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Dubai explores Islamic Exim Bank feasibility

Dubai: As part of Dubai’s focus on establishing itself as a key hub for international trade, the Department of Economic Development (DED), Government of Dubai, has commissioned a project to assess the feasibility to establishment an Exim Bank.

The proposed institution will provide a wide range of products and services aimed at supporting trade flows into and out of the UAE.

The proposed bank, once approved, is expected to be the first fully Sharia-compliant institution of its kind. It will be a major initiative to establish Dubai as the capital of Islamic economy.

“Dubai has one of the best infrastructure to serve as a regional hub for international trade flows and remains focused on further investing in and enhancing this position. It is our aim to double trade flows over the next five years. The proposed Exim Bank aligned to some of the best global operating models will support the achievement of this objective and further enhance our existing position,” said Sami Al Qamzi, Director General of DED.

Dubai DED has engaged Noor Investment Group as an exclusive advisor for this project.

“A dedicated team from Noor Investment Group undertook the initial financial, administrative and marketing studies, which enabled such an important project to come to light,” said Dr. Ahmad Al Janahi, Deputy CEO of Noor Investment Group and Noor Bank.

“The proposed bank will focus on enhancing Dubai’s international trade, aiming at steadily doubling trade volumes towards Expo 2020,” Al Janahi said.

The main objective of the new institution is to assist businesses in the UAE to grow their trade flows by providing risk mitigation, financing and market access.

Exim Banks by nature is a government or semi-government agency which commonly provides insurance cover to exporters against losses from non-payment by the importers, as a means to promote the country’s foreign trade. Other services offered by Exim banks may include marine insurance, post-shipment discounting of invoices, pre-shipment advances against confirmed orders and help in finding new markets.

The proposal to set up an Exim Bank in Dubai comes at a time when the emirate is embarking on significant investment in trade infrastructure development linked to Expo 2020.

Although it is not clear what the size and structure of the capital of the proposed institution, bankers said while a significant portion of the original capital will come from the Dubai government and government-related entities, like in other parts of the world, the new institution is likely to have capital contributions from local, regional and international financial institutions and multilateral agencies.

Dubai’s objective to create an Islamic Exim Bank jells well with its twin objective of creating the city a global trade hub and a global centre for Islamic finance.

Once set up, the institution will be the first Islamic Exim Bank. While the Export-Import Bank of Malaysia currently offers Sharia-compliant products and services, it also has conventional portfolio of products and services.