Local Content in the Gulf: How Procurement Is Building Industries, Skills and New Business Opportunity

A complete guide to how Gulf governments and major companies are using purchasing power to develop suppliers, strengthen domestic capability and create more lasting economic value.

Research note: This article was prepared using information available up to 31 August 2026. Local-content rules, formulas and tender requirements differ by country, organisation, sector and contract, so businesses should always verify the current requirements attached to a specific opportunity.

Introduction

Every major contract produces two results.

The first is visible: a road is completed, equipment is installed, a hospital receives new technology, an industrial plant begins operating or a company receives the professional service it required. The second result is less visible but economically important: how much of the contract’s value remains inside the country through wages, supplier purchases, investment, skills, technology and future business capability.

Local content is the discipline of understanding and improving that second result.

Across the Gulf, governments and major national companies are increasingly looking beyond the immediate delivery of a product or service. They are also examining whether procurement can develop local suppliers, create productive employment, attract manufacturers, strengthen industrial resilience and build capabilities that remain after a contract has ended.

This represents an important change in the economic role of procurement.

For many years, procurement was treated primarily as an operational function. The buyer identified a requirement, invited suppliers, compared technical and commercial offers, awarded the work and managed delivery.

That function remains essential. Buyers must still receive the right quality, at the right time, at a commercially sensible cost.

However, when governments, sovereign-backed companies, energy groups, utilities, healthcare systems, airlines, developers and infrastructure organisations purchase billions of dollars of goods and services every year, their decisions influence much more than individual contracts. They can determine which industries develop, which suppliers invest, which skills become valuable and which activities remain inside the economy.

This is not unique to the Gulf. Public procurement represents approximately 13% of GDP across OECD countries on average, and governments around the world are increasingly using it to support industrial development, innovation, employment, resilience and other strategic priorities. The OECD also makes an important qualification: procurement-led industrial policy works only when it is designed carefully, preserves meaningful competition and avoids creating unnecessary cost or weak protected industries.

The Gulf provides an especially important setting for this change.

The region is undertaking one of the world’s largest programmes of economic expansion and diversification. National governments and major companies have substantial purchasing power, while large projects create concentrated and relatively visible future demand.

Saudi Arabia, the United Arab Emirates, Qatar, Oman, Bahrain and Kuwait have consequently developed different systems for increasing the value created inside their economies. These include national-product preferences, local-content scores, audited certificates, supplier-development programmes, workforce measures, investment incentives, manufacturing commitments and contract-specific plans.

The terminology varies. Saudi Arabia commonly uses local content and Aramco’s In-Kingdom Total Value Add, while the UAE, Qatar and Oman use variations of In-Country Value. Bahrain has introduced Takamul, and Kuwait Petroleum Corporation operates local-content and SME-development initiatives through its oil-sector ecosystem.

Despite these differences, the underlying economic question is similar:

When a major organisation spends money, how much capability does that spending leave behind?

The strongest local-content systems do not simply move contracts from foreign companies to domestic companies. They encourage local and international businesses to invest, train, manufacture, innovate, source responsibly and become part of a productive national supply chain.

The objective is not to close the Gulf to international business. The region continues to depend on global investment, specialist expertise, advanced equipment, technology and internationally connected value chains.

The objective is to create a better exchange.

International suppliers gain access to substantial and growing markets. In return, Gulf economies seek more than an imported product and an invoice. They increasingly seek employment, investment, knowledge, resilience and commercial capability that can support future growth.

The question is no longer only what a contract delivers.

It is also what remains in the economy when the contract is complete.

Part One: What Local Content Actually Means

1. Local Content Measures Economic Contribution

Local content measures the contribution that a company, contract, product or supply chain makes inside a particular economy.

That contribution may include goods manufactured locally, services performed locally, salaries paid to national and resident employees, purchases from domestic suppliers, investment in local assets, workforce training, research, technology development and support for smaller businesses.

A local-content score is therefore not simply a measure of where a company is registered. It attempts to identify where economic activity actually occurs.

The precise definition differs between programmes. The UAE’s National In-Country Value system, for example, evaluates areas including domestic manufacturing or third-party spending, investment in UAE assets, Emiratisation, workforce contribution, exports, technology and sustainability. QatarEnergy’s Tawteen programme considers local goods and services, workforce training, supplier development and investment in fixed assets.

Kuwait Petroleum Corporation describes local content through the employment of Kuwaitis, the provision of domestic goods and services, greater private-sector participation and the use of oil-sector products to develop downstream industry. Oman’s energy-sector approach similarly focuses on expenditure retained in the country and its effect on business development, human capability and productivity.

The common principle is that local content follows economic substance.

It asks where people work, where suppliers operate, where assets are located, where knowledge is developed and where commercial value accumulates.

2. Local Content Is Not Simply “Buy Local”

Buying from a locally registered supplier may support the domestic economy, but it does not necessarily mean that most of the product’s value was created locally.

A trading company can import a finished product, add a commercial margin and deliver it to a buyer. The transaction is local, but much of the manufacturing, engineering, intellectual property and employment may still exist outside the country.

The reverse can also be true.

An internationally owned manufacturer may employ local people, operate a factory, purchase domestic services, train engineers, hold assets inside the country and export products from a Gulf location. Its ownership is international, but its local economic contribution can be substantial.

This distinction is fundamental.

Local procurement measures where the buyer places an order. Local content examines how much value is created or retained inside the economy through the complete chain behind that order.

The strongest systems therefore avoid treating every domestic invoice as equally valuable. They examine the economic activity underneath the invoice.

3. Local Content Is Not the Same as Local Ownership

Local ownership can be important, particularly where governments want to support national entrepreneurship and increase citizens’ participation in the private economy.

However, ownership alone does not explain economic contribution.

A locally owned company that imports almost everything, performs limited work domestically and employs few people may produce relatively little local value. An international company with a factory, engineering team, training programme and domestic supplier network may produce considerably more.

Good local-content policy recognises both.

It can support national ownership and SMEs while also rewarding international businesses that make meaningful long-term investments. The aim should be to increase productive activity, rather than only change the legal identity through which an imported transaction occurs.

The UAE’s audited ICV framework illustrates this principle. Its score reflects local spending, assets, workforce and other measured contributions, while each legal entity must obtain its own certificate based on financial statements and supporting records.

4. Local Content Is Broader Than Workforce Nationalisation

Saudiisation, Emiratisation, Omanisation, Qatarisation, Bahrainisation and Kuwaitisation are national employment policies. They seek to increase citizens’ participation in the workforce, particularly in the private sector.

Employment is one part of local content, but the two ideas should not be confused.

A company can employ nationals while importing nearly all its products and technology. It can also purchase locally manufactured products without creating high-quality careers or transferring meaningful skills.

A complete local-content strategy connects several elements.

It develops employment, suppliers, physical assets, technology, management capability and local production where commercially appropriate. The workforce component becomes more valuable when employees are given real responsibility, technical development and clear career progression.

The long-term objective is not merely a higher local headcount.

It is a stronger local capability.

5. Local Content Does Not Require Complete Self-Sufficiency

No modern economy produces everything it consumes.

Complex equipment may contain components, software, materials and intellectual property from several countries. Even a product manufactured in the Gulf may depend on imported machinery, specialised inputs or international engineering.

This is not a weakness. Participation in global value chains can provide access to better technology, efficient inputs and export markets.

Local content should therefore not be understood as an attempt to remove every import. It is a process of identifying which activities can be performed competitively inside the country and where local participation would create valuable, durable capability.

For small and open economies, this balance is especially important. OECD analysis emphasises that effective industrial policy must preserve access to foreign inputs and export markets, while avoiding the creation of protected industries that cannot compete without permanent support.

The practical objective is not maximum localisation at any cost.

It is the most productive combination of local capability and global connection.

6. The Eight Main Forms of Local Economic Value

Local economic value can be created through several connected channels.

The first is local goods. These include products manufactured, assembled, processed or substantially transformed inside the country.

The second is local services. Engineering, maintenance, logistics, software, testing, consulting, construction and professional support may all create domestic value when the work is genuinely performed within the market.

The third is employment and wages. Salaries support households, consumption and future skills, while productive employment can reduce the economy’s dependence on public-sector careers.

The fourth is supplier expenditure. A large contractor can extend local content through its purchases from smaller domestic businesses.

The fifth is investment in assets. Factories, workshops, laboratories, offices, equipment and technology infrastructure expand what the economy is capable of producing.

The sixth is training and human development. Apprenticeships, technical academies, professional certifications and management development can strengthen capability beyond a single project.

The seventh is research, technology and intellectual property. Local engineering, software development, design, testing and innovation represent deeper forms of value than basic distribution.

The eighth is future exports. The strongest local-content investment can eventually serve customers outside the country, creating a new source of external income rather than depending permanently on domestic procurement.

These eight forms should not be treated as interchangeable.

A dollar spent on routine domestic administration may count as local expenditure, but it does not necessarily create the same long-term value as investment in a technical facility, supplier capability or exportable product.

That difference becomes central when local content is used as economic policy.

Part Two: Why Procurement Is Becoming Economic Policy

7. The Gulf Has Entered a Capability-Building Stage

For several decades, Gulf energy income financed cities, infrastructure, public services and national institutions.

The next economic stage is increasingly concerned with what those assets can produce. Governments want infrastructure to support competitive companies, productive employment, industrial capability, technology and exports.

Local content sits directly inside this transition.

It connects national economic strategy to everyday commercial decisions. Instead of diversification remaining only a vision document or investment announcement, procurement translates it into thousands of decisions about who supplies, where work is performed, who is trained and what is manufactured.

This is why local-content systems are becoming more formal.

The programmes are increasingly supported by formulas, certificates, digital portals, approved auditors, mandatory product lists, contract plans and reporting requirements. The movement is from general encouragement toward measured economic contribution.

8. Procurement Creates a Market Before an Industry Exists

One of the hardest parts of building a new industry is creating enough reliable demand.

A company may be willing to establish a factory, service centre or technical team, but only if it can see a sufficient future market. Without that visibility, importing remains less risky than investing.

Major buyers can change this calculation.

A national oil company may know that it will require pumps, valves, chemicals, digital systems, maintenance, protective equipment and engineering services for many years. A healthcare system can forecast demand for medical supplies, diagnostics and hospital technology.

When buyers publish future demand and coordinate purchasing, suppliers gain evidence that a market exists.

That evidence can support investment decisions, financing applications, joint ventures, recruitment and technology partnerships. Procurement becomes a bridge between national ambition and private capital.

The buyer is no longer only purchasing from an existing market.

It can help create the market it will need.

9. Anchor Buyers Can Build Entire Supplier Ecosystems

An anchor buyer is a large organisation whose recurring demand can support a wider network of companies.

National energy companies are the clearest Gulf examples, but the concept also applies to airlines, utilities, healthcare groups, defence organisations, transport operators, developers, telecommunications companies and large industrial businesses.

The anchor buyer awards major contracts to primary suppliers. Those companies then purchase from subcontractors, manufacturers, service providers, logistics companies, technology firms, recruiters, testing laboratories and professional advisers.

The economic effect moves through several levels.

A single project can help several firms improve quality, hire people, purchase equipment and qualify for future opportunities. Once those capabilities exist, they may serve other buyers and sectors.

World Bank research on supplier development highlights this wider effect. Local suppliers can increase employment, skills, technology transfer and SME access to capital, while capabilities created for one major investor may later support other industries and export markets.

The most valuable local-content programme therefore does not create one protected supplier.

It creates a capable and connected supplier system.

10. Resilience Has Become Part of the Economic Calculation

The lowest immediate purchase price is not always the lowest complete economic cost.

A distant supplier may offer a cheaper unit price, but the buyer may also face longer delivery times, larger inventories, currency exposure, shipping disruption, limited local maintenance and slower emergency support.

Local or regional supply can reduce some of these risks.

A domestic manufacturer may repair equipment quickly, hold critical spare parts, adapt products to local conditions and work directly with the buyer’s technical teams. These advantages can be especially valuable in energy, water, healthcare, food, defence, transport and other critical systems.

The OECD’s 2026 procurement review notes that governments worldwide are increasingly using procurement to improve security of supply and resilience. It also cautions that indiscriminate reshoring can raise costs without necessarily reducing risk, which means buyers need careful category-by-category analysis.

Localisation should therefore be selective.

Critical products may justify greater local capacity, while ordinary products with diverse and reliable global supply may not.

11. Employment Policy Is Moving Into the Supply Chain

Large government and state-owned organisations cannot create every national career directly.

Their supply chains, however, contain thousands of private companies. These companies can employ engineers, technicians, analysts, project managers, finance professionals, manufacturers, software specialists and other skilled workers.

Local-content programmes allow major buyers to influence this employment.

Instead of limiting national-workforce goals to their own organisations, they can create incentives for suppliers to recruit, train and advance national talent.

ADNOC’s ICV programme illustrates the scale such a mechanism can reach. The company reports that the programme has driven more than AED 307 billion into the UAE economy since 2018 and helped create more than 23,000 private-sector employment opportunities for UAE nationals.

The important measure is not only the number of people employed.

The quality, productivity and durability of those careers matter equally.

12. Procurement Can Attract Investment, Not Only Suppliers

A traditional supplier may serve the Gulf from a factory located elsewhere.

A local-content system can change the commercial calculation by making a domestic facility, service centre or joint venture more competitive in future tenders. This may attract investment that would otherwise remain outside the region.

The investment can take several forms.

A manufacturer may establish assembly and later expand into full production. A technology company may build a local engineering team, while an international service provider may create a training academy or maintenance centre.

The strongest inward investment brings more than capital. It can introduce technology, management experience, customer relationships, quality systems and access to international markets.

IMF research on GCC diversification finds that inward investment can contribute to non-hydrocarbon growth, particularly when it brings capabilities and connects domestic activity to wider commercial networks. Earlier IMF work similarly emphasises the role of trade and foreign investment in technology transfer, workforce skills, productivity and export development.

This is why good local-content policy should remain open to international businesses.

The aim is not to exclude them, but to encourage deeper participation.

13. The Buyer Is Purchasing Two Forms of Value

Every procurement decision begins with the direct requirement.

The buyer needs reliable equipment, capable construction, safe operations, useful software or an effective professional service. Local content cannot replace technical quality.

The second form of value is the wider economic contribution created through delivery.

A proposal may include local manufacturing, supplier development, workforce training, investment and future export capacity. Another proposal may deliver the same immediate product with little lasting economic effect.

The buyer must decide how much weight to give each form of value.

A strong system never treats economic contribution as permission to deliver poor quality or unreasonable cost. It identifies the offer that creates the best complete result across price, performance, risk and long-term value.

Procurement therefore moves beyond finding the cheapest compliant bid.

It seeks the most valuable credible outcome.

Part Three: How Local Content Is Measured

14. A Local-Content Score Is an Economic Approximation

Local economic contribution is complex.

A company may employ people, own assets, purchase from suppliers, export products and invest in training. Each activity has a different effect, and some effects continue for years.

No single formula can measure all of this perfectly.

Local-content systems therefore use practical indicators. They convert selected forms of economic activity into a score that buyers can verify and compare.

The score is an approximation, not a complete measurement of national benefit.

A high score can show that more activity occurs locally, but it does not automatically prove that the activity is productive, innovative or globally competitive. Programme design must therefore combine scoring with judgement about quality, sustainability and additional economic value.

15. Historical Contribution and Future Commitment Are Different

A company’s existing local-content position shows what it has already built.

It may have a factory, national employees, domestic suppliers, audited spending and local assets. These elements can be measured using past financial information.

A contract-specific plan asks a different question.

It estimates what the bidder will create if it wins a particular opportunity. The company may commit to additional hiring, supplier purchases, training, assets or manufacturing during delivery.

Both measures are useful.

The historical score rewards companies that have already invested. The future plan allows a new or international supplier to compete by offering a credible programme of additional contribution.

QatarEnergy’s Tawteen model clearly separates these ideas. Its ICV scorecard uses the supplier’s latest audited 12-month financial information, while an ICV plan sets out the future contribution promised for a particular contract and may be reviewed during execution.

This distinction prevents local content from becoming only a reward for existing incumbents.

It gives challengers a route to demonstrate what they are prepared to build.

16. The Main Components of a Local-Content Formula

Most formulas begin with local purchases.

A supplier receives greater recognition when it buys goods and services from companies that themselves create value inside the economy. This can extend local content through several tiers of the supply chain.

Workforce contribution is another common component.

Programmes may measure national employment, total domestic labour cost, training, professional development or the number and quality of jobs created.

Investment is also important.

Factories, machinery, laboratories, service centres and other assets demonstrate that a company has established productive capacity rather than only a sales presence.

Some systems recognise exports, research, technology or sustainability.

These additions are significant because they reward companies for becoming more competitive and capable, rather than merely increasing domestic spending.

The UAE’s manufacturer formula, for example, gives substantial weight to manufacturing cost and domestic investment, alongside Emiratisation and wider workforce contribution. It also provides potential bonuses connected to exports, advanced technology and sustainability.

The formula sends a message about the behaviour the economy wants to encourage.

What is measured will influence how companies invest.

17. Verification Matters Because Claims Are Easy to Make

Local-content promises can be commercially valuable.

A supplier with a stronger score may gain an advantage in tender evaluation, which creates an obvious incentive to present its contribution positively.

Verification is therefore essential.

Companies may need to provide audited financial statements, payroll records, supplier invoices, asset information, training evidence and other supporting documentation. Independent certifying bodies or approved auditors can then review the information.

The UAE’s current National ICV guidelines require figures to align with audited financial statements and supporting documents. Certificates are issued for individual legal entities by authorised certifying bodies, rather than being assumed across an entire corporate group.

QatarEnergy also requires approved certification of scorecards and contract plans. For longer contracts, the buying entity can request reviews during execution to monitor whether the promised contribution is being delivered.

Without verification, local content can become marketing language.

With reliable evidence, it can become a credible procurement factor.

18. The Supplier’s Suppliers Matter

A large contractor may appear to have a substantial local operation, but much of its contract value can pass through to imported equipment or international subcontractors.

A complete assessment therefore looks beyond the first-tier supplier.

If the main contractor purchases from a strong domestic manufacturer, that expenditure can create local wages, investment and supplier activity. If it buys from a local distributor whose product is almost entirely imported, the deeper local effect may be smaller.

This creates a chain of value.

The local-content contribution of one company influences the score of the next company that purchases from it. Stronger domestic suppliers can therefore improve the competitiveness of several larger businesses.

The approach also gives companies a commercial reason to understand their supply chains more precisely.

Supplier data becomes part of economic strategy.

19. Price and Local Content Must Be Evaluated Together

A local-content score should not be read as a replacement for price.

If a domestically supplied product costs twice as much, performs poorly and cannot be delivered reliably, the economic benefit may disappear through higher project costs, delays and maintenance.

At the same time, a narrowly defined purchase price may ignore wider value.

A local supplier can reduce transport, inventory, response time and operating risk. It can also create employment, assets and tax or fee revenue.

The correct comparison is therefore broader than “local price versus imported price.”

It should include total cost of ownership, quality, delivery, resilience, future competition and the value of capability created.

OECD research finds mixed evidence on the effectiveness of domestic preferences and local-content requirements. Outcomes depend heavily on market structure, policy design and whether the measure increases capability or merely reduces competition.

Local content creates value when its economic benefits exceed its economic costs.

That principle should remain at the centre of every programme.

20. Two $100 Million Contracts Can Leave Very Different Results

Imagine two industrial contracts, each worth $100 million.

In the first contract, finished equipment is imported. Local activity is limited to distribution, transportation, installation and basic administration.

The buyer receives the required equipment, but most manufacturing, engineering, intellectual property and supplier expenditure remain outside the country. The contract has fulfilled its operational purpose while leaving a relatively narrow domestic footprint.

In the second contract, specialised components that cannot yet be produced competitively are still imported. However, final manufacturing or assembly occurs locally, domestic companies provide engineering and logistics, nationals receive technical training, a service centre is established and selected suppliers receive long-term orders.

The buyer may receive the same functional equipment.

The economic result is different because the contract has also created assets, skills, supplier revenue and future maintenance capacity.

Neither structure should automatically be declared better.

The second contract is stronger only if the local activities are efficient, useful and sustainable. If the factory has no future demand, the skills are not transferable or the final product cannot meet quality requirements, the apparent local value may be temporary.

The real objective is not to maximise every domestic expenditure line.

It is to maximise the lasting productive value created by the contract.

21. Good Measurement Examines What Would Not Otherwise Have Happened

A programme should distinguish between existing activity and genuinely additional activity.

A company may receive credit for an office, employees or supplier spending that existed before the contract and would have continued without it. Those contributions are still real, but they are different from a new factory, training programme or export capability created because of the opportunity.

This is known in economic evaluation as additionality.

The simple question is: what changed because the policy or contract existed?

A strong assessment also examines durability.

Will the employment remain after delivery? Can the equipment serve other customers? Are the skills useful elsewhere, and can the supplier compete without permanent preference?

These questions are harder to measure than invoices.

They are also closer to the economic purpose of local content.

Part Four: Six GCC Countries, Different Local-Content Models

22. Saudi Arabia: National Purchasing Power as an Economic Instrument

Saudi Arabia has developed the region’s broadest national local-content architecture.

The Local Content and Government Procurement Authority coordinates policy, supports national products and connects government purchasing with the objectives of Vision 2030. Its work includes local-content requirements, product preferences, mandatory national-product categories and mechanisms for incorporating local contribution into procurement.

The latest published Vision 2030 measurement put the local-content share of non-oil expenditure at 54.5% in 2024, compared with a 52% baseline. The same report recorded local content in oil and gas at 67.4% and defence-industry localisation at 24.89%, illustrating how localisation is being measured across very different sectors.

The Saudi model is connected to the scale of the domestic market.

Large government budgets, national companies, infrastructure programmes and industrial demand can support investments that would be difficult to justify in a smaller economy. The country can use recurring purchasing requirements to encourage local manufacturing, services, employment and technology.

For international businesses, this changes market entry.

A representative office or distributor may remain sufficient for some opportunities, but companies seeking substantial government or strategic-sector business increasingly need to consider deeper local capability.

The commercial question is no longer only whether Saudi Arabia has demand.

It is how the company will participate in creating value inside that demand.

23. Aramco’s iktva: A Flagship Anchor-Buyer Model

Saudi Aramco’s In-Kingdom Total Value Add programme is one of the Gulf’s most developed examples of procurement-led economic transformation.

Launched in 2015, iktva measures and encourages the contribution made by Aramco’s suppliers through domestic spending, investment, employment, training, research and supply-chain development.

Aramco reported that local content reached 70% of its procurement spending at the beginning of 2026, up from an iktva score of 35% when the programme began. The company has set a new intention to reach 75% by 2030.

The reported wider results are substantial.

Aramco states that iktva has contributed more than $280 billion to Saudi GDP, supported more than 200,000 direct and indirect jobs, enabled over 350 manufacturing investments and helped produce 47 strategic products in the Kingdom for the first time. It has also identified more than 200 additional localisation opportunities across 12 sectors, representing an estimated annual market of $28 billion.

These figures are reported by Aramco and should be understood within its own programme methodology. Their importance lies not only in scale, but in the structure they reveal.

The company maps future demand, identifies supply-chain gaps, engages international manufacturers, supports local firms and connects procurement with investment. This gives suppliers a clearer economic case for establishing capability inside Saudi Arabia.

The most powerful element is predictability.

A manufacturer is more likely to invest when it can see recurring technical demand from a large and credible buyer.

24. The United Arab Emirates: An Audited National ICV System

The UAE has built a national ICV system that connects government entities and major national companies through a common certification framework.

The Ministry of Industry and Advanced Technology describes the programme as a way to redirect procurement expenditure into the national economy, support industrial and service companies, attract investment and create employment for Emiratis. Certified companies can use their verified ICV score with participating entities during tendering.

The scale of industrial procurement under the system has continued to grow.

MoIAT reported that industrial procurement through the National ICV Programme reached AED 168 billion in 2025, up from AED 143 billion in 2024. The ministry’s live registry listed more than 8,700 certified companies by the end of August 2026, although participation and valid-certificate counts can change as certificates are issued and expire.

The UAE framework is especially useful for understanding the difference between ownership and contribution.

A company’s score is built from measurable activity, including local manufacturing or supplier purchases, investment, Emirati employment, wider workforce contribution and selected bonuses connected to exports, technology and sustainability.

This allows international companies to build a stronger position through real domestic investment.

A foreign-owned manufacturer with substantial UAE production, assets, employment and exports can demonstrate more local value than a company whose contribution is limited to local registration.

25. ADNOC: From ICV to Industrial Resilience

ADNOC has been one of the UAE’s main anchor institutions for local-content development.

Its programme encourages local manufacturing, supplier spending and private-sector employment for UAE nationals. ADNOC reports that more than AED 307 billion has been returned to the UAE economy through ICV since 2018, alongside more than 23,000 employment opportunities for Emiratis in the private sector.

In 2026, ADNOC expanded the model through its Industrial Resilience Programme.

The programme introduced Local+, which prioritises suitable Made in the Emirates products across ADNOC’s project pipeline, and ICV+, which encourages engineering, procurement and construction contractors to purchase from local manufacturers. ADNOC connected these measures to approximately AED 200 billion of planned project awards between 2026 and 2028.

This development shows how local content is evolving.

The original focus was largely on retaining economic value and creating jobs. The newer model places greater emphasis on the reliable domestic availability of priority products and the behaviour of major contractors.

The buyer is not only asking whether the first-tier contractor has a good score.

It is also asking whether that contractor will strengthen the industrial system underneath the project.

26. Qatar: Tawteen Connects Opportunity, Supplier Development and ICV

QatarEnergy’s Tawteen programme is organised around three pillars: new investment opportunities, supplier development and an In-Country Value policy.

The programme aims to build a competitive domestic energy supply chain, attract knowledge- and technology-focused businesses, and contribute to economic diversification. It identifies opportunities across areas including subsurface services, maintenance and repair, digital technologies, chemicals, metals, engineering, equipment and business services.

The supplier-development pillar is important.

QatarEnergy and participating energy companies provide capability-building, talent development and strategic support intended to help local suppliers meet sector requirements. The model recognises that a preference alone cannot turn an unqualified business into a capable supplier.

The ICV system then measures contribution through local purchases, human and business development, and capital investment. Suppliers that invest in these areas can receive a commercial advantage in tenders.

Qatar’s approach also distinguishes between historical performance and contract commitments.

The supplier submits an audited ICV scorecard, while a contract-specific ICV plan can commit the bidder to future local expenditure and capability development. The plan can be monitored during execution and verified at completion.

Since July 2023, locally established suppliers and contractors generally need an ICV score to have their bids accepted for QatarEnergy tenders, with an exemption for companies established for less than two years. International companies incorporated outside Qatar can participate with a zero ICV score, which means local investment can become a commercial differentiator rather than a complete barrier to entry.

27. Oman: Retained Value, SMEs and Supplier Access

Oman has developed In-Country Value most visibly through its energy, industrial and infrastructure sectors.

The model defines ICV as expenditure retained inside the country that contributes to business development, human capability and productivity. It includes local goods and services, Omani employment, SME participation, training and investment.

The Ministry of Energy and Minerals reported in May 2026 that ICV retained from contracts awarded by operating companies had exceeded 30% of total contract expenditure. OQ separately reported that retained ICV increased by 24% in 2025, while its expenditure with SMEs reached approximately OMR 117.7 million.

Oman’s Joint Supplier Registration System is another important part of the model.

JSRS provides a common supplier network used by energy operators and other buyers. It supports supplier visibility, certification and contract opportunities for Omani SMEs and Local Community Contractors as well as larger national and international companies.

The Omani approach demonstrates that local content requires market infrastructure.

Suppliers need to know where opportunities exist, buyers need reliable supplier information, and smaller companies need routes into procurement systems that may otherwise favour established large contractors.

Oman has also connected procurement with industrial development. OQ reported that 78% of its procurement expenditure in 2024 went to local suppliers, while its measured ICV score was 32.4%. The difference between those two figures illustrates why local purchasing and retained economic value are not identical.

28. Bahrain: Takamul and Industrial Local Value

Bahrain’s Takamul programme measures the contribution made by industrial establishments to the national economy.

Qualifying companies can receive a certificate that provides a 10% preference in government procurement. The programme seeks to increase local value in industrial products and encourage large factories to purchase more from national SMEs.

Bahrain also operates the Made in Bahrain mark.

Licensed factories can qualify when their products contain at least 35% domestic content, helping buyers and consumers identify products with a defined level of national production.

The Bahrain model is significant because the country has a smaller domestic market than Saudi Arabia or the UAE.

Its long-term opportunity lies in specialisation, regional integration and the ability of Bahraini manufacturers to serve neighbouring markets. Local-content policy therefore becomes more valuable when it helps companies achieve regional scale rather than remaining dependent on Bahrain’s domestic purchasing alone.

Cooperation with Saudi Arabia provides an early example.

Saudi authorities have recognised qualifying Bahraini products within local government-procurement preferences, while Saudi industrial companies can participate in Bahrain’s Takamul programme.

This points toward a wider future for Gulf local content.

National capability can become the foundation for regional value chains.

29. Kuwait: Product Preferences and Oil-Sector Development

Kuwait’s local-content model is less centralised than the national certificate systems used in the UAE or Qatar.

Public procurement contains preferences for national and GCC products, while the oil sector uses company-specific supplier approval and development systems. Current US government procurement guidance describes a 15% preference for domestically and GCC-produced items and requirements for foreign bidders to source a portion of available materials from the local market. Businesses should verify these conditions against the current tender and Kuwaiti regulations before relying on them.

Kuwait Petroleum Corporation’s PADER platform provides a clearer view of the oil-sector strategy.

KPC defines local content through Kuwaiti employment, domestic goods and services, private-sector participation and the use of petroleum-sector outputs to create downstream industries. The platform is intended to support SMEs and increase private participation in KPC and subsidiary opportunities.

Kuwait’s large energy sector and accumulated financial strength provide substantial potential anchor demand.

The economic opportunity is to convert more of that purchasing power into competitive private-sector capability, technical careers and downstream industry. As in every GCC country, the result will depend on opportunity visibility, execution and whether supported companies become stronger rather than permanently dependent.

30. The Six Systems Share a Direction, Not a Formula

The GCC does not have one common local-content score.

Saudi Arabia combines national procurement policy with company programmes such as iktva. The UAE uses a national audited certificate, while QatarEnergy combines historical scorecards with contract-specific plans.

Oman places substantial emphasis on retained value, supplier registration and SME participation. Bahrain links industrial contribution to procurement preference, while Kuwait combines product preferences with oil-sector supplier development.

These systems should not be treated as interchangeable.

A company with a strong UAE ICV score cannot assume that the same structure will satisfy Saudi, Qatari or Omani requirements. The definitions, evidence, weights, eligible costs and procurement effects differ.

However, the strategic direction is increasingly consistent.

Gulf buyers want more economic value, supply-chain capability, employment and resilience from the money they spend.

Part Five: How Anchor Buyers Create Supplier Ecosystems

31. A Large Buyer Can See Demand That Individual Suppliers Cannot

A small manufacturer sees the orders it has received.

An anchor buyer sees the complete demand pipeline across operations, projects, maintenance and replacement. This information gives it a unique ability to identify commercial gaps.

The buyer may discover that it imports the same product repeatedly across several business units. It may also find that different contractors purchase similar components from unrelated international suppliers.

When that demand is combined, a domestic investment can become commercially viable.

This is one of the most valuable functions of a local-content programme.

The buyer can reveal the size, timing and technical characteristics of future demand without guaranteeing that any supplier will win automatically.

32. Tier-One Contractors Determine How Far Local Content Travels

Large projects are often delivered by engineering, procurement and construction contractors or other primary suppliers.

These companies control substantial purchasing beneath the main contract. Their sourcing decisions determine whether local content reaches smaller manufacturers and service providers or remains concentrated within the first tier.

A buyer can therefore increase economic impact by placing requirements on the primary contractor.

The contractor may need to source selected products locally, use approved SMEs, submit a supplier plan or report actual expenditure during execution.

ADNOC’s ICV+ initiative is a clear current example. It is designed to encourage EPC contractors to buy more from UAE manufacturers rather than allowing the local-content objective to stop at the contractor’s own organisation.

The same principle applies outside energy.

A hospital contractor, software integrator, infrastructure developer or facilities-management company can all extend opportunity through their subcontracting decisions.

33. Preference Alone Does Not Build a Supplier

A procurement preference can help a local business win its first substantial contract.

However, it does not automatically improve the company’s quality, management, financing or delivery capability.

A supplier may need technical assistance, new equipment, certification, better financial controls, skilled employees and stronger planning before it can meet the buyer’s requirements consistently.

This is why supplier development must accompany local preference.

World Bank research identifies several features commonly associated with effective supplier-development programmes: technical support, management and tendering guidance, financial products, quality standards, buyer introductions, supplier databases, mentoring and opportunities for joint bidding.

The best support is specific.

A general business workshop may be useful, but a supplier improves faster when the buyer identifies an actual technical gap connected to a real commercial opportunity.

34. Demand Visibility Can Be More Valuable Than a Subsidy

Companies invest when they believe future customers will exist.

A one-time grant may reduce the cost of equipment, but it cannot make an unnecessary factory commercially sustainable. A credible multi-year demand pipeline may provide stronger investment evidence.

Anchor buyers can publish products and services they expect to require over the next three, five or ten years.

They can identify approximate volumes, technical standards, expected qualification periods and whether the opportunity is suitable for local manufacturing, assembly, maintenance or distribution.

Aramco’s localisation-opportunity programme demonstrates this approach. It identifies supply-chain gaps and estimated annual market size, allowing local and international investors to examine opportunities before establishing facilities.

Demand information should not become a guaranteed contract.

Suppliers must still compete on quality, price and performance, but they can make investment decisions with better evidence.

35. SMEs Need Accessible Contract Structures

A small company may be technically capable but unable to bid for a contract that is too large, financially demanding or administratively complex.

Requirements for high turnover, large performance guarantees, extensive past experience and long payment periods can exclude SMEs before their capability is considered.

Buyers can improve access without lowering standards.

They can divide suitable procurements into smaller lots, create subcontracting opportunities, simplify documentation, use proportionate financial requirements and provide clear qualification guidance.

The OECD notes that SMEs commonly face barriers in public procurement because of contract size, administrative complexity and resource limitations. Well-designed procurement can improve their participation while maintaining competition and performance.

The objective is not to award complex work to an unprepared company.

It is to remove requirements that are larger than the actual risk of the work.

36. Finance Is Part of Supplier Capability

Winning a large contract can create a financial problem before it creates a profit.

The supplier may need to purchase machinery, recruit employees, hold inventory and provide guarantees months before receiving payment.

A company with a strong order but insufficient working capital may fail during delivery.

Supplier development therefore needs a financial dimension.

Banks, development funds, export-credit agencies and anchor buyers can help through purchase-order finance, guarantees, equipment leasing, receivables finance and faster payment structures.

The buyer does not need to absorb every commercial risk.

It does need to recognise that payment design and access to finance influence whether capable smaller suppliers can participate.

37. Standards and Testing Infrastructure Create Market Access

A manufacturer cannot supply critical equipment merely because it is local.

It must meet technical, safety, quality and performance standards.

Testing laboratories, accreditation bodies and certification systems are therefore part of the local-content ecosystem. Without them, companies may need to send products abroad for approval, adding cost and delay.

Buyers can also help suppliers understand qualification requirements before a tender is released.

Technical workshops, prototype programmes and controlled trials allow companies to improve before competing for full-scale contracts.

This support should never compromise safety.

Its purpose is to give capable suppliers a realistic path toward meeting the same standards required from international companies.

38. Industrial Clusters Reduce the Cost of Localisation

A factory performs better when it is surrounded by useful infrastructure and suppliers.

Industrial cities and specialised clusters can provide energy, land, logistics, testing, maintenance, training, shared services and access to major customers.

These connections reduce the cost of establishing production.

They can also create knowledge spillovers, because engineers, workers and suppliers move between related companies.

A pump manufacturer may support machining firms, coating companies, testing laboratories, logistics providers and maintenance specialists. Those firms can then serve other manufacturers.

The economic value comes from the network.

A single isolated factory may create activity, while a cluster can create an industry.

39. Maintenance and Aftermarket Services Are Often the Best Starting Point

Full manufacturing is not always the first sensible step.

Maintenance, repair, calibration, spare-parts management, field service and technical support may offer a more realistic entry into local capability.

These activities are close to the customer and often require quick response.

They also create technical employment and allow the supplier to understand local operating conditions before making a larger production investment.

Over time, the company may add refurbishment, component manufacturing, assembly and product development.

Localisation is usually strongest when it develops in commercially justified stages.

Part Six: Employment, Skills and Knowledge Transfer

40. The Quality of Employment Matters

A local-content programme can increase the number of jobs without necessarily improving economic capability.

Routine administrative roles may support employment, but they do not produce the same long-term effect as engineering, technical operations, research, manufacturing or management responsibility.

Job quality should therefore be considered alongside headcount.

Useful measures include productivity, training, career progression, retention, qualifications and whether nationals move into positions that influence technical and commercial decisions.

This does not mean every job must be highly specialised.

Economies need a wide range of occupations, but workforce policy becomes more valuable when it creates clear routes from entry-level work into deeper capability.

41. Training Should Be Connected to Real Demand

Training is most effective when it prepares people for actual jobs and technologies.

A supplier may establish a technical academy because a new facility requires certified operators. An engineering contractor may develop apprenticeships connected to a multi-year project pipeline.

This demand-led approach is stronger than providing training without a clear route into employment.

Buyers can help by sharing future workforce needs with universities, vocational institutes and suppliers.

The objective is to create a sequence: expected demand, required capability, relevant training and productive employment.

QatarEnergy’s Tawteen programme combines supplier development with talent and capability building, while Aramco’s iktva model connects local investment with workforce training and technical employment.

Training should not exist only to improve a bid score.

It should make the company and the worker more capable.

42. Knowledge Transfer Is More Than a Classroom

Technology transfer is often described as training, but the deepest transfer occurs through work.

A national engineer learns more by participating in design, commissioning, troubleshooting and product improvement than by attending a short presentation.

Joint teams, secondments, apprenticeships, shared research and structured management responsibility can all transfer knowledge.

The receiving organisation must also be capable of absorbing it.

A company needs suitable employees, leadership commitment and enough continuity for learning to remain inside the business.

A contract can require knowledge transfer, but it cannot create learning automatically.

The process must be built into how the work is delivered.

43. Management Capability Is a Form of Local Content

Suppliers do not fail only because of weak technical skills.

They may struggle with costing, planning, quality control, contract management, cash flow, governance or customer communication.

These management capabilities determine whether a company can grow beyond one protected opportunity.

Supplier-development programmes should therefore include commercial and organisational improvement.

World Bank experience shows that successful programmes frequently combine technical support with business planning, financial management, tendering guidance, mentoring and access to buyer networks.

A strong local supplier should eventually be able to compete without special handling.

That requires a capable organisation, not merely a capable product.

44. Research, Engineering and Intellectual Property Create Deeper Value

The shallowest form of localisation moves a finished product through a domestic distributor.

A deeper form performs installation, maintenance or assembly locally. Manufacturing creates more capability, but research, engineering and intellectual property can create the most durable advantage.

A company that designs products in the Gulf can adapt them to heat, dust, water conditions, energy systems and regional customer requirements.

A software company can develop local products, employ engineers and own intellectual property that serves international customers.

These activities create knowledge that can be reused.

The UAE has explicitly connected advanced-technology adoption to its ICV formula through the Industrial Technology Transformation Index, allowing manufacturers to improve their score by demonstrating stronger technology and sustainability capabilities.

This is an important evolution.

Local content begins to reward how intelligently a company operates, not only how much it spends.

45. International Expertise Remains Essential

The Gulf has grown by combining domestic ambition with international talent, capital and technology.

Local-content policy should preserve that strength.

Foreign professionals can train teams, transfer operating experience, connect businesses to global markets and help establish industries that do not yet exist locally.

The economic objective is not to remove international expertise.

It is to ensure that the expertise produces lasting value through local teams, institutions, assets and partnerships.

A strong international company should be able to enter a Gulf market, earn commercially attractive returns and contribute to national capability at the same time.

The relationship should be mutually productive rather than purely transactional.

Part Seven: When Local Manufacturing Makes Economic Sense

46. Market Size Comes Before Factory Size

Manufacturing requires recurring demand.

A buyer may want a product made locally, but one project is rarely enough to support a factory for many years.

The first question should therefore be the size of the accessible market.

How many units will the country require? How frequently will they be replaced? Can the facility supply neighbouring GCC countries or international markets?

A small economy may not justify six independent factories producing the same item.

Regional demand may make the investment viable when national demand alone does not.

This is why localisation strategy should begin with market evidence, not the symbolic value of a factory announcement.

47. The Complete Cost Must Be Competitive

Local production can reduce freight, inventory, lead time and disruption risk.

It can also face higher costs from smaller production volumes, imported machinery, specialist labour and underused capacity.

The right comparison is total cost over the product’s life.

Buyers should consider quality, delivery, maintenance, inventory, financing, operating reliability and the economic cost of disruption.

A locally produced component does not need to be the cheapest in every circumstance.

It does need a credible complete value proposition.

The OECD warns that highly restrictive procurement approaches can increase costs and reduce trade without necessarily creating greater resilience. Careful market analysis is therefore essential before deciding that a product must be localised.

48. Localisation Should Follow a Capability Ladder

Companies do not need to move directly from exporting to full manufacturing.

A practical progression may begin with an authorised distributor and local customer support. The next stages can include a sales office, national employees, spare-parts inventory, maintenance, repair, assembly and selected domestic sourcing.

Deeper stages may involve full manufacturing, product engineering, research and regional exports.

The correct level depends on demand, technical complexity and commercial opportunity.

A software business may create deep local value through engineering and intellectual property without owning a factory. An equipment manufacturer may create its strongest contribution through maintenance and refurbishment before local production becomes viable.

The ladder prevents localisation from becoming an all-or-nothing decision.

It allows capability to grow with evidence.

49. Strategic Categories Deserve Different Treatment

Not every product has equal economic or national importance.

Critical medicines, water equipment, energy components, cybersecurity systems, food inputs and transport infrastructure may justify stronger domestic or regional capacity.

Office supplies and widely available standard products may require a different approach.

Buyers should classify categories according to supply risk, economic opportunity, technical feasibility and future demand.

This produces a more disciplined localisation portfolio.

Some categories may require domestic production, others regional suppliers, and others a diversified global sourcing strategy.

Resilience comes from choosing the right structure for each category.

It does not come from applying one rule to everything.

50. Services Can Create as Much Value as Manufacturing

Local-content discussions often focus on factories because physical production is visible.

However, advanced services can create substantial employment, exports and intellectual property.

Engineering, design, software, financial services, logistics, testing, maintenance, healthcare and professional advisory work can all produce high-value domestic activity.

The distinction between a product and service is also becoming less clear.

Industrial equipment increasingly depends on software, monitoring, data analysis and long-term technical support.

The Gulf should therefore avoid measuring economic depth only through the number of products manufactured.

A capable service and knowledge economy is also a form of industrial strength.

51. Digital Local Content Requires a New Measurement Model

Traditional formulas were designed around physical goods, wages and assets.

Digital businesses create value differently.

A technology company may employ local software engineers, develop algorithms, host data, manage cybersecurity operations and create intellectual property without purchasing large quantities of physical materials.

The GCC still relies heavily on imported digital products and services in several areas, even as governments invest significantly in digital infrastructure and artificial intelligence. IMF analysis identifies the development of domestic digital capability as an important part of the region’s next economic stage.

Future local-content systems will need to measure these contributions more accurately.

They may need to consider local code development, data infrastructure, research, product ownership, specialist employment and exportable digital services.

Counting office rent and payroll alone will not capture the complete value.

52. Export Capability Is the Strongest Test

A local supplier may initially depend on procurement preference.

The longer-term test is whether it can sell to customers that are not required to choose it.

Exports demonstrate that the product or service can compete on quality, price and performance in a wider market.

They also bring external income into the economy and reduce dependence on domestic government demand.

This does not mean every supplier must export immediately.

It means local-content policy should help capable businesses move toward regional and international competition.

The progression is important.

Local preference can open the door, but competitiveness must eventually keep it open.

Part Eight: What International and Local Businesses Need to Understand

53. There Is No Single Gulf Local-Content Strategy

A company cannot create one localisation plan and apply it unchanged across the GCC.

The customer, formula, evidence and commercial effect differ.

Saudi government procurement, Aramco iktva, UAE National ICV, ADNOC requirements, QatarEnergy Tawteen and Oman’s energy-sector systems each have their own structures.

Businesses should begin with the specific buying institution.

They need to understand whether the tender uses a historical certificate, contract plan, mandatory product list, price preference, minimum threshold or subcontracting obligation.

This analysis should occur before pricing and partner selection.

Local content added at the end of a bid is usually weaker and more expensive than local content built into the operating model from the beginning.

54. Map the Opportunity Before Making the Investment

A factory or large office should not be created only because localisation is becoming important.

The company must first understand the accessible demand.

Which organisations buy the product? What quantities are required, and how often? Which suppliers already serve the market?

The analysis should also identify procurement cycles, technical qualification, price levels, payment terms and the local-content mechanisms that influence award decisions.

A large headline market may contain only a small commercially accessible segment.

Investment should be based on verified buyer demand rather than broad economic optimism.

This is especially important in specialised industrial categories where qualification can take years.

The best localisation decision begins with a realistic company and decision-maker map.

55. Choose the Right Depth of Local Presence

Different opportunities justify different levels of investment.

A company selling occasional specialist equipment may need strong local technical support but not domestic manufacturing. A business serving recurring national infrastructure demand may require a service centre, workforce and inventory.

A manufacturer with large regional demand may justify a factory and export operation.

The choice should balance commercial return with strategic value.

Companies should ask what local capability will improve customer outcomes, reduce operating risk and strengthen tender competitiveness.

The answer may be employment, service, sourcing, assembly, manufacturing, research or a combination.

Localisation should solve a real business problem.

56. Build the Supplier Network Before the Tender

A company cannot promise credible local purchasing if it has not identified capable suppliers.

Supplier mapping should cover quality, capacity, certification, delivery, financial stability and their own local-content contribution.

The company may need more than one supplier for critical categories.

It should also understand where development is required.

A smaller domestic company may need technical support, forecasting or a longer agreement before it can invest in the required capacity.

Strong supplier relationships take time.

They are difficult to create during the final days of a tender.

57. Treat Local-Content Data as Financial Data

A local-content certificate or contract report may depend on payroll, purchases, assets, training and supplier evidence.

These records need the same discipline as financial reporting.

The commercial team should not make commitments that finance, human resources, procurement and operations cannot verify.

Companies should establish clear ownership of the calculation.

Supplier certificates need to be monitored, expenditure must be classified consistently, and supporting evidence should be retained.

Poor information can reduce the score, delay certification or create disagreement during contract close-out.

Local-content management is therefore not only a government-relations task.

It is a cross-functional operating system.

58. A Bid Commitment Becomes an Operating Obligation

A company may improve its commercial evaluation by promising future local value.

Once the contract is awarded, that promise must be delivered.

Recruitment may take longer than expected, local suppliers may fail qualification and planned equipment may be delayed. The company should therefore test every commitment before including it in the bid.

A credible plan contains clear activities, owners, budgets, milestones and evidence.

Longer contracts should also include monitoring during delivery rather than waiting until the end.

QatarEnergy’s use of contract-specific plans and midpoint reviews illustrates this principle. The local-content promise is treated as part of performance, not only as a document submitted during tendering.

Overpromising may win attention.

Reliable execution builds a long-term market position.

59. Working Capital Must Be Included in the Plan

Localisation usually requires upfront expenditure.

The supplier may need to lease premises, buy machinery, recruit people, hold inventory and support smaller subcontractors before receiving contract payments.

These costs can create pressure even when the project is profitable.

Businesses should model payment timing, guarantees, retention, certification costs and the ramp-up period of new facilities.

They should also assess whether local suppliers need earlier payment or financing support.

A local-content plan that ignores cash flow may fail during implementation.

Commercial sustainability is part of economic value.

60. Partnerships Should Add Capability, Not Only Eligibility

A local partner can provide market knowledge, relationships, licences, workforce access and operating infrastructure.

However, a partnership created only to satisfy formal requirements may add little economic value and can create governance risk.

The best partnerships combine complementary strengths.

The international company may provide technology, products and global customers, while the local partner contributes operations, investment, suppliers and market understanding.

Responsibilities, intellectual property, management control and future expansion should be clear.

A successful joint venture should be able to build a real business.

It should not exist only as a name on a tender document.

61. Avoid Cosmetic Localisation

Cosmetic localisation changes the appearance of the transaction without changing where meaningful value is created.

Examples include routing imports through a local intermediary, placing a label on a finished product, employing people without productive responsibility or announcing a facility that performs limited activity.

These structures may produce a short-term score advantage.

They rarely create durable capability and can weaken trust with buyers.

The stronger approach is transparent.

A company should state what is already local, what will become local, what must remain international and why the proposed structure creates the best overall result.

Honest localisation is more credible than exaggerated localisation.

62. Use Local Content to Improve the Business Itself

Local-content compliance can be treated as an administrative cost.

A better approach is to use it to improve the operating model.

Local maintenance can reduce customer downtime. Domestic inventory can shorten delivery, while a trained national workforce can improve customer access and continuity.

Local suppliers can lower selected costs and create product adaptations.

A regional factory can open export markets and reduce dependence on one country.

When local content strengthens competitiveness, the company no longer needs to view the programme only as a tender requirement.

It becomes part of business strategy.

Part Nine: How Buyers Can Build Better Local-Content Programmes

63. Begin With the Economic Problem

A programme should not begin by selecting an arbitrary local-content percentage.

It should begin by identifying the problem that procurement can help solve.

The issue may be excessive import dependence, limited maintenance capacity, insufficient national employment, weak SME participation or lack of domestic manufacturing.

Different problems require different instruments.

A mandatory product list may help an existing local industry. Supplier development may be more suitable where capable firms are close to qualification.

Investment incentives may be needed where demand exists but productive assets do not.

Clear objectives make measurement more meaningful.

64. Publish Demand Early

Suppliers need time to invest.

A tender issued today cannot create a factory next month unless the capability already exists.

Buyers should therefore publish forward demand where commercially and legally possible.

The information may include product categories, approximate volumes, technical standards, qualification timelines and expected project schedules.

Early visibility allows suppliers to form partnerships, arrange finance and develop capacity.

It also helps the buyer discover whether the intended localisation is commercially feasible.

Demand transparency turns procurement into a market-development signal.

65. Engage the Market Before Setting Requirements

Buyers may not know the complete economics of manufacturing or supplying a specialised product.

Early market engagement allows them to understand capacity, cost, technology and investment conditions.

Potential suppliers can explain what demand level would justify a facility, which inputs must remain imported and how long qualification will take.

This does not mean allowing one company to design the tender for itself.

Engagement should be structured, transparent and open to credible market participants.

The OECD’s industrial-policy guidance emphasises the importance of identifying the problem, defining the scope, selecting the right intervention and evaluating results. Procurement programmes benefit from the same disciplined sequence.

Good requirements begin with good market intelligence.

66. Separate Support From Guaranteed Success

A government or anchor buyer can help a supplier understand standards, access finance and identify opportunities.

It should not guarantee that the supplier will win indefinitely.

Competition gives companies a reason to improve.

A local business that can rely permanently on preference may have less incentive to reduce costs, innovate or serve customers well.

Support should therefore have milestones.

As capability rises, the supplier should compete against stronger benchmarks and pursue other customers.

The desired result is a commercially independent company.

The programme has succeeded when the supplier no longer depends on the programme for survival.

67. Reward Actual Delivery

Local-content plans should be monitored like other contract commitments.

The buyer can track employment, purchases, investment, training and supplier development during execution.

Rewards may be provided where performance exceeds credible targets, while shortfalls should be addressed according to clear contract terms.

The process must distinguish between factors within the supplier’s control and genuine external constraints.

Monitoring also creates policy intelligence.

If companies repeatedly fail to meet one requirement, the problem may be an unrealistic target, a missing supplier or a wider skills gap.

The buyer can then improve future programme design.

68. Measure Capability, Not Only Expenditure

Domestic expenditure is relatively easy to count.

Capability is harder to measure, but often more important.

A buyer should examine whether suppliers improved quality, achieved certification, reduced lead times, created technical careers, increased exports or developed new products.

These outcomes reveal whether the programme is changing the economy.

They also help distinguish productive local content from spending that would have occurred anyway.

The most useful dashboard combines immediate activity with longer-term results.

It asks not only how much money remained in the country, but what the country became more capable of doing.

69. Coordinate Across Buyers

Suppliers face difficulty when every government entity or national company uses a different definition, certificate and reporting system.

Some variation is necessary because sectors have different priorities.

However, unnecessary duplication raises cost and discourages smaller businesses.

Common definitions, interoperable data and mutual recognition can reduce this burden.

The UAE’s national framework provides one example of several entities using a common certificate. Qatar’s Tawteen model coordinates participation across energy-sector companies, while Oman’s JSRS provides a shared supplier system for multiple buyers.

Coordination allows companies to spend more time building capability and less time reproducing similar paperwork.

Part Ten: Where Local Content Can Lose Economic Value

70. Higher Cost Without Higher Capability

The most obvious risk is paying more without creating a durable benefit.

A local supplier may win because of preference, but continue importing almost everything and make little investment in productivity.

The buyer pays a premium, while the wider economy gains limited capability.

This is why programme evaluation matters.

The additional cost should be compared with the employment, investment, resilience and future competition created.

A temporary premium can be sensible when it helps a supplier reach efficient scale.

A permanent premium for an unchanged product is harder to justify.

71. Reduced Competition

Local-content requirements can reduce the number of eligible bidders.

Less competition may raise prices, weaken innovation and increase the buyer’s dependence on a small group of suppliers.

This risk is greater in small markets where only one or two domestic companies can serve a category.

The OECD’s 2026 review explicitly warns that procurement measures aimed at supporting domestic industry can create unjustified barriers and that evidence of their effectiveness remains highly dependent on design and context.

Competition should therefore be protected wherever possible.

Local suppliers need opportunity, but they also need credible rivals and performance expectations.

72. Mistaking Activity for Productivity

A factory opening creates investment and employment.

That does not automatically mean the factory is economically productive.

It may operate at low capacity, depend on expensive imported inputs or sell only because buyers are required to purchase its output.

A strong assessment asks whether the facility reduces complete cost, improves resilience, develops skills or creates an exportable product.

The same principle applies to training and employment.

A large number of short courses may improve a reported metric without changing how work is performed.

The quality of the outcome matters more than the visibility of the activity.

73. Creating Local Intermediaries Instead of Local Industries

A procurement preference can unintentionally encourage additional trading layers.

The foreign manufacturer sells to an intermediary, which resells the same product to the buyer at a higher price.

The transaction appears more local, but production, technology and engineering remain elsewhere.

Intermediaries can be valuable when they provide inventory, credit, service, technical support and market access.

The issue is not distribution itself.

The issue is whether the intermediary creates a meaningful function or only changes the invoice route.

Programmes should reward substance.

74. Duplicating the Same Industry Across Small Markets

Every country naturally wants more production and employment.

However, six small factories producing the same specialised product may be less competitive than one or two Gulf facilities serving the regional market.

Duplicated capacity can lead to low utilisation, higher prices and permanent dependence on procurement preference.

Regional specialisation offers another path.

One country may develop chemicals, another maintenance, another advanced logistics and another digital services, while products and capabilities move across the GCC.

OECD analysis of small open economies argues that industrial policy should be designed around value chains and international coordination rather than treating every sector as a self-contained national system.

Local capability does not have to mean national isolation.

It can be part of regional scale.

75. Keeping Support After Its Purpose Has Ended

Industrial support is often easier to introduce than remove.

Companies organise around the benefit, employees depend on the activity and policymakers may be reluctant to acknowledge that an instrument is no longer effective.

OECD research published in 2026 found that industrial-policy instruments are highly persistent, with relatively few discontinued in any given year. This reinforces the importance of sunset dates, performance reviews and clear exit conditions.

A programme should continue because it produces value, not simply because it exists.

Support can be reduced as suppliers become capable, markets deepen or economic conditions change.

Policy discipline is part of commercial discipline.

76. Weakening the Openness That Helped the Gulf Grow

The Gulf’s economic strength has been built partly through openness.

International companies, workers, investors, equipment, technology and trade have played central roles in the region’s development.

Local content should deepen this model, not reverse it.

Excessively restrictive requirements can discourage investment or separate Gulf companies from efficient global inputs.

The better model is conditional openness.

International companies remain welcome, while stronger domestic contribution improves their access and competitiveness.

This creates an exchange between market opportunity and capability creation.

The Gulf gains more from international business, while international business gains a deeper and more durable position in the Gulf.

Part Eleven: From National Local Content to GCC Value Chains

77. The GCC Market Can Create Scale That Individual Countries Cannot

Saudi Arabia has enough domestic demand to support industries that may not be viable in smaller GCC markets.

The UAE provides international connectivity, financial services and manufacturing infrastructure. Oman offers strategic ports and industrial locations, while Bahrain has established industrial and service capabilities close to the Saudi market.

Qatar and Kuwait combine concentrated demand with substantial energy and financial resources.

These strengths can complement one another.

A supplier may manufacture in one GCC country, source components from another, manage logistics through a third and serve customers throughout the region.

This structure can create more competitive Gulf content than six disconnected national systems.

78. Mutual Recognition Is Beginning to Appear

IMF analysis has noted that GCC countries have taken steps to exclude one another from some local-content restrictions in support of regional trade and value-chain integration.

The Saudi-Bahraini relationship provides a practical example.

Qualifying Bahraini products can receive treatment within Saudi procurement preferences, while Saudi industrial companies can participate in Bahrain’s Takamul programme.

These arrangements can reduce unnecessary duplication.

They also provide manufacturers with a larger accessible market, improving the economics of investment.

The next stage could include wider recognition of certificates, common standards, compatible supplier information and clearer GCC rules of origin.

Regional content can make national content more sustainable.

79. The Gulf Still Needs Global Inputs

Regional integration does not remove the importance of international supply chains.

Advanced manufacturing will continue to use global machinery, components, technology and specialist services.

The economic goal is to choose where the Gulf can add the most value.

It may manufacture selected components, perform engineering and maintenance, develop software, process materials or manage regional distribution.

Imported inputs can support Gulf exports.

A product does not need every component to be domestic in order to create meaningful regional capability.

The test is whether the Gulf-based activity is competitive, productive and increasingly valuable.

80. Exporting Is the Final Stage of Supplier Development

A supplier that serves only one national buyer remains vulnerable.

A change in budget, project timing or procurement policy can reduce demand.

Regional and international customers create a broader commercial base.

They also test the company against genuine market competition.

The Gulf’s best local-content programmes should therefore connect suppliers to export finance, international certification, trade missions, regional buyers and global anchor companies.

The objective is not simply to replace imports.

It is to create products and services that other markets want to import from the Gulf.

81. Regional Procurement Data Could Become a Major Economic Asset

The six GCC countries collectively purchase an enormous range of products and services.

Yet demand information is often fragmented across entities, platforms and project pipelines.

Better regional data could reveal categories where combined demand is sufficient to support competitive investment.

It could also identify duplicated capacity, common shortages and areas where one country already has a capable supplier base.

This does not require buyers to disclose commercially sensitive information.

Aggregated category forecasts and common technical requirements could still improve investment decisions.

Economic coordination begins with shared visibility.

Part Twelve: The Future of Local Content in the Gulf

82. Local Content Will Move Beyond Oil and Gas

Energy companies have led many of the Gulf’s most developed local-content systems because they combine large recurring demand with complex technical supply chains.

The model is now relevant far beyond energy.

Healthcare, transport, aviation, water, defence, construction, telecommunications, food, pharmaceuticals, technology and financial services all contain opportunities for domestic capability.

The correct method will differ by sector.

A hospital may focus on medical supplies, equipment servicing and health technology. A transport operator may develop maintenance, digital systems and component suppliers.

The wider expansion of local content will require sector-specific knowledge.

One universal formula will not capture every form of value.

83. Digital Procurement Will Make Contribution More Visible

Local-content systems depend on data.

Digital procurement platforms can connect tender information, supplier certificates, invoices, payroll, assets and contract performance.

This can reduce manual reporting and make verification more reliable.

It can also help buyers understand the complete supply chain rather than only the first-tier contractor.

Over time, governments may be able to see which categories create the greatest employment, investment and supplier development for each unit of procurement.

Better data can improve policy.

It can identify programmes that are working, requirements that are unrealistic and economic gaps that need a different solution.

84. Artificial Intelligence Will Change What “Local” Means

Artificial intelligence products can be developed in one country, trained on infrastructure in another and delivered digitally across the world.

Traditional questions about where a product was manufactured become less useful.

Future assessments may need to examine where engineers work, where data is governed, where computing infrastructure is located, who owns the intellectual property and where commercial income is recorded.

The Gulf is investing heavily in AI, data centres and digital government.

Local-content policy can help these investments develop domestic technical capability rather than only increase technology consumption.

The challenge will be designing measures that reward real innovation.

Counting servers or office space alone will not be enough.

85. Sustainability Will Become Part of Local Value

Local supply can reduce some transport and inventory requirements, but domestic production is not automatically more sustainable.

Its environmental value depends on energy use, materials, waste, water and the efficiency of the facility.

Future procurement systems are likely to examine economic and environmental contribution together.

The UAE has already introduced technology and sustainability elements into its ICV framework, while ADNOC’s newer industrial-resilience approach connects domestic production with continuity and strategic capacity.

Circular-economy activities could become especially important.

Repair, refurbishment, recycling and material recovery create local employment while reducing the need for new imported products and inputs.

86. Buyers Will Focus More on Critical Capability

The next generation of local-content programmes is likely to become more selective.

Instead of trying to localise a very large number of products, buyers may focus on categories that matter most to operational continuity, economic resilience and future industry.

These may include critical energy equipment, medical products, food systems, water technology, cybersecurity, advanced materials and digital infrastructure.

ADNOC’s Local+ and Industrial Resilience Programme reflects this movement toward priority products and strategic capacity.

Selective localisation can concentrate investment where it creates the greatest value.

It can also preserve open international competition in categories where local production offers limited benefit.

87. The Score Will Matter Less Than the Capability Behind It

Scores and certificates are necessary because buyers need consistent information.

However, the mature stage of local content will focus on outcomes.

Can the supplier respond faster? Has it created a qualified workforce? Can it design, manufacture, maintain or export something that was previously unavailable?

Has the buyer’s supply chain become more competitive and resilient?

These questions reveal whether local content has moved beyond compliance.

The strongest company will not simply know how to improve its score.

It will have built a business whose operations naturally produce a strong score because real economic value is being created.

88. Procurement Could Become One of the Gulf’s Most Important Development Systems

National visions describe where economies want to go.

Investment programmes provide capital, while regulations create the operating environment.

Procurement connects these elements to actual demand.

It gives industries customers, workers employment and investors evidence that a market exists.

When designed well, it can convert public and national-company expenditure into supplier capability, technology, manufacturing and future exports.

When designed poorly, it can raise costs, weaken competition and reward appearance over substance.

The difference lies in disciplined implementation.

Buyers need clear economic objectives, credible market information and measured outcomes. Suppliers need real capability, honest commitments and commercially sustainable investment.

The Gulf has already demonstrated the scale of what anchor-led programmes can produce.

The next opportunity is to make those programmes more coordinated, more selective and more connected to regional and global competitiveness.

Conclusion: What Remains After the Contract

Local content begins with a simple question.

When the work is complete and the supplier has been paid, what remains inside the economy?

The answer may be a factory, a trained workforce, a stronger SME, a service centre, a new product, a technical standard or an export relationship. It may also be nothing more than a local invoice attached to an imported product.

The difference matters.

Gulf governments and major companies are increasingly using procurement to influence that difference. Saudi Arabia is connecting national purchasing power with industrial development, while the UAE has built an audited national ICV system and expanded the role of anchor buyers such as ADNOC.

Qatar is combining investment opportunities, supplier development and contract-specific ICV commitments. Oman is using retained value, supplier platforms and SME participation, while Bahrain and Kuwait are developing their own combinations of industrial preference and oil-sector capability.

These systems are not identical, and they should not become exercises in achieving the highest possible percentage without regard to cost or competitiveness.

The economic purpose is more important than the administrative score.

Local content works when it creates activity that is productive, useful and durable. It works when local companies become stronger, international companies invest more deeply, workers develop valuable skills and buyers receive reliable products at a sensible complete cost.

It becomes even more powerful when national capability grows into regional and international competitiveness.

The future Gulf supplier should not be successful only because it is local.

It should become successful globally because local opportunity gave it the demand, skills, investment and experience required to compete.

That is the larger promise of local content.

Procurement can deliver more than a completed contract.

It can help build the economy that will deliver the next one.

Sources and Further Reading

Public Procurement and Industrial Policy

The OECD’s 2026 report on public procurement, trade and industrial policy provides the main international framework used in this article. It examines domestic preferences, local-content requirements, industrial development, competition, resilience and the importance of evaluating the complete economic effect of procurement measures.

The OECD Industrial Policy Handbook and its work on small open economies provide additional guidance on identifying genuine market problems, selecting proportionate interventions, preserving competition and connecting domestic capability to international value chains.

Supplier Development

World Bank research on international supplier-development programmes informs the discussion of technical assistance, finance, management capability, buyer introductions, quality systems, clusters and export development. The evidence supports a central conclusion of this article: preference alone is less valuable than preference combined with capability building.

Saudi Arabia

Saudi local-content information is drawn primarily from the Local Content and Government Procurement Authority, the Saudi Vision 2030 Annual Report and Saudi Aramco’s current iktva reporting. These sources provide the national policy context, latest published indicators and programme results reported through early 2026.

United Arab Emirates

The UAE section uses current material from the Ministry of Industry and Advanced Technology, including the National ICV formula, certification guidelines, certified-company data and industrial-procurement reporting. ADNOC’s official ICV and Industrial Resilience Programme information provides the anchor-buyer case study.

Qatar and Oman

QatarEnergy and Tawteen provide the information used to explain Qatar’s three-pillar localisation system, ICV scorecards, future plans and procurement effects. Oman’s Ministry of Energy and Minerals, OQ and JSRS provide the information on retained value, SME expenditure, common supplier registration and energy-sector procurement.

Bahrain and Kuwait

Bahrain’s Ministry of Industry and Commerce provides the principal information on Takamul and the Made in Bahrain mark, while the Saudi Press Agency documents the Saudi-Bahraini cooperation arrangement. Kuwait Petroleum Corporation provides the definition and objectives of its PADER local-content platform, supplemented by current government-procurement guidance.

GCC Integration and Global Investment

IMF research provides the wider context on GCC value-chain integration, foreign investment, technology transfer and economic diversification. It also supports the article’s conclusion that local capability and international openness should be designed to reinforce one another rather than treated as opposites.