Saudi Arabia’s economy to see a better future with the rise of trade finance

4139What was considered as a whiff of trade finance in the Kingdom of Saudi Arabia has gradually picked up pace since. Clear vision and stupendous leadership has successfully steered the Kingdom’s economy on the tides of fluctuant market.

Things are not like they used to be in the Trade Finance sector of Saudi Arabia. There is a dramatic shift towards building an understanding on the latest tools and technologies in the trade finance function as well as a thirst in Saudi’s to implement the state of the art techniques to bolster their economy. “The International Monetary Fund (IMF) expects the Kingdom to achieve a growth rate above 4% in 2014 and 2015, led by government spending and robust private sector activity. The Saudi Government has been emphasizing increasing non-oil exports from the Kingdom. As a result, the total value of KSA’s non-oil exports reached a record high of around US$ 55bn during the Year 2013, reflecting a 9% increase from the year before. We see non-oil exports gaining more strength in the coming years. Total imports in the kingdom touched around US$ 164 bn in the year 2013 reflecting around 5.50% increase from the year before. With import volumes growing in the coming years, we expect an increase Trade Financing Solutions including Bank Payment Obligation and supply chain finance will grow in the coming years. Mega Projects such as Riyadh Metro and the forthcoming new projects in the Kingdom will boost Import LC business, as these mega projects require importing of materials, etc. for executing the projects.” says Ossama Abdulbaqi A. Bukhari, Executive Vice President & Division Manager, Corporate Banking Group, Riyad Bank.

The financial climate is seeing positive signs of growth with the advent of Saudi Arabia’s prime focus on building its infrastructure. According to Abdulrahman Moulay, CFO, Fawaz Al Hokair Group, “The International trade community is becoming closer than ever and is expected to do so in the future. With the WTO, the world is becoming a large business village.  Trade finance will be an instrumental tool to achieve this objective.  I think with clearer terminologies and better understanding of concepts, more merchants will join in and everybody wins. As the Kingdom of Saudi Arabia is investing in its infrastructure, there will be an increased need for Trade Finance and I think the Saudi trade finance Summit is an excellent opportunity to post awareness and promote concepts and enhance knowledge.”

Once considered unreachable, the relaxation of certain laws has caused a surge of trade within the Kingdom. This coupled with the trade finance opportunities is a boon for Gulf’s largest and most powerful economy – Saudi Arabia. “The trade finance businesses in the most of foreign countries that are trade partners to Saudi Arabia have evolved over last two decades significantly and continue to evolve with great pace, with ever-new products and solutions being introduced regularly. These are Products that provide buyers and seller credit for e.g under the concept of Forfaiting and Reverse Forfaiting, other products like Factoring; and now introduction of BPO (Bank Payment Obligation) as one of the latest innovation in Trade Settlements. Additionally Thus one of the trends foreseen in near future is Saudi Arabian Financial market to embrace many new/innovative Trade Finance products and solutions, with demand gradually increasing.” says Anjum Noman Mirza, Head of Trade Finance Sales, Banque Saudi Fransi

Riyadh Bank’s EVP, Osama further says, “Apart from the increase in the import and exports of trade goods, the sustained impetus of the government on infrastructure spending has led to increase in Capital goods for projects in the Kingdom. For Instance, Letters of Credit issued by KSA Banks in Y2013 amounted to US$ 54bn compared to US$32bn issued in Y2009. (Source SAMA website)”

Measures are being taken by the Ministers and leaders of Saudi to diversify the non-oil exports and boost trade. The rise in trade encourages the use of trade finance, hence accentuating the need to utilize trade finance options and know more about this sector.” Abdulrahman further adds, “The Kingdom of Saudi Arabia is moving ahead with serious and rapid plans to diversify its sources of income from an oil based economy to include other sources of income such as tourism, manufacturing, and petrochemicals, etc.  I think this conference will shed lights on this and will help promoting aspects and concepts of trade Finance to achieve this objective.”

Smart businesses have understood this need and are set to tap the latent opulence of trade finance and have hence decided to join the 2nd Annual Saudi Trade Finance Summit, the Kingdoms premier trade finance gathering. The conference is set to bring forth the burning topics in the trade finance function that will shape the Kingdom’s economy. Taking place on 05th – 06th of November 2014 at the Al Faisaliah Hotel in Riyadh, this one of a kind event is going to reveal the future of trade finance, thus, taking a positive step to rub shoulders with other developed nations on the trade finance front and to become Middle East’s trade hub. Massimiliano Leopardi, CFO, Sadara Chemical Company says “It is very important to have such conference in today’s time with mentioning the economic & risk benefits that are rising from utilizing Trade Finance.”

During the two day program, Banks, Legal Firms, Insurance Companies, Technology Companies, Risk Management companies and other financial institutions will come together to meet Government organizations, trading companies, corporate and conglomerates from the region. The summit is organized by QnA International based out of Dubai.

Some of the biggest banks and trade finance experts and service providers are sponsoring and supporting this powerful initiative. Riyad Bank and National Commercial Bank Saudi Arabia are the Platinum Sponsors, with Banque Saudi Fransi, BNP Paribas and SAP Middle East supporting this one of a kind concept as the Gold Sponsors. Bank Muscat is partnering at a Silver Sponsor level and the Bronze level of sponsorship is taken up by The Islamic Corporation for the Insurance of Investment and Export Credit and The Arab Investment and Export Credit Guarantee Corporation. Additionally, CNBC Arabia, Eye of Riyadh and Cash and Trade Magazine are the media partners for this must attend summit.

“In a glut of conferences and summits with a never ending canvas, it is always refreshing to find a niche offering that focuses on one crucial aspect of the business chain. Saudi Trade Finance Summit gets that spot on!” says Asher Noor, CFO, Al Touq group

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