Local Procurement Strategies for ICV Growth in UAE

What Is ICV?

The National In Country Value (ICV) Programme aims to increase the share of economic value retained within the UAE by encouraging companies to spend more locally. It supports national goals such as developing local manufacturing, strengthening UAE based services, creating jobs, enhancing skills, and promoting technology and investment.

In simple terms, ICV measures how much value a company creates and keeps inside the UAE. Several factors influence a company’s ICV score, including:

Purchasing goods and services from UAE based suppliers
Buying UAE manufactured products
Employing and developing Emirati talent
Investing in UAE based assets and operations
Supporting local SMEs
Providing training, technology, and knowledge transfer

Among these,local procurement is one of the most direct and controllable levers for improving ICV performance.

Why Local Procurement Matters

Every organisation purchases materials, services, and equipment. When these purchases are made from UAE suppliers, more money circulates within the national economy. This creates multiple benefits:

A Designated Zone is defined in Cabinet Decision No. 100 of 2023 as an area that is designated under the VAT Law (by reference to the List of Designated Zones in Cabinet Decision No. 59 of 2017) and that has been included as a Free Zone under the Corporate Tax Law.

Strengthens UAE businesses and manufacturers
Creates jobs and builds professional capability
Reduces dependency on overseas suppliers
Shortens delivery times and reduces logistical risks
Lowers shipping and import related costs
Encourages suppliers to improve quality and capacity
Enhances competitiveness in government and major client tenders

Local procurement does not mean buying locally at any cost. Companies must still consider price, quality, safety, reliability, and delivery timelines. The goal is to identify areas where local sourcing is feasible and beneficial.

1. Understand Current Spending

The first step in improving ICV performance is understanding where the company’s money is currently spent. Procurement teams should review annual spending and classify it into clear categories such as:

Raw materials and equipment
Construction and engineering services
Maintenance and repair
Transport and logistics
Information technology
Professional and business services
Catering, cleaning, and security
Subcontracting

Once categories are defined, the company should identify which purchases are fully local, partially local, or entirely imported. This creates a baseline—a starting point that helps measure improvement over time.

Often, this review reveals simple opportunities, such as replacing an overseas service provider with a capable UAE based company or shifting certain materials to local distributors.

2. Set Realistic Local Procurement Targets

After establishing a baseline, companies should set practical and measurable targets based on the availability and capability of UAE suppliers. Examples include:

Increasing local spending on transport services by a defined percentage
Sourcing more office supplies from UAE vendors
Identifying local alternatives for selected maintenance materials
Awarding a portion of subcontracting work to UAE SMEs
Increasing purchases of UAE manufactured products annually

Targets must be specific and measurable. A vague statement like “increase local procurement” is difficult to track. Clear targets help procurement teams, suppliers, and management work toward the same objective.

Targets should also be reviewed periodically. As local suppliers expand their capacity or improve quality, companies may be able to increase their local spend goals. If certain products are not yet available locally, the focus should shift to supplier development rather than unrealistic expectations.

3. Build a Strong Local Supplier Database

Many organisations do not have a complete view of the suppliers operating in the UAE. A structured supplier database helps procurement teams quickly identify suitable local businesses.

A useful database includes:

Supplier name, activity, and trade licence details
Products and services offered
Manufacturing location
Quality and safety certifications
ICV certificate status
Production capacity and technical capability
Past project experience
Contact details and performance history

The database should include both large companies and SMEs. Local SMEs often offer competitive pricing, flexibility, and specialised knowledge but may be overlooked simply because they are not widely known.

Actively identifying and evaluating local suppliers increases competition and opens new opportunities for collaboration.

4. Include ICV in Tender Requirements

ICV considerations should be integrated into tender documents from the beginning—not only after bids are received. Procurement teams can request bidders to demonstrate how they will support local value creation.

Tender requirements may include:

The bidder’s ICV certificate or expected ICV contribution
Proposed UAE based suppliers
A local procurement plan
Local manufacturing or assembly commitments
Emiratisation and training plans
Use of UAE based subcontractors
Reporting requirements for local spending

Requirements should be clear and achievable. Overly strict conditions may exclude capable local suppliers, while vague requirements may lead to unmeasurable commitments.

Contracts should also specify how local value performance will be monitored. Suppliers committing to local procurement targets should provide evidence such as purchase records, supplier details, and supporting documents throughout the project.

5. Develop Local Suppliers

Some UAE suppliers may have potential but may not yet meet required capacity, quality, or documentation standards. Instead of rejecting them immediately, companies can support their development.

Supplier development initiatives may include:

Sharing future demand forecasts
Explaining technical and quality requirements
Providing feedback after tender evaluations
Offering training on compliance, safety, and documentation
Starting with small pilot orders
Allowing time for system improvements
Facilitating partnerships between local and international companies

This approach is especially valuable for SMEs. With guidance and reasonable opportunities, small suppliers can grow into reliable long term partners.

International companies operating in the UAE can also contribute by transferring technology, knowledge, and management practices to local entities—creating genuine local capability rather than relying solely on intermediaries.

6. Monitor the Full Supply Chain

Local procurement should not stop at the first supplier. A company may buy from a UAE registered distributor, but if the product is fully imported, the local value created is minimal.

Therefore, organisations should understand their broader supply chain. Major suppliers and contractors can be asked to report:

Origin of goods and materials
UAE based subcontractors
Local manufacturing or assembly activities
Local employment and training contributions
Spending with UAE SMEs

Monitoring second and third tier suppliers provides a more accurate picture of local value and encourages main contractors to improve their own procurement practices.

7. Improve Records and Reporting

Strong procurement decisions must be supported by strong documentation. ICV related information should be recorded accurately and consistently.

Procurement and finance teams should maintain:

Supplier invoices and purchase orders
Contracts and supplier details
Manufacturing origin information
Local vs. non local spending
Subcontractor payments
Employee and training records
Local asset and investment details

A regular ICV dashboard can help management track progress, highlight high import areas, and monitor supplier commitments. Accurate records also simplify certification and audit processes.

Conclusion

Local procurement is one of the most practical and impactful ways to strengthen ICV performance. It begins with understanding current spending, identifying capable UAE suppliers, setting realistic targets, and embedding local value requirements into tenders and contracts.

Successful companies treat ICV as part of everyday procurement—not as a last minute compliance exercise. They collaborate with local suppliers, support SMEs, monitor the wider supply chain, and maintain reliable records.

When managed effectively, local procurement benefits everyone: companies gain stronger supply chains, local businesses grow, and the UAE economy gains new jobs, skills, investment, and industrial capability. ICV is not just a requirement—it is an opportunity to create lasting national value.

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