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TAWAZUN ECOMONIC PROGRAM

INDUSTRIAL DEVELOPMENT UNIT

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OVERVIEW

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Background

ESTABLISHMENT

CHAIR

AIM

RESULTS

The Program was established in early 1992 by the

Tawazun Economic Council (Previously known as the Offset Program Bureau)

Chaired by H.H. Mohammed bin Zayed Al Nahyan, Crown

Prince of Abu Dhabi, Deputy Supreme Commander of the

UAE Armed Forces

To drive economic and commercial value from the

country's extensive defense procurement program

By partnering with world-class players, the Program has

created several multi-million dollar economic and

industrial joint ventures

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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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HOW IT WORKS

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Procurement process

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Threshold “Based on contract value”

30% (MAX)

As input

contributions

70% (MIN)

As output

contributions

No obligation

(within 5 years)

GHQ contract

US$ 0-10M

GHQ contract

US$ 0-10M

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Min. % required (Based on a study made on 2010)

60 %

of purchase

contract value

0

20

40

60

80

100

120

140

160

180

Austria UnitedKingdom

TheNetherlands

Norway South Africa Philippines Canada UAE Saudi Arabia

172

120 117

102 100 100 100

60

40

Avg

101

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Duration and Milestones

5%

Upfront Grace period Fulfillment period (7 years)

10% 10% 15% 15% 20% 25%

Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7

Determined by the complexity of the project

• Construction of facility

• Import of Machinery

• Export licenses

• Etc.

UPFRONT GRACE PERIOD

MORE PLANNING = MORE REWARDS!

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Hybrid Model – Input and Output

INPUT CONTRIBUTIONS

(MAX. 30% OBLIGATION)

Industry Enablers Knowledge

Empowerment

Equity Contribution

INPUT VALUE

(Multiplier between 1.0 – 2.0)

OUTPUT - RESULTS GENERATED

(MIN. 70% OBLIGATION)

Net Profit /

Export Sales

Hiring UAE

Nationals

OUTPUT VALUE

(Multiplier between 2.0 – 5.0)

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Hybrid Model – Input

INPUT CONTRIBUTIONS

(MAX. 30% OBLIGATION)

Industry Enablers Knowledge

Empowerment

Equity Contribution

INPUT VALUE

COMPONENTS OF INPUT VALUE

Transfer of

Technology

and

Know-How

Industry Enablers

Achieving Certification.

Setting up and implementation of management

system processes.

IP contribution. (Provision of license)

Start-up team. (Expertise by DCs)

Knowledge Empowerment

Establish JV specific apprenticeship program.

Develop industry specific local expertise,

based on and related to apprenticeship

program.

Facilitate scholarship program benefiting JVs.

Equity

Contribution

Cash Contribution.

In-kind: Current value of Machines.

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Hybrid Model – Output

OUTPUT - RESULTS GENERATED

(MIN. 70% OBLIGATION)

Net Profit /

Export Sales

Hiring UAE

Nationals

OUTPUT VALUE

MAIN ACTIVITIES MULTIPLIER

Export % of Sales

Additional Multiplier

5% - 20% 1.5

21% - 50% 2.0

51% & above 3.0

BONUS ACTIVITIES MULTIPLIERS

% Nationals Total employees

Additional Multiplier

10% - 30% 1.0

31% - 70% 1.5

71% & above 2.0

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Underperforming

5% 10% 10% 15% 15% 20% 25%

Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7

Shortfall

8.5% Bank Guarantee

Unfulfilled obligation will be

rolled-over to

default account

Penalty will be wiped-out 50% 50%

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Design Engineering

Defense

Industry

Manufacturing

System

Integration Manufacturing

Program

Management

Systems & Components

Land & Naval Systems

Munitions & Weapon Systems

Aerospace Systems Advanced Materials

Autonomous Systems

MRO Testing

Business Focus Areas

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Land Systems

Advanced Armoring

systems

Aerospace

Aero Engine

Aero structure

Precision

Manufacturing

Precision machining

parts

Munitions

Guided Ammunition

Weapon systems Advanced Material

Armored Vehicles

Naval Systems

Ship building Systems

Other Technologies & systems

Oil & gas separator systems

Oil drilling rig

COMPONENTS

&

SYSTEMS

Business Focus Areas

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Examples of accepted projects

Production and assembly of the 8x8 and 6x6 vehicles

76mm multirole modular system and guided ammunition

SAMOUM

Maintenance, repair and overhaul

AMMROC 8X8 Vehicles

Advanced Ammunition System

Short Range Air

Sefense System Anti Ship Missiles

Manufacturing 25/30 mm turrets Advanced Material

Metallic

Precision

Ammunition Manufacturing

Burkan Siham Al Khaleej Non-lethal

Ammunition Composite

Surface

Treatment

Autonomous System Shipyard Building

Etihad Ship Building

Remote Controlled Weapon Systems

Remote Controlled Weapon Systems Industrial Cooperation

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THANK YOU!