LOC18:31
15:31 GMT
KUWAIT, Oct 25 (KUNA) -- The strong capabilities for commercial growth of
the Organization of Islamic Cooperation (OIC) countries, especially Middle
East and the GCC ones, along with interest in Islamic finance, enable Islamic
trade finance sector to be a promising sector in the near future, showed a
report by Kuwait Finance House (KFH).
But, Islamic trade finance in its current state is still a small sector
compared to global trade finance industry as a whole, the KFH-compiled report
entitled: "Reality and Growth Opportunities", said.
The Islamic finance focuses on supporting concrete economic businesses, and
commercial finance is one of business sectors that fit with the principles of
Sharia (Islamic law), so Sharia-compliant banks are in a good position to take
advantage of financial flows from the OIC, it indicated.
The geographic composition of world trade has shifted to reflect the
divergent growth performance of the developed and emerging economies. Emerging
countries are now an increasingly significant part of the global economy as
these economies grow wealthier, entailing shift towards higher domestic
demand. Within the emerging markets, OIC member countries and in particular
Middle East and North African (MENA) region countries are also gaining
importance in the global trade sphere, it added.
The MENA region is expected to experience an impressive 131 percent
compound annual growth rate (CAGR) increase in trade during the period
2012-2026. The corresponding figure for the increase in global trade during
the same time period is 86 percent. In addition, intra-OIC trade rate is
targeted to be 20 percent by 2015, it suggested.
As per market estimates, total trade financing amongst the OIC member
countries, including Saudi Arabia, Malaysia and Turkey stood just under USD 4
billion in late 2012, the report noted.
In MENA and OIC in general, the Islamic trade finance sector has been
supported by Islamic Development Bank (IDB), a leading multilateral
development agency. A major IDB initiative for promoting Islamic trade
financing is the setup of International Islamic Trade Finance Corporation
(IFTC). As per ITFC 2013 statistics, it has approved Islamic trade
transactions worth USD 4.4 billion in 2012, reflecting a 47 percent increase
from USD 3.03 billion in 2011, the KFH report concluded. (end)
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