Investment Banking Critical for Kingdom
Maha Akeel, Arab News 

JEDDAH, 30 April 2006 � Challenges facing Saudi Arabia�s banking sector due to likely competition from multinational institutions in the aftermath of its World Trade Organization (WTO) membership were among the subjects discussed at a daylong seminar organized by the GlobeInvest Banking Forum at the Jeddah Hilton [April 29]. Dr. Nahed M. Taher, CEO, GulfOne Investment Bank, was the keynote speaker. Her topic was: Why Investment Banking is Critical Today. 

Jeddah Chamber of Commerce and Industry Chairman Abdullah Al-Muallami opened the forum and Amr Khashoggi, chairman of the JCCI�s international relations committee (IRC) and Saudi German Business Group of Jeddah (SGBG) delivered the welcome address. 

Banking, financial and investment experts and businessmen attended the event, which was conducted by Ranya Bajsair, coordinator, JCCI-IRC.

There is a perception all over the world that with high oil prices, the Gulf region has solid liquidity with huge surpluses of funds to finance its current and future projects, Nahed said, adding, �This implies that they have no problems in conquering their future structural bottlenecks and finance.� �This is incorrect,� said Nahed, a strong proponent of the Kingdom�s economic liberalization and reform in the interest of its burgeoning population and sustainable economic development. �It�s incorrect because of the lack of proper investment banking activities and long-term debt tools that misutilize much of the incoming funds and hinder the development, depth and expansion of the private sector�s role in the economy, which is essential for bringing efficiency and acceleration to our economic growth,� she said.

Consequently, banks have not seen the return of overseas Saudi funds as has been predicted although investment banking is at the heart of Islamic principles based on profit-sharing and asset-based rather than interest-bearing, she added.

She noted that the region is passing through a transitional period in shifting from high dependence on oil, trade and construction to knowledge-based and sustainable lucrative productive sectors. �At present, GCC economies have huge financing requirements for long-term mega-investment opportunities estimated at over $1 trillion by 2020. Despite that, there�s a serious funding gap in the region,� Nahed said. 

Al-Muallami said the forum, organized by the JCCI-IRC and SGBG, was taking place at an opportune time. �The banking sector has remained under some sort of protection, but this cannot continue. The challenge is represented primarily in how to develop the mechanism, services and human resources. Our economy is eager to open and can overcome various challenges,� said the former Jeddah mayor.

Khashoggi spoke about the role of IRC in connecting Jeddah to the world with the purpose of facilitating economic prosperity, spiritual understanding and multicultural cooperation. 

�The forum is designed to go beyond traditional banking topics and focus extensively on some of the rarely discussed subjects that are integral to investment banking, such as securitization and other structured credit products as alternative tools for financing and risk transfer, investment opportunities in emerging economies, wealth management in difficult times, Islamic sukuk and capital markets in the Gulf as key to sustainable economic growth. 

Sponsors of the forum included E.A. Juffali & Brothers, Gulf One Investment Bank, Bank Aljazira, Safra Co. Ltd., Buchanan Capital Group and Shairco. Media sponsors were Arab News, Asharq Al-Awsat and Al-Eqtisadiah. 

-- With input from Khalil Hanware and K.S. Ramkumar

Reprinted with permission of Arab News.

• An Open Letter from a Saudi Businessman: Amr Khashoggi - SUSRIS IOI - Jan. 12, 2006

• Saudi Economic Performance: A Conversation with SAMBA Chief Economist Brad Bourland - SUSRIS IOI - Feb. 27, 2005

• Reform and Terrorism in Saudi Arabia - A Roundtable Discussion with Amr Khashoggi - SUSRIS IOI - Oct. 18, 2004

• Arab World Economies: Prosperity Amidst Political Uncertainty - Brad Bourland - SUSRIS IOI - Sep. 23, 2004

• "A Saudi Vision For Growth" - Women Make Their Mark at Jeddah Economic Forum - Lubna Olayan's Keynote Address

• Strengthening Arab-US Relations: What is Required? - A Saudi View of the Palestine Problem - SAF IOI - Oct 11, 2003

Saudi Arabia's Accession to the WTO: Is a "Revolution" Brewing? - Middle East Policy Council Capitol Hill Conference Series on US Middle East Policy:

• Part 1 - Introduction by Ambassador - Chas Freeman

• Part 2 - William Clatanoff: On American Interests

• Part 3 - C. Christopher Parlin: On The Saudi Perspective

• Part 4 - Robert Jordan: A Diplomat's View

• Part 5 - Kestenbaum: Boots on the Ground

• Part 6 - Jean-Francois Seznec: A Look At Future Growth

Jeddah Chamber of Commerce and Industry