TEC (Tawazun Economic Council) Presentation DSMC Event July2012

1. TAWAZUN ECOMONIC PROGRAM
INDUSTRIAL DEVELOPMENT UNIT
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2. OVERVIEW
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3. Background
The Program was established in early 1992 by the
ESTABLISHMENT Tawazun Economic Council (Previously known as the
Offset Program Bureau)
Chaired by H.H. Mohammed bin Zayed Al Nahyan, Crown
CHAIR Prince of Abu Dhabi, Deputy Supreme Commander of the
UAE Armed Forces
To drive economic and commercial value from the
AIM country's extensive defense procurement program
By partnering with world-class players, the Program has
RESULTS created several multi-million dollar economic and
industrial joint ventures
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4. Objectives
• DEVELOP modern defense industry in UAE through building related industrial infra-
structure
• PROMOTE partnerships between the national and international industrial leaders to
facilitate modern technology transfer
• CREATE employment opportunities for UAE Nationals in specialized fields
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5. HOW IT WORKS
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6. Procurement process
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7. Threshold “Based on contract value”
GHQ contract GHQ contract
US$ 0-10M US$ 0-10M
30% (MAX)
As input
contributions
No obligation
(within 5 years)
70% (MIN)
As output
contributions
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8. Min. % required (Based on a study made on 2010)
60 %
of purchase
contract value
172
180
160
140 120 117
120 102 100 100 100
Avg
100 101
80 60
60
40
40
20
0
Austria United The Norway South Africa Philippines Canada UAE Saudi Arabia
Kingdom Netherlands
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9. Duration and Milestones
5% 10% 10% 15% 15% 20% 25%
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7
Upfront Grace period Fulfillment period (7 years)
UPFRONT GRACE PERIOD
Determined by the complexity of the project
• Construction of facility
• Import of Machinery
• Export licenses
• Etc.
MORE PLANNING = MORE REWARDS!
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10. Hybrid Model – Input and Output
INPUT CONTRIBUTIONS OUTPUT - RESULTS GENERATED
(MAX. 30% OBLIGATION) (MIN. 70% OBLIGATION)
Knowledge
Industry Enablers
Empowerment
Net Profit / Hiring UAE
Export Sales Nationals
Equity Contribution
INPUT VALUE OUTPUT VALUE
(Multiplier between 1.0 – 2.0) (Multiplier between 2.0 – 5.0)
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11. Hybrid Model – Input
COMPONENTS OF INPUT VALUE
Industry Enablers
 Achieving Certification.
INPUT CONTRIBUTIONS  Setting up and implementation of management
(MAX. 30% OBLIGATION) system processes.
 IP contribution. (Provision of license)
Knowledge Transfer of
Industry Enablers  Start-up team. (Expertise by DCs)
Empowerment Technology
and
Know-How Knowledge Empowerment
 Establish JV specific apprenticeship program.
Equity Contribution  Develop industry specific local expertise,
based on and related to apprenticeship
program.
INPUT VALUE  Facilitate scholarship program benefiting JVs.
Equity  Cash Contribution.
Contribution
 In-kind: Current value of Machines.
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12. Hybrid Model – Output
MAIN ACTIVITIES MULTIPLIER
Export % of Additional
Sales Multiplier
OUTPUT - RESULTS GENERATED
(MIN. 70% OBLIGATION) 5% - 20% 1.5
21% - 50% 2.0
Net Profit / Hiring UAE 51% & above 3.0
Export Sales Nationals
BONUS ACTIVITIES MULTIPLIERS
% Nationals Additional
OUTPUT VALUE Total employees Multiplier
10% - 30% 1.0
31% - 70% 1.5
71% & above 2.0
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13. Underperforming
8.5% Bank Guarantee
5% 10% 10% 15% 15% 20% 25%
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7
Shortfall
50% 50% Unfulfilled obligation will be
Penalty will be wiped-out rolled-over to
default account
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14. Business Focus Areas
Systems & Components
Land & Naval Munitions & Weapon
Defense Systems Systems
Industry
Autonomous
Systems
Manufacturing
Aerospace Systems Advanced Materials
System Program
Design Engineering Manufacturing Testing MRO
Integration Management
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15. Business Focus Areas
Precision
Land Systems Aerospace Munitions
Manufacturing
Aero Engine
COMPONENTS Precision machining
Armored Vehicles Aero structure parts Guided Ammunition
&
Advanced Material Naval Systems Other Technologies &
Weapon systems systems
SYSTEMS
Oil drilling rig
Advanced Armoring
systems Ship building Systems Oil & gas separator systems
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16. Examples of accepted projects
76mm multirole modular system Production and assembly of the
Maintenance, repair and overhaul
and guided ammunition 8x8 and 6x6 vehicles
AMMROC SAMOUM 8X8 Vehicles
Ammunition Manufacturing Advanced Material Manufacturing 25/30 mm turrets
Non-lethal Metallic Surface
Burkan Composite Siham Al Khaleej
Ammunition Precision Treatment
Remote Controlled Weapon
Shipyard Building Autonomous System
Systems
Remote Controlled Weapon Systems Etihad Ship Building Industrial Cooperation
Advanced Ammunition System
Short Range Air
Anti Ship Missiles
Sefense System
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17. THANK YOU!
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