The 2016 Jeddah Economic Forum concluded its proceedings after a three-day event held under the theme “Public-Private Partnerships: An Effective Partnership for a Better Future,” under the patronage of His Royal Highness Prince Khalid Al-Faisal bin Abdulaziz, Advisor to the Custodian of the Two Holy Mosques and Governor of the Makkah Region, and attended by a select group of economic decision-makers and officials from both the local and international spheres at the Hilton Hotel in Jeddah.
Promoting Partnership Between the Two Sectors Through Financing
During the closing session, which the forum dedicated to financing issues, Dr. Nader Mohammed, Head of the World Bank Office in Riyadh, reviewed international financing and public-private partnerships as well as economic policies and reforms that improve credit ratings. He called for encouraging partnership between these two sectors and streamlining certain procedures related to investment and strategic planning to achieve the goals of this partnership, which require financing, liquidity, and an effective administrative system, emphasizing the development of the bond market as an indicator to support financing and investments, alongside Islamic institutions that invest in asset management.
The session also addressed the role of finance in strengthening this partnership, particularly in the areas of education and health, as well as the economic conditions currently facing the world, as well as Islamic finance, international finance, operations in the global economy, positive outcomes, the impact of these factors on the partnership between the two sectors, the successes achieved, oil prices, their impact on this partnership, and our efforts to stimulate the economy.
For his part, Dr. Ahmed bin Abdulkarim Al-Khulaifi, Deputy Governor of the Saudi Arabian Monetary Agency for Research and International Affairs, stated that the banking sector in the Kingdom is a major economic force in terms of the volume of financing and deposits, noting that the Kingdom’s banking sector has previously extended loans to many foreign companies, particularly those with high credit ratings.
The volume of bank lending to companies: 85%
Al-Khalifi explained that the volume of bank lending to companies in the Kingdom reached 85%, with the remainder going to individuals and small and medium-sized enterprises (SMEs), which account for 2 percent of total bank lending. Meanwhile, small enterprises rely on, which account for 40 % of the Kingdom’s GDP; they deserve to be supported through financing so they can play a positive role. Al-Khalifi addressed Islamic finance in the banking sector, which has seen remarkable success both locally and internationally, noting that the G20 has shown great interest in Islamic banking and the issuance of sukuk or tawarruq, which account for 48% in the Kingdom, He noted that ethical investments—or financing compliant with Islamic Sharia—align with human nature; furthermore, the justice that characterizes Islamic finance makes it a fertile ground for promoting ethical investments, which has significantly contributed to its global spread among banks seeking to improvebanking and financing systems.
Developing and Supporting Small Businesses
Tom Paulson, CEO of Al-Falah Capital, emphasized the importance of financing and support for small businesses, noting that it contributes to the development of their services and, consequently, fosters cooperation between the two sectors, while ensuring the continuity of this financing until these projects—which support and develop ideas and innovations, particularly in schools and among youth—are improved, emphasizing the importance of planning for this by revising regulatory policies to finance these small enterprises.
Focus on the Middle Class
His Excellency Moliman Darmancia Haddad, Chairman of the Board of Commissioners of the Financial Services Authority, noted that the topic of Islamic finance is of utmost importance, especially if supported by a sound infrastructure and the development of the Islamic capital market, noting that most bank deposits worldwide are long-term and that the regulatory environment for banks has become complex. This environment must be reviewed, particularly with regard to financing operations and the development of this market, and we must deepen our understanding of the capital market to provide the fundsfor the success of Islamic financing.
He emphasized the importance of focusing on the middle class in society in the process of Islamic financing, given its rapid growth in many countries, which will help highlight the advantages of Islamic financing and foster cooperation with emerging markets to bridge the existing gap in this field.
