IslamicFinance.de

Pakistan has picked arrangers for a potential $2bn debt sale planned for later this year. The sale would come as Pakistan’s finances are starting to show strain. The nation’s foreign-exchange reserves have fallen 15% to $19.8b this year as its traditional exports dwindle and imports rise. The World Bank estimates that $17b of external financing is needed in the next financial year for Pakistan to bridge its rising debt payments and current account deficit. The deficit is expected to widen to 5.7% of gross domestic product, from a deficit of 4.4% in 2016. The country is planning to raise $1b from a Sukuk offering, and has mandated Citigroup, Standard Chartered, Deutsche Bank, Dubai Islamic Bank and Noor Bank to manage the sale. Citigroup, Standard Chartered, Deutsche Bank and Industrial & Commercial Bank of China were chosen for a potential conventional bond offering of an equal amount.

Financial technology widely referred to as FinTech has grown primarily in the last decade due to growing Internet access worldwide and the emergence of smartphones and apps. According to the Ericsson Mobility Report published last year, 70 %bof the world’s population is expected to be using smartphones by 2020.
As smart devices are increasingly becoming part of everyday life for most people in the digital age, it is essential for the banking sector to become more innovative to enhance its productivity. “We’re transitioning toward a situation where growth for companies and economies will have to depend more on productivity than before,” said Jarmo Kotilaine, chief economist at the Bahrain Economic Development Board (EDB).
“To achieve that, you will need better management, better innovations, new distribution channels and new capital.” Increasing the efficiency of digital banking will particularly serve customers in Saudi Arabia, where banks’ working hours overlap with those of most employees.

Plans by the Philippines to sell Islamic bonds could open a new source of financing for the incoming government of Rodrigo Duterte. Governments across Asia are increasingly viewing sukuk as a viable funding option, with Hong Kong open to tap the market for a third time while Sri Lanka and the Maldives consider debuts. A sukuk from these debutante countries could widen the Asian market that is dominated by sovereign deals from Malaysia and Indonesia. The Duterte government would have to work on a legal framework to facilitate sukuk, which could prove difficult in a busy agenda. Ashraf Mohammed, Assistant General Counsel of Asian Development Bank, said despite the concerns, interest is growing in the region to use Sukuk for infrastructure financing.

Dr Ishrat Hussain, Chairman Center of Excellence for Islamic Finance emphasized that Islamic Finance should not be restricted to a faith based segment and the banking sector has to increase investment in agriculture, SME and Islamic Microfinance. He stated that the share of Islamic Banks is 13pc growing at the rate of 28%, however, there are still regulatory and legal challenges which need to be addressed to make a real shift in lending profiles.

Dubai Islamic Bank’s Group Chief Executive Officer Dr. Adnan Chilwan, on his first visit to Pakistan, outlined the detailed growth strategy for the franchise in the country. This newly defined strategy repositions the Bank’s medium term plans alongside the transformational growth the Group has achieved as part of their 2014-2016 strategic agenda. The event also marked and celebrated the successful 10 years of the Bank’s operations in the country.