Q1: What is iktva program?
The In Kingdom Total Value Add (iktva) program is designed to drive domestic value creation and maximize long-term economic growth and diversification to support a rapidly changing economic environment.
Q2: What is the objective of the iktva program?
iktva recognizes prioritization of domestic value creation. It is designed to drive increased investment, economic diversification, job creation, and workforce development within the Kingdom. By 2021, at Saudi Aramco we aim to achieve 70% localization of all spending, creating a business environment that will provide thousands of new jobs, and enable 30% export of Saudi energy sector products.
Q3: What does iktva mean to existing and potential new suppliers?
As well as enabling a sustainable Saudi energy sector, iktva provides a level playing field for suppliers through consistency and transparency in application and process. Uniform evaluations for both service and material suppliers will be consistent across the company, creating supplier-focused partnerships, and investment stability and assurance achieved through annual assessments.
Q4: How does the iktva program work?
The program will first establish an iktva baseline score for each supplier measured against key metrics for local value creation. With the supplier, we will then jointly develop an action plan to increase the iktva score. Thirdly, we will measure performance and track progress to ensure the relationship results in continued local value creation.
Q5: Who will benefit from iktva?
The benefits of a strong and sustainable economy are widespread and long-term – quality jobs for a growing Saudi population, innovation and diversification of industry, and improved global competitiveness through increased exports.
In addition to the direct benefits of our investment in their goods and services, suppliers will gain access to a growing, higher skilled Saudi workforce and will be recognized as prioritizing value creation which can lead to increased opportunity for expansion into markets across the Kingdom, the GCC region, and the world.
Q6: What are the parameters to measure iktva? And how is it calculated?
A. Localized goods and services
B. Salaries paid to Saudis
C. Training and development of Saudis
D. Supplier development spending
r. Research & Development X. Export Revenue Factor (%)
E. Company revenue
Q7: How was the consultation process conducted for iktva?
We understand that achieving our objective of 70% localization of all spending by 2021 requires collaboration, commitment and trust. An extensive consultation program was conducted which included representatives of the major supplier sectors to develop and refine iktva.
Additionally, a successful pilot phase engaged more than 100 companies across sectors in Kingdom and internationally to ensure we created a level playing field for all our existing and future suppliers.
Q8: When is this program taking effect?
The iktva program was launched on an event on December 1, 2015
Q9: Do you need to comply with iktva to do business with Saudi Aramco?
A bedrock of our strategy at Saudi Aramco is to drive domestic value creation in every aspect of our business. iktva reorients the dynamics of our business partnerships with more than 1000 existing suppliers to this effect, and we will work collaboratively with all suppliers that chose to participate, to develop action plans and ensure our relationships are mutually beneficial and focused on domestic value creation.
Q10: How would iktva affect your existing business with Saudi Aramco?
The dynamic has necessarily changed with a value proposition focused on the future. We have historically awarded contracts on the basis of technical compliance and lowest cost. Moving forward, participation in iktva will be one of the components used to evaluate any supplier proposal.
Q11: Who is iktva applicable to? (E.g. suppliers, manufacturers, service providers)
All suppliers who we are engaged with – suppliers, manufacturers and service providers – will be encouraged to participate in the iktva program.
Q12: Does iktva apply to both local and international businesses?
iktva will be a component in the evaluation for all awarded contracts and agreements – local and international. It does not discriminate in any way between in-Kingdom and out-of-Kingdom suppliers.
Q13: How can iktva benefit your business?
iktva recognizes prioritization of value creation. Increasing the iktva score has the potential to increase business with us at Saudi Aramco, others in Saudi Arabia, and the GCC region. It drives toward developing a local cost-effective workforce, making goods and services more competitive locally, regionally and globally.
This program has the potential to help companies develop new products, services and technologies through partnerships in and outside of the Kingdom. All of which will lead to greater business performance and a more diversified economy.