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The United Arab Emirates is strengthening the competitiveness of SMEs, given they are the backbone of any national economy, as the nation progresses towards a sustainable knowledge- and innovation-based economy. The UAE government has prioritised entrepreneurs and SMEs, because they diversify income sources, provide employment opportunities – ultimately advancing the economy and placing the UAE among the most competitive economies in the world.
In line with the the wise leadership’s vision to empower the youth and support the local economy across sectors, and with the aim to enhance stability and prosperity to overcome the current challenges, the UAE launched incentives and economic stimulus packages to boost the business sector and mitigate the impact of COVID-19 on the national economy, especially the SMEs.
A virtual seminar titled “Government Procurement: Opportunities and Challenges”
The Ministry of Finance recently participated in a virtual seminar organised by the Emirates Entrepreneurs Association. In the seminar - Government Procurement: Opportunities and Challenges - H.E. Mariam Al Amiri, Undersecretary of the Financial Management Sector at MOF, deliberated the role of the ministry’s Department of Government Procurement in enabling Emirati entrepreneurs to overcome the repercussions of the pandemic, as well as the importance of a platform for government procurement to support entrepreneurs and SMEs. H.E. also noted the need to increase government procurement in favour of Emirati entrepreneurs, and the positive effect it can have to enable them to face current challenges.
Stimulating government procurement towards Emirati entrepreneurs during COVID-19
Since the pandemic outbreak, the Council of Ministers has issued directives to support entrepreneurs and SME owners to help them face the economic repercussions, reduce financial burden, and provide them with the required liquidity. These decisions include removing the SME registration fee and exempting all renewal fees for the first two years of establishment, directing 10% of the procurement value to SME owners, giving a 10% price preference to SMEs when evaluating bids, and exempting Emirati-owned SMEs from submitting a bank guarantee letter if the contract value is not more than one million dirhams. The exemptions also apply to others.
The importance of government procurement efforts for UAE entrepreneurs during COVID-19
The Ministry of Finance confirmed that in a crisis, governments need to take urgent steps around procurement and supply procedures - this is reflected in the current procurement policy in accordance with Cabinet Resolution No. (4) for 2019 on Procurement Regulation and Storehouse Management in the Federal Government. The resolution includes affording powers to concerned ministers and enable them to approve purchases in a manner they see fit, while stating the justification for expediting the purchasing process. It also lists several purchasing methods to include Pricing Agreements that facilitate and accelerate the purchasing process in accordance with the framework agreement and direct order, with a maximum limit of one million dirhams. Additionally, they will have an imprest fund of 10,000 dirhams for purchases.
Furthermore, this will speed up the purchasing process through imprests, tender or auction – where the time period for receiving tender bids is reduced from 15 to 7 working days and the time period of receiving auctions bids is reduced from 10 to 7 working days – will account for emergencies.
Additionally, contract forms and agreements have been standardised at the federal level to reflect the new procurement methodology, and have been submitted to the electronic procurement, in order to facilitate and expedite contracting procedures with companies. They have also been linked to the national program, in order to support SMEs and facilitate registration, by linking them with relevant parties through the new government procurement platform.
MoF, recently, amended the procedure to register suppliers in order to facilitate companies in the Federal Supplier Register, generate competition between suppliers to highest quality offers in terms of prices and quality, as well as to attract more companies to the Federal Supplier Register. The amended procedures include reduction in required attachments from five to one: the commercial license, enabling payment with Visa and Mastercard, and creating one account for suppliers without the need to sign up for a separate account on MoF’s website. The move reiterates the ministry’s keenness to ease the registration process, encouraging more companies to bid for tenders. Furthermore, it spurs economic development, by encouraging SMEs to register with the Federal Supplier Register.
The importance of a special government procurement platform to support SMEs
MoF has increased the fee exemptions package to support Emirati entrepreneurs and to enable them to overcome the economic repercussions of COVID-19, and to increase their participation through the Government Procurement platform launched by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai in April 2019. These procedures are in line with the wise leadership’s directives to accelerate digital transformation in the UAE, in line with the goals of the UAE Vision 2021, as well as the UAE mGovernment Initiative.
The government procurement platform delivers flexible government procurement processes and reduces the duration of purchases from sixty days to six minutes. The platform facilitates government procurement operations to ease and enhance the participation of national SMEs, while bolstering the efficiency of government spending by significantly reducing procurement costs.
The platform will provide SMEs with features such as easy access to 36 federal government entities, long-term contracts to supply goods and services, and encourage SMEs and entrepreneurs to register in the Federal Supplier Register. This is to help SMEs to diversify their business by registering in the Supplier Register by easing efforts to meet federal entities’ requirements. The platform will also include a catalog of all goods and services needed by the federal government.
In order for them to benefit from the platform, SME owners should register in the Supplier Register of MoF as soon as possible. Further features will be provided to SMEs in the future. This will include free registration and renewal for all SMEs, and new procurement policies for the platform. The new government procurement platform will also include the largest number of services that will contribute to registering a large number of SME projects, taking into account the governance for all procedures for participating in tenders and services provision. Furthermore, the new platform will strengthen federal entities contracts with SMEs with more than 10% for federal procurement, and increased participation.
A majority of contracts for SMEs will be through the government procurement platform, while ensuring a clear methodology bearing in mind the needs of federal entities. These studies are classified in terms of high demand and average supply by companies in advisory services. This includes average demand by federal entities and average supply of leasing and renting cars, furniture and stationery, as well as high demand by the federal entities and low supply by enterprises such as insurance, computer tools and software. SME owners will be supported by ‘Made by SMEs’ logo on the digital procurement platform of the federal government.
MoF looks forward to direct 10% of the total government procurement to SMEs, which amount to AED 500 million. This takes into account the increase in the proportion in accordance with further developments.
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For more information, please contact:
Mary Khamasmieh
Weber Shandwick
E: mkhamasmieh@webershandwick.com
Rawad Khattar
Weber Shandwick
E: RKhattar@webershandwick.com
Evita Karam
Weber Shandwick
E: EKaram@webershandwick.com
© Press Release 2020
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