Dubai is studying plans to establish the world's first fully Sharia-compliant export credit agency in a bid to double trade flows over the next five years.
Known as Dubai Exim Bank, the facility would assist in financing the export of goods and services to foreign markets. It would operate according to Islamic finance principles, which does not allow the charging or receiving of interest.
“Dubai has one of the best infrastructures to serve as a regional hub for international trade flows and remains focused on further investing and enhancing this position,” said Sami Al Qamzi, the director general of Dubai Department of Economic Development (DED). “It is our aim to double trade flows over the next five years. The exim bank aligned to some of the best global operating models will support the achievement of this objective and further enhance our existing position.”
Dubai’s economy has staged a comeback from a downturn in 2009 that dented the emirate’s property and banking sectors. Robust expansion in trade has in part helped to propel the emirate’s revival. Non-oil foreign trade rose 7.6 per cent to Dh1.33 trillion last year, according to data released this week.
Dubai DED has hired Noor Investment Group, a local financial company, to assess the feasibility of setting up the bank. The DED said the facility would provide a multiple range of products and services aimed at supporting trade flows into and out of the UAE.
“It is worth mentioning that Dubai Exim Bank will be the first Sharia-compliant bank of its kind in the whole world,” said Ahmed Al Janahi, the chief executive of Noor Investment Group and Noor Bank. “Furthermore, the bank will focus on enhancing Dubai’s international trade as we move towards Expo 2020.”
Officials said the plans fitted into the goal of Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, to establish Dubai as a capital of the Islamic economy.Agency, continued on b2 →
Many countries around the world have established export-import banks or export credit agencies to help boost the competitiveness of their companies abroad. Most assist in financing the export of goods and services to international markets by providing loans to foreign buyers. They are especially useful where they can assume financial risks that the private sector is either unwilling or unable to accept.
The DED said the facility would deal directly with international bodies as well as other exim banks around the world to promote UAE trade.
Abu Dhabi announced plans in 2010 to set up its export credit agency, as a way of bolstering its export levels. The proposals have yet to materialise.
Emirates Airline and Etihad Airways are among the biggest global users of the Export-Import Bank of the United States to help them pay for aircraft from Boeing, the US plane maker.
tarnold@thenational.ae
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