Abdulla Al Awar

The Dubai International Financial Centre (DIFC) is working closely with the World Bank Group’s Multilateral Investment Guarantee Agency (Miga), on an initiative to assist and support the development of the region’s bond and sukuk market.

The two institutions are also cooperating closely on their overall aim of promoting foreign direct investment (FDI) into the Mena region.

Dr Omar Bin Sulaiman, governor of DIFC and vice chairman of UAE Central Bank said: “DIFC’s partnership with Miga will contribute significantly to enhancing the growth potential of the bond and Sukuk markets in the region.”

“This partnership supports DIFC’s long-term strategy for developing highly efficient and liquid capital markets. By providing the means for mitigating political risks, this partnership can play a significant role in stimulating foreign investment, which is critical to the region’s economic growth.”

As part of the initiative, the DIFC and Miga hosted a conference for the region’s capital markets industry at the DIFC Conference Centre.

Abdulla Al Awar, chief executive officer of the DIFC Authority, said: “By leveraging DIFC’s knowledge of the regional markets and Miga’s experience in working closely with emerging markets, the initiative will help create cost-efficient, cross-border financial structures, which are critical for facilitating investments.”

He pointed out that the risk perception of the region, and particularly of the GCC member countries, is reducing rapidly with the abatement of the global financial crisis.

“Despite the financial crisis, there have been a couple of successful bond issues, in the UAE for example this year, indicating a continuing appetite. The DIFC and Miga are working closely to nurture, assist and support the industry to expand and gain depth,” Al Awar added.

“In recent years, the bond market in MENA in general and in the Gulf in particular, has grown,” said Dr Nasser Saidi, chief economist of the DIFC Authority.

“Exceptional growth has been witnessed in the Islamic Sukuk market. But it must be remembered that the Sukuk is a relatively new instrument and its growth is still minor given the huge potential for the Islamic bond in the mainly-Muslim MENA region,” Dr Saidi said.

“The same is true for the overall FDI situation in the Arab World. Though the numbers have gone up in recent years, they still do not match the potential or the requirements of our region,” Dr Saidi pointed out while calling for a cross-border regional policy approach towards dismantling obsolete investment laws and creating opportunities and channels for foreign investments.

Ileana Boza, global head of business strategy and client development at Miga, spoke on supporting foreign investment into the region.

“Concerns about economic and political stability often inhibit investments, particularly in securities issued by developing countries and emerging markets,” Boza said.

“However, conventional bonds or Islamic Sukuk issued by either the public or the private sector institutions in such countries and markets, offer potentially high-return investment opportunities,” she pointed out.

“This is where Miga comes in,” said Emanuel Salinas, senior investment officer at Miga.

“Miga, a member of the World Bank Group, addresses investor concerns by providing ‘political risk insurance’ for foreign investments in developing countries,” Salinas explained. – TradeArabia News Service