As a global hub for trade, commerce and innovation, the United Arab Emirates (UAE) has been recognized as such for years. The UAE government has worked to diversify their economy in recent years, in an attempt to reduce its oil revenues dependence and build a more stable, resilient economy. The In-Country Value (ICV) Program takes the lead as one of the key initiatives in this respect aimed to encourage local industries, inducing foreign investments and generating job opportunities in the private sector. This article examines the contribution of the ICV certification to economic diversification within the UAE.
What is ICV Certification?
The ICV Program was started in 2018 under the Ministry of Industry and Advanced Technology (MoIAT) as a means to promote local content and give businesses an opportunity to help grow the UAE’s economy. ICV certification is a process by which companies can prove the local economic support they make by revealing their contributions in different fields including job creation, local procurement and investment in research and development.
The Importance of ICV Certification for Economic Diversification
ICV certification plays a crucial role in promoting economic diversification in the UAE by:
- Supporting Local Sourcing and Manufacturing
ICV certification incentivizes companies to supply locally sourced materials and hence support the growth of new industries as well as to create a more robust domestic supply chain. The effect is to decrease reliance on imports while creating a more self contained economy.
- MoIAT ran the “Make it in the Emirates” campaign in March 2021 to encourage local manufacturing and raise the output of the UAE’s industry.
- This initiative is complemented by the ICV Program, which helps companies obtain an advantage in tenders and contracts by means of their ICV score.
- Attracting Foreign Investments
ICV certification shows the UAE as an attractive destination for foreign investors by certifying commitment to local content and economic development. In addition to bringing in much needed capital, it also helps transfer technology and expertise, and best practices, thereby further promoting economic diversification.
- In 2022, total inflows of foreign investment were $22.7 billion (AED 83 billion), up from $20.7 billion (AED 76 billion) in 2021.
- Creating Job Opportunities
This ICV certification encourages companies to employ and train Emirati nationals more strongly, and henceforth generate numerous job opportunities in the private sector. This not only aids in economic diversification, but it also bolsters social stability and cohesion.
- Since the inception of the ICV Program, more than 3,000 job opportunities for Emirati Nationals were created, according to MoIAT.
- Boosting Research and Development
The ICV Program is aimed to encourage companies to invest in R&D activities to promote innovation and to promote the growth of the knowledge based industries. This contributes to economic diversification by creating new sources of revenue and employment.
- The UAE launched the National Strategy for Industry and Advanced Technology in 2021, the goal of which is to improve efficiency of current and future research and development (R&D) and their funding channels so that they are aligned and fall within priority markets and industries.
Table 1: The Objectives of the ICV Program and their Contribution to Economic Diversification
| Objectives of the ICV Program | Contribution to Economic Diversification |
|---|---|
| Strategic localization of supply chain | Encouraging local content and creating a more robust local supply chain |
| Development of new local industries and services | Attracting foreign investment and creating new industries and services |
| Stimulating and attracting foreign investments | Encouraging foreign investment and creating new industries and services |
| Diversifying the economy | Creating new industries and services and reducing reliance on oil revenue |
| Creating valuable job opportunities in the private sector | Increasing the participation of Emiratis in the workforce and reducing reliance on foreign labor |
| Contributing to the growth of the national GDP | Increasing the private sector’s contribution to the national GDP |
| Enhancing spending on research and development (R&D) and advanced technology | Stimulating R&D and creating new industries and services |
| Increasing the private sector’s contribution to national GDP | Diversifying the economy and reducing reliance on oil revenue |
FAQs
Q: Who is presently eligible for ICV certification?
A: Eligible for ICV certification are companies operating in the UAE, providing goods and services to government entities and large private sector organizations.
Q: What is the validity period of ICV certificate?
A: An ICV certificate is valid for one year from the date of issuance. To keep their ICV score, companies have to renew their certification annually.
Q: What are the benefits of ICV certification?
A: The advantages of ICV certification are in terms of raised opportunities to win tenders and contracts, access to new markets, improved brand image as well as enhanced competitiveness.
Q: What does the ICV Program do to contribute to economic diversification?
A: The ICV Program is meant to boost the national GDP by increasing the private sector’s contribution, creating job opportunities, attracting foreign investment, promoting R&D, creating new industries and services and, most importantly, encouraging local content.
Conclusion
The ICV certification is beneficial in promoting economic diversification in the UAE as it would lead to promoting local sourcing, attracting foreign investments, generating job opportunities and stimulating in the areas of research and development.
For obtaining ICV certification companies operating in UAE should consider seeking services of professional ICV consultants in UAE to boost their ICV scores in order to earn credibility and contribute towards the UAE’s long term growth and prosperity.
