QnA International organizes summit on trends and challenges on trade finance in Saudi Arabia
Dubai 5 November, 2015 – Dubai based QnA International is set to host the annual Saudi Trade Finance Summit in partnership with the Saudi Arabia arm of International Chamber of Commerce (ICC). The event now in its third edition, is an exclusive by-invitation only gathering of the most influential senior finance professionals and decision makers in Saudi Arabia—the largest economy in the GCC pursuing economic diversification goals.
A
n important area for the development and diversification of domestic economies is international trade based on goods and services. This, however, requires financing provided by trade finance. “Although international trade has slowed down in the recent years, 63.3% of respondents to the 2015 ICC Global Survey on Trade Finance, reported an increase in trade finance activity,” noted Mr. Yassin Suroor, Chairman of ICC Saudi Arabia.
The increases that Mr. Suroor mentioned are partially due to organizations seeking increased financial protection for potential risks and defaults in the current turbulent world of trade emphasizing the importance of trade finance products. “Rather than focus on the negatives currently in global trade, organizations involved in trade finance should seize the opportunities to develop novel financial products suited to the current global market” commented Sidh N C, Director, QnA International.
“In Saudi Arabia,” he continued, “the availability of trade finance is paramount for newer organizations borne from the government’s economic diversification plans, which are primarily SME’s.” However, a worrying result from the ICC survey suggests SME’s accounted for 53% of all rejected trade finance transactions, “This could happen if the correct compliance procedures, protocols and rules are not followed properly, leading to the rejection of the trade finance transaction,” explained Mr. Suroor when asked about possible causes of this high rejection rate. In contrast, larger corporations have an acceptance rate of 79% of their trade finance transactions.
A particularly alarming result obtained from the ICC report are the responses on finance compliance. A staggering 80% of respondents cited anti-financial crimes compliance as an impediment to trade finance, while 70% of respondents declined transactions due to stringent anti-money laundering, and know your customer protocols. Another 46% of the banks surveyed cited compliance cost and complexity as a reason for terminating contracts. Further, 91% of respondents expect compliance requirements to increase further in the years to come.
“At the summit we aim to discuss the challenges of trade finance in the global context of slowing trade, the compliance impediment, new trade finance products focused on risk protection and how all of this can be applied to the Saudi Arabian experience to expand the sector in the Kingdom while mitigating challenging circumstances,” said Sidh N C on the relevance of the summit to Saudi Arabia.
The two day summit will feature panels on risk assessments, finance strategy, supply chain finance, and Islamic finance amongst other engaging topics. The event will be held from 10 – 11 November at the Al Faisaliah Hotel in Riyadh, Saudi Arabia.