Saudi Arabia is the somewhat reclusive economic superpower of the MENA region. It has the largest population, GDP and oil reserves in the GCC region and is strategically and militarily important on both a regional and global scale. However, unlike its neighbors the UAE or Bahrain, Saudi Arabia is not a culturally or economically-welcoming place for international business and as such much of Saudi Arabia's non-oil related business is an internal market.
The country has embraced its own version of Islamic finance, and as we can see from Zawya's Sukuk Monitor [see opposite] the issue of Sukuk has been warmly embraced across the economic spectrum. The country has given birth to some monumental Sukuk over the last few years, such as the 20-year $2.1bn Saudi Basic Industries Corporation issue of 2007.
Most of the Sukuk issued have been for internal consumption - hence the issuing currency of Saudi Arabia riyal. However, a few companies - most notably Dar Al-Arkan - have experimented with US dollar issues for the international market. Despite the local flavor of Sukuk, the busiest bank in Saudi Arabia has been the UK's HSBC, ably abetted by local subsidiary SABB.
Next week: Shari'ah compliant Global Equity funds
© The Islamic Globe 2011
