Saudi Arabia Uncovers its Massive Trade Finance Potential

A two day conference in Radisson Blu Hotel, Riyadh on the 10^th & 11^th December saw the leading corporate & conglomerates meet the Banks and financial institutions for the first time under one platform to discuss the challenges, trends and booming potential of Trade Finance.

With topics ranging from Macroeconomic view, Islamic Finance, commodity financing, Risk Management, liquidity issues to supply chain management and alternative sources of financing, the summit saw a stellar lineup of speakers discuss & debate on these hottest topics.

  “We live in a globalized world; organizations need to protect themselves against commercial risks (unwillingness to pay and bankruptcy). The conference will raise awareness on the importance of Trade Finance.”  Said His Excellency Walid Abukhaled, Deputy Minister for Industrial Affairs, Ministry of Commerce & Industry

Trade finance around the world is on a rise, post-recession. People have understood the significance & importance of the latest tools & techniques used in finance in order to gain an edge over the competition viz. the leading conglomerates & MNCs. Sameer M. Sehgal, MD EMEA, CitiBank sharing  his views on global trade said, “By common consensus, the three biggest secular trends of our age are – Globalisation, Urbanisation and Digitisation, respectively. Its noteworthy that each of these trends has a close connection to the world of trade.”

Not only across the globe but in the GCC also the rise in confidence in trade finance as a preferred tool of financing is seen as a growing trend. “Across the GCC region, Trade Finance has been growing on the back of a buoyant economy and clients are today looking at alternative financing options which can assist in the growth of the business. Today Banks are focusing on effective working capital management for clients and Banks in the region look to Trade Finance to support this growth” said Krishnakumar Duraiswamy, Senior VP & Head of Trade Finance, Abudhabi Commercial Bank

The Kingdom of Saudi Arabia is a hotspot when it comes to trade, being the largest economy in the middle east and having higher working capital, lesser liquidity issues automatically makes it a desirable market for trade finance.  Ahmar Azam, CFO, Obeikan Education & Retail added on to this fact and said, “This region is experiencing phenomenal growth which is being spearheaded by the Saudi Arabia along with other GCC countries. Trade Finance and related products are maturing at a fast pace with best practices evolving day by day. Companies are becoming more agile and sophisticated in their liquidity management and promptly learning and using trade finance products more effectively. This conference is timely and is expected to provide the required platform for finance, risk and business leaders to learn from each other in areas of trade finance and how finance, liquidity, risk management and supply chain are affected by it.”

Emphasizing on the role of the banking sector in Saudi Arabia & backing the potential of Saudi banks to become global hubs, Dr. Ahmed Telfah, VP, Chief Economist, Riyad Bank quoted  “Saudi banks play a dynamic and energetic role in promoting trade activities. This is reflected through the fact that the international trade activities in Saudi Arabia were among the fastest to recover after the recent global economic meltdown. Merchandise imports by Saudi Arabia grew by 63 percent compared to their level in 2009, while the growth was 24 percent for the world, 20 percent in the advance economies and 33 percent in emerging countries. Banks’ contribution in putting Saudi trade back on track was prominent, as the value of Letters of Credit (LCs) issued by Saudi banks to finance imports by private parties increased by 71 percent since that year.

The timing of the Summit is also significant, as it comes after the end of the World Trade Organization (WTO) Ministerial Conference in Bali, Indonesia, on December 3-6. On this conference, hopes will be revived to get world trade back to the multilateral trade negotiations after the protectionism and bilateral and regional negotiations that prevailed after the economic crisis” said Dr. Ahmed Telfah, VP, Chief Economist, Riyad Bank

Also, Highlighting this exponential increase in popularity of Islamic Trade Finance in Saudi Arabia , Yasser Dahlawi, CEO, Shariyah Review Bureau said “Thomson Reuters The Global Islamic Asset Management report (2014) indicated that Saudi Arabia is one of three prominent markets that house 70% of the Global Islamic fund.  That shows the importance of the GCC market and in particular the Saudi market.

 On a different note, through the advancement of the Sharia advisory services globally, it’s easier and more cost effective now for business to be Sharia compliant.”

The two day conference organized by QnA International, will be chaired by Mr Adnan Shaikh, Deputy GM – internal audit from SABB as the conference chairperson. This one of a kind summit has caught attention of not only the Saudi banks but also the financial institutions worldwide looking to expand and work with one of the richest economies in the GCC, the Kingdom of Saudi Arabia.

Saudi Arabia has once again opened doors to the future & growth by embracing the best financing options and indulging into the latest trends, technologies, strategies & techniques of Trade Finance.