Doha - H E Sheikh Abdullah bin Saud Al Thani, the Governor of Qatar Central Bank (QCB), has urged Islamic banks to expand their financing to public infrastructure and industrial projects.
Speaking at the opening of the 1st Annual World Islamic Infrastructure Finance Conference (WIIFC) yesterday he said that Islamic banks face difficulties to participate in long term financing due to liquidity constraints and asset management, but they are encouraged to continue to develop financing products using effective risk management methods and applications.
"Qatar has been taking steps to encourage and promote its financing needs among Islamic banks and Islamic investors through the issuance of its Islamic Sukuk which was successfully received by the global market", he said.
He said that the successful global financing of Qatargas II project included a large tranche of Islamic finance to the order of $530m long-dated maturity and project risks.
The WIIFC opened yesterday with over 200 international business and government delegates from 15 countries taking part.
The sessions of the conference highlighted the important trends within Islamic and Shariah international investment and project finance.
Highlights of the day included the inaugural address by the QCB Governor, and sessions dealing with large-scale infrastructure projects, ramifications of the GCC's exceptional economic growth, new developments in the field of Islamic infrastructure finance with panelists Salah Mohammed Jaidah, CEO Qatar Islamic Bank, Brad Bourland, Chief Economist, Navid Goraya, GM of QNB Al Islami.
In his inaugural address, Sheikh Abdullah bin Saud pointed out that the Qatar Sukuk and the Qatargas Islamic funding using Shariah-compliant structures demonstrates the ability of Islamic institutions to deal with long-dated maturities despite the constraints of liquidity and reserves they face.
"This demonstrates the ability of Islamic finance to compete with conventional finance in industrial and infrastructure projects", he said.
A significant portion of the increasing liquidity in the Gulf would assist in the creation of Islamic institutions, he said. This will lead to future development of Shariah-compliant Islamic structures in many areas of banking and most importantly in the infrastructure sector.
He said that Qatar was emerging as one of the largest industrial hubs for hydrocarbon and petrochemical development projects. Since many of these projects use project finance structures, Islamic financing is becoming an increasingly important component of the funding requirements.
"Qatar has its fair share of promoting Islamic investment and project financing whether through Sukuk or other Shariah-compliant structured finance. The frequent using of Sukuk and similar Islamic products by Qatari and non-Qatari banks will help create an Islamic Capital Market over time", he said.
Sheikh Abdullah bin Saud also noted that the number of Islamic financial institutions worldwide has grown over the past three decades to around 300 institutions in over 75 countries.
This growth was due mainly to increase in demand for Islamic products, increasing wealth and liquidity in the GCC from higher oil prices, and rising inward investment due to industrial and infrastructure projects, especially in Qatar and in the region as a whole, he explained.
He said Qatar's Real GDP growth was 8.8 per cent in 2005, averaging 7.0 per cent during the past 3 years.
"We expect government and public investment in the country to total about $ 130bn over the coming years.
In addition to growth, the economy is restructuring with the aim of providing a bigger role for the private sector", he added.
© The Peninsula 2006
