How to drive the next phase of local content/in-country value development in the GCC
In-Country Value (ICV) programmes were initially created to increase workforce nationalisation, ensuring that investment was channelled into the development of a country’s own talent pool. Over time, they have evolved into total value programmes that encompass a wide range of factors to improve economic efficiency and diversity, while also being key engines to driving social development.
Today, comprehensive programmes encompass strategic initiatives such as developing local supplier capabilities, establishing strategic supply chain partnerships with international OEMs, attracting local and foreign investments, together with developing a future-proof workforce through training and internship programmes.
Now is the perfect time for GCC countries to join Saudi Arabia as an ICV leader
Saudi Arabia’s positive impact on ICV development
Over the past decade, Saudi Arabia has been instrumental in driving ICV development impact, powered by the need to diversify its economy and build new local capabilities and capacities to fuel the country’s post-oil economic future.
With a backdrop of accelerating technological development, a newly emerging industrial revolution, and rapid societal change, now is a pivotal time for other GCC countries to focus on the development and implementation of their ICV development programmes if they want to remain competitive and future proof their economies.
Efficio – the leading specialist ICV, procurement, and supply chain development consultancy – has developed and implemented best-in-class ICV development policies and programmes in the GCC region for more than a decade.
Our experience of developing Saudi Arabia’s ICV regulation and establishing and implementing ICV development programmes with public and private sector leaders across the Kingdom can function as a valuable blueprint other countries in the region. Below, we have summarised key milestones of our ICV development journey in Saudi Arabia and key success factors that have underpinned successful ICV development.
Efficio’s Local Content/ICV development journey in Saudi Arabia
Saudi Arabia has one of the most advanced ICV programmes and ecosystems in the region and can function as a good benchmark for other GCC countries in the development of their own ICV initiatives.
Efficio has led the development of the nation’s ICV programme and ecosystem over a series of key milestones.
In 2015 and 2016, we worked with Ministries and other public sector partners to lay the foundations for the country’s ICV programme. We established the national ICV definition, a standard ICV measurement approach, and developed foundational localisation initiatives across the country’s emerging ICV ecosystem.
During 2017 and 2020, we led the development of best-in-class ICV development programmes with the National Champions across several industries, such as Petrochemicals, Mining, and Telecommunications. These programmes were fundamental to translating the regulation into action, and Efficio had a critical role in establishing and executing local market
development initiatives, including supplier development and investor attraction programmes to drive ICV growth impact. Our execution was enabled by our world-leading ICV Operating Model, which included the design of ICV policies, initiative procedures, digital ICV reporting and performance management systems, as well as a holistic ICV training programme delivered by the Efficio Academy.
Recently, Efficio has been involved in expanding the design and delivery of ICV programmes to a wider set of leaders in areas such as aviation and investment funds, together with leading the development of a comprehensive ICV enablement ecosystem. These enablers include tax incentives, land allocation tools, price preferencing mechanisms and others – owned and led by public sector Ministries. Additionally, we are continuing our work with the national champions to future proof their ICV programmes, developing new opportunities, and accelerating ICV impact delivery by leveraging emerging trends – such as sustainable manufacturing, ESG, circular economy, digitalisation, and AI – that offer good opportunities to other GCC countries, as well to achieve their objectives of becoming leaders in new industries, green energy technologies, and other high-tech, high-investment emerging industries.
Seven key success factors for ICV development
Using our extensive regional and global ICV development experience, we have defined seven critical success factors for national ICV development programmes.
Define a balanced ICV vision and mission
Defining a national-level localisation vision and objectives is critical to setting the mandate from the top. It should strike a balance between enabling the growth of local content in more mature industries, while also encouraging the localisation of emerging industries, such as green energy, ICT, and others, through foreign investment attraction and knowledge transfer.
Example: KSA’s Vision 2030 program creates the national mandate for localisation, local content, economic diversification, and job creation.
Set measurement standards
What gets measured gets managed. A standard measurement formula should be established to enable and unify the approach to baselining of as-is ICV performance, target setting, and impact tracking. Impact is then measured across broader Environmental / Social / Governance (ESG) impact pillars and communicates corporate benefits, as well cost reduction, lead time reduction, increased supply chain security, improved working capital, and other metrics. Measurement and performance management should be enabled through digital tools.
Example: In KSA, a local authority established a national standard ICV formula. Efficio developed a digital, interactive ICV reporting system enabling major companies to proactively measure and manage their ICV performance.
Develop supply chain intelligence
A national supply chain intelligence platform should be built to inform localisation opportunities across the product and services value chains and to enable the capacity growth and capability development of the existing local supply chain.
Example: Ministries are developing a national supplier qualification and development platform.
Engage National ICV Champions to lead ICV development
“ICV Champion” companies should be nominated in key industrial sectors to drive initial ICV development, raise awareness and readiness to ICV across their supply chains, and develop ICV growth opportunities. Their efforts should be enabled through a comprehensive ICV operating model, incorporating ICV policies, processes, and tools.
Example: In KSA, national champions are leading ICV development in the Electricity, Mining, Oil & Gas, PetChem, Telecoms, Tourism, and Travel sectors.
Develop holistic local market development initiatives
ICV programmes should combine initiatives enabling the growth of existing local supplier capacities and capabilities through supplier development programmes, together with developing new local capabilities through investor attraction and strategic partnership initiatives.
Example: Efficio developed comprehensive supplier development, supplier enablement, OEM Strategic Alliance, Investor Outreach, and othe programmes at national champions in KSA, enabling ICV growth on a wide spectrum from the development of local SMEs through to attracting global OEMs to invest in Saudi Arabia.
Underpin initiatives through ICV incentives and enablers
Market development initiatives should be underpinned by an ecosystem of localisation and investment incentives and enablers, which is required to accelerate and grow ICV value creation impact.
Example: Various Ministries in KSA are developing “Enablers Suites” to incentivize ICV growth in the energy and other sectors, containing enablement pillars such as grants, loan and lease subsidies, tax & customs deductions, land, social support, and more.
Create future-proofed sustainable impact
Identifying competitive advantages in manufacturing and services across new and disruptive industries is important to drive sustainable ICV growth impact. Initiatives and investments should enable technology and knowledge transfer and be underpinned by human capital development to ensure long-term value creation.
Example: Some Ministries are developing localisation opportunities across software / AI / machine learning segments, with a focus on ICT workforce skills development, which will drive the future economic development and expansion in the Kingdom.
Efficio’s end-to-end ICV service offering
Efficio offers a holistic ICV development service through its dedicated ICV Centre of Excellence.
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Establishing an ICV performance baseline.
Identifying opportunities for growing the ICV impact.
Developing ICV growth strategies leveraging a wide range of tactical and strategic ICV growth levers.
Utilising Efficio’s ICV Operating Model, developing an ICV vision and mission statement, ICV policy, market development procedures, tools, and templates to execute the ICV growth plan.
Delivering the ICV growth initiatives, including supplier development, ICV planning in contracts, strategic alliance development, investor outreach, and others.
Engaging with the national ICV Ecosystem to develop incentives and enablers for ICV growth initiatives.
Developing bespoke, interactive, digital ICV reporting and performance management systems.
Managing the periodic ICV reporting and performance management cycle.
Continuously improving the efficiency of ICV processes and providing continued upskilling, training, and on-the-job coaching to ICV development teams.