Complex Made Simple

GCC national products to be prioritised in government procurement purchases

These rules will be applied to tenders for all government ministries, institutions, authorities and companies.

His Excellency Abdullah Sultan Al Fan Al-Shamsi, Assistant Undersecretary for Industry in the Ministry of Economy, revealed that the Cabinet of Ministers has approved the common rules in relation to prioritising GCC national products in government procurement purchases, via its resolution number (85/4/2) of 2015.

According to the new decree, national products of the GCC member countries, including all extractive, agricultural, animal and industrial products, in their raw form or in any subsequent stages of preparation or manufacturing will be given preference over foreign goods.

These rules will be applied to tenders for all government ministries, institutions, authorities and companies in which the government owns 51% or more capital share.

Giving national products the advantage over foreign goods in Government Procurement Purchases will be achieved through pricing. The prices of foreign products will be increased by 10% and then compared to national products. If the national product equals or is less than the price of a foreign product, then the government organization would be mandated to purchase the national product. Alternatively, the foreign product could be purchased if its price is still lower than the national product, even after the 10% increase.

His Excellency Abdullah Sultan Al Fan Al-Shamsi said: “Local goods have proven to be reliable in regional and international markets. These products need to be given an advantage in the face of fierce competition existing in local markets, due to subsidized foreign products.

“These rules will also contribute to achieving the federal government’s commitment of sourcing 10% of their procurement requirements through SMEs in the country. Adopting these rules will encourage and help develop national production especially for small enterprises.”

The ministry has assured that the quality will not be compromised while prioritising national products. The uniform rules require all goods to fulfill the GCC Standardization Organization (GSO) specifications. The Cabinet’s decision is also in line with the GCC Uniform Economic Agreement that states that commodities produced in any GCC member country should be given the same treatment in other member states.

Furthermore, the advantage does not breach any global trade rules as the UAE is not part of the World Trade Organisation’s plurilateral Agreement on Government Procurement. Besides, the General Agreement on Tariffs and Trade (GATT) additionally states that the principles of similar treatment for national and foreign products are not applicable to the laws and regulations on government procurement.

The Ministry of Economy will hold a conference to clarify the details of the Cabinet resolution Number (2/ 4/85) of 2015.