Why LRIP launched in the Abu Dhabi?
The program aims to create a conducive investment environment by addressing the concern of industrial land’s high price in Abu Dhabi. LRIP seeks to provide favourable environment to the industrial investors through low rent rates and long-term contracts for new industrial investments that are eligible to register in this program.
The program was launched to achieve the following objectives in industrial sector of Abu Dhabi:
- Develop targeted sub-sectors
- Attract new Foreign Direct Investments
- Increase occupancy of Industrial land
- Enhance the economic impact of the industrial sector
- Boost the productivity of manufacturing entities by encouraging technological transformation
As a series of Abu Dhabi economy enhancement programs of 'Ghadan 21’, Industrial Development Bureau (IDB) launched the LRIP initiative at the end of year-2022.
New manufacturing companies in Abu Dhabi from specified sectors including Electrical or Electronics Manufacturing, Machineries Manufacturing, Transportation Manufacturing, Chemical Manufacturing, Pharmaceuticals and Food Processing, who wish to avail rebate on land rent are required to prepare and declare their LRIP score to Certifying Bodies empaneled by Department of Economic Development (ADDED).
New manufacturing companies are eligible to join LRIP within the cut off dates as below:
- Manufacturing companies holding “under construction” license issued for by ADDED.
- Manufacturing companies holding “Production License” that are less than 6 months old from the date of LRIP application.
Incentive is based upon the percentage of score achieved which is tabulated below:
| Category | Score | Rate/Sqm* (AED) | |
|---|---|---|---|
| A | >= 80% | 5 | |
| B | Between 60%-79% | 7.5 | |
| C | Between 50%-59% | 10 | |
*Prices are subject to change.
If the score of applicants is below 50%, the contractual rates are applied. Also for plot size of above 50,000 sqm, manufacturing entity will borne standard rate as per their lease agreement for plot size in excess of 50,000 sqm.
The program was established to resolve some of the current issues facing the new industrial investors in Emirate of Abu Dhabi. The land rent rates had an enormous increase in the past years, which created burden on manufacturing operations.
LRIP has enabled new entrants in specified manufacturing sectors in Abu Dhabi to save significant amounts on their land rent cost, which is the one of the foremost objectives of seasoned entrepreneurs to do business in cost effective manner.
Entry eligibility criteria of LRIP evaluates new manufacturing entities on fulfilment of requirements to allow rebate for retroactive construction phase (rebate of upto 1 year maximum after rent free grace period) after obtaining valid Production License.
From year 2 onwards, manufacturing entities will be evaluated against specific set of requirements to continue availing the level of rebate depending on the category achieved. Rebate will be paid upon renewed certified score and completion of rental year.
To acquire the LRIP Certificate, manufacturing entities need to have below listed details:
- Valid management accounts of atleast 6 months for new manufacturing entities
- IFRS compliant audited financial statements for already enrolled manufacturing entities
- Supporting documents as per required LRIP score contributory factors
- Land lease contract with Tawtheeq
LRIP Score is determined based on following factors for newly established manufacturing entities:
Entry Eligibility Criteria for newly established manufacturing entities
| Attribute (%) | Score Weightage (%) |
|---|---|
| Investment | 30 |
| Investment top up | 20 |
| Supply chain support | 30 |
| Industry 4.0 Readiness | 20 |
Yearly control measure from year 2 onwards
LRIP Score is renewed based on following factors for already enrolled manufacturing entities:
| Attribute (%) | Score Weightage (%) |
|---|---|
| Investment | 10 |
| Investment top up | 05 |
| Emiratisation | 10 |
| Emiritisation numbers | 05 |
| Skilled labour | 10 |
| Supply chain support | 10 |
| Productivity | 30 |
| Spending on Abu Dhabi based Labour Housing | 20 |
Land Rebate Incentive Program (LRIP) Score Improvement Consultancy
We understand the importance of doing business in cost effective manner and so our client’s need to avail available government incentives to reduce cost of business operations, hence we have developed a specialised sub service line in our firm who is well versed with all LRIP Score effecting parameters and therefore we recommend score improving measures to our clients that are achievable by business process re-engineering and corporate restructuring.
Our ‘Score Impact Analysis Consultancy Report’ identifies areas of score improvement in each of the score contributory factors of the LRIP Program and includes recommendations of measures to implant for increasing score in accordance with LRIP Guidelines, thus enabling our clients to save significant amounts in each fiscal year by availing rebates on land rent through LRIP promulgated by the Industrial Development Bureau (IDB) of Abu Dhabi Department of Economic Development (ADDED).
How we stand out as an Expert LRIP Consultant
LRIP requirement is substantially same as of Energy Tariff Incentive Program (ETIP) requirements, which is another incentive program launched by ADDED for manufacturing companies in Abu Dhabi to avail incentives on Electricity and Gas tariffs.
Our managing partner is experienced in massive number of ETIP engagements in PJSCs, MNCs and large sized regional manufacturers from Big Four Accounting Firms, right from the implementation of the ETIP Program by ADDED in mid 2019, therefore we are an expert ETIP and LRIP Consultants with required level of knowledge and confidence to deal with any requirement of our clients with respect to arrangement of LRIP Certificates and drafting of LRIP Score Improvement Plan in accordance with pertinent guidelines.
Being expert LRIP Consultants we are well-aware of the updated Guidelines by IDB and ADDED and have deeply rooted assimilation with dynamics that effect LRIP score in any business environment.
In addition to our expert LRIP knowledge and experience, we go extra miles with our clients to stand out the competition by performing below activities during our service delivery:
- Preparing LRIP template of our clients by ensuring that all the LRIP score gaining areas are included in the template to achieve optimal score that our clients are eligible to in accordance with guidelines
- Making our clients understand about the parameters of LRIP score and the determining factors that affect the score in respective business case.
- Prepare working files in a way to ensure seamless approval of our client’s LRIP Certificate.
- Ensuring that only relevant information is required that have notable effect on the LRIP Score of our clients, to avoid unnecessary delays in gathering and verifying information.
