the score for ongoing operations and income production while outlining the plan for improving the ICV Score in a given amount of time.
Under the UAE government's ICV Program, which aims to strengthen regional industries and improve economic performance, businesses generally take part in four main activities:
- Identification and Analysis of Customer Needs: Businesses start the process by using tools like focus groups and surveys to discover what customers need.
- Process Design for Value Delivery: Organizations create processes to offer value more successfully and economically after understanding the needs of their customers. This could entail adopting cutting-edge technologies, creating new training curricula, or redesigning workflows.
- Implementation of improvements: Improvements are put into practice by businesses to meet consumer expectations and improve overall ICV performance.
- Monitoring Outcomes: Companies can determine the efficacy of their methods and make the required modifications for continual improvement by conducting ongoing monitoring and evaluation of the implemented improvements.
The ICV Improvement Plan, which supports local industries and promotes economic growth in the United Arab Emirates, is essentially a proactive effort by businesses to coincide with the goals of the ICV Program.
Mandatory Compliance: ICV Improvement Plan as a Prerequisite in ADNOC Tender Terms
The ICV Improvement Plan is mandated as part of the Abu Dhabi National Oil Company (ADNOC) tender terms and conditions. In instances where stipulated by tender terms, Suppliers are obligated to furnish an ICV Improvement Plan alongside their commercial bids.
ICV Improvement Plans Available in the UAE:
Agreement-based Improvement Plan: Suppliers falling under this category must hire a project auditor, whose role it is to check project expenses for accuracy. Project-specific ICVs which specify the portion of the project value to be gradually retained and released by ICV targets are issued by certifying organizations.
Company-based Improvement Plan: During the term of the agreement, a company-based improvement plan is required for Annual ICV certificates issued in the United Arab Emirates. By predetermined ICV targets, the plan specifies the portion of the agreement value that will be retained and released gradually.
Significance of ICV Improvement Plans in the UAE: Elevating Commitment, Competitiveness, and Economic Impact
In the evaluation of bids, the In-Country Value (ICV) improvement plan takes precedence over the ICV Certificate in the UAE. Unlike the ICV Certificate, the improvement plan showcases a company's dedication to investing and fostering job creation in the country, surpassing mere compliance with minimum requirements.
Furthermore, the ICV improvement plan empowers companies to tailor their strategies to meet the specific needs of the country, providing them with a strategic advantage over those relying on generic plans.
The UAE government places substantial importance on the ICV improvement plan, envisioning its role in enhancing the productivity of Emirati companies and bolstering their global competitiveness. Launched in 2018, the plan has demonstrated success in its initial two years.
Among its accomplishments, the ICV improvement plan has been instrumental in generating employment opportunities for Emiratis by offering financial assistance to companies investing in new technologies or expanding their operations.
Additionally, the plan has facilitated an increase in exports from the UAE, as government support has enabled Emirati companies to invest in new products and services for export, contributing to a positive impact on the country's economy.
Hence, even if a company possesses a favorable ICV Certificate score, the competitive edge is contingent on the improvement plan's ability to significantly elevate the ICV score in the years following the agreement period.
Integral Role of the ICV Improvement Plan in UAE: A Binding Commitment for Sustained Progress
The submission of the ICV Improvement Plan alongside the ICV bid is a mandatory step for suppliers, and this plan is considered legally binding with no room for alterations. Although the new criteria were formally implemented in November 2018, ADNOC Group promptly incorporated them, at least partially, into significant tenders. The ICV score determination in Abu Dhabi, United Arab Emirates, combines the ICV Improvement Plan with the ICV Certificate.
To monitor progress, quarterly evaluations are conducted to ensure that the company is aligning with the established ICV goals. Any deviations are promptly reported, prompting the creation of an immediate corrective action plan. Upon meeting the ICV target, a significant milestone of 5% of the contract value is added, ensuring ongoing ICV achievement with annual progressive payments.
For the release of payments, suppliers must present the requisite ICV certificate in the United Arab Emirates, affirming the fulfillment of the ICV milestone. This underscores the critical role of the ICV Improvement Plan as a binding commitment, driving continuous advancement and accountability in the pursuit of ICV objectives.
Strategic Alliances for ICV Excellence: Unlocking Potential with BMS Auditing
In conclusion, the ICV program catalyzes local suppliers to boost their contributions to the economy, offering incentives like tax breaks and subsidies for community investments. As businesses strive for long-term competitiveness, a well-crafted ICV strategy becomes crucial. BMS Auditing, a trusted ICV consultant, provides invaluable assistance in optimizing ICV spending and enhancing overall ICV scores. With a proven track record, BMS Auditing conducts a thorough review of the company's ICV status, identifies areas for improvement, and collaborates on a tailored plan with both short-term and long-term goals. Companies partnering with BMS Auditing can achieve cost savings and an improved ICV score simultaneously.