ISLAMABAD: The central bank of Pakistan is stepping up its push to develop Islamic banking, encouraging lenders to expand their operations in the nation.
Pakistan was one of the first countries to introduce Islamic banking at a national level in the 1970s, but the industry’s share of the overall banking system has lagged levels in some other countries.
As of September, Islamic banks held 926 billion rupees ($8.8 billion) of assets or 9.5 percent of the total, up from 8.1 percent a year earlier, central bank data showed. That compares with around 25 percent in the region.
The central bank aims to double the industry’s branch network and reach a 15 percent share of the banking system in the next five years, and is taking fresh steps to achieve that.
This month, the central bank named a new deputy governor to focus on Islamic banking and enlisted renowned scholar Muhammad Taqi Usmani to its Shariah board, part of efforts to improve consumers’ perception of the industry.
“The emphasis on Shariah compliance has increased and there is a demand for more sharia-based Islamic banking rather than simply sharia-compliant banking,” Shakir Ullah, a member of the central bank’s Islamic banking focus group, said.
“I expect that Pakistan will soon become a key player in Islamic banking globally and will probably take the role it played in the 1980s as the pioneer of Islamic banking.”
Shariah-compliant banking merely obeys the industry’s rules, while sharia-based business also follows the spirit of Islamic principles such as an emphasis on transactions based on real economic activity rather than monetary speculation.
Last year, the central bank launched a media awareness campaign and said it would revise rules on sharia governance and liquidity management for Islamic banks.
Pakistani lenders currently include five full-fledged Islamic banks and 14 which operate Islamic windows, and some appear to be responding. A number of conventional banks aim to grow or spin off their existing Islamic windows, while new entrants are expected.
One of them is Summit Bank, which last year said it would convert itself into a full-fledged Islamic bank over a three- to five-year period.
It has 111.9 billion rupees of assets and 187 branches, which at present would make it Pakistan’s second largest Islamic bank after Meezan Bank, taking second spot away from the Pakistani unit of Dubai Islamic Bank.
“Summit is actively working on their groundwork, like finalyzing manuals, product papers, etc. They will soon convert one of their conventional branches here in Karachi and will start operations,” said a central bank source. The bank did not respond to Reuters requests for comment.
Other banks plan to expand their existing branch networks. This is seen as key because 56 percent of the Islamic industry’s 1,161 branches are in the five largest cities, leaving smaller cities underserved, the central bank said in a report.
National Bank of Pakistan (NBP) added 10 branches to its Islamic window last year and plans seven more by the end of this quarter, to reach a total of 25, said Zubair Haider, NBP’s group chief of Islamic banking.
“Our business plan calls for over 100 branches in the next three years. The environment is quite positive and banks are quite keen to push into Islamic banking.”
Other conventional banks such as Allied Bank will soon offer Islamic banking, while Bank of Punjab opened its first Islamic branch last year, said Haider.
“From an awareness point of view this will help the industry,” he added.
This month, MCB Bank was given regulatory approval to spin off its Islamic window into a separate subsidiary with 10 billion rupees in paid-up capital, using its existing 27 Islamic banking branches to form the new entity.
Competitive pressures are expected to increase, said Suleman Muhammad Ali, vice president of product development and sharia compliance at Meezan Bank.
“There has been renewed aggressiveness from existing participants like Alfalah Islamic and Dubai Islamic Bank through expansion of branches and revamping of divisions.
“This may result in eroding the conventional share in the long term and increase competitiveness among Islamic banks in the near term,” said Ali.
Bank Islami Pakistan expects business will more than double in the next three years, forecasting its assets will reach 184 billion rupees by 2016 from 81.2 billion rupees last September, a stock exchange filing showed.
The central bank’s media campaign is expected to intensify in coming months and such educational efforts could attract previously unbanked clients to the sector, rather than snatch them away from conventional banks, said NBP’s Haider.
Positive market sentiment has prompted some investors in the sector to cash out: Kuwaiti firm Noor Financial said last month that it was selling its 49.11 percent stake in Meezan Bank for $190 million, expecting to post a $24 million profit.
The identity of the buyer has not been officially revealed.
Pakistan central bank steps up Islamic banking push
Pakistan central bank steps up Islamic banking push
Qiddiya launches executive office to strengthen engagement with business partners
RIYADH: Qiddiya Investment Co., fully backed by Saudi Arabia’s Public Investment Fund, has launched an executive office dedicated to overseeing destination marketing and management.
The new office, called “Spirit of Play,” represents the company’s first initiative to build strategic partnerships with businesses, investors, and professionals, according to the Saudi Press Agency.
The development of cities like Qiddiya, designed to elevate entertainment experiences, is a key element of Saudi Arabia’s strategy to diversify its economy and foster growth in sectors such as tourism. Located just 40 minutes from Riyadh, Qiddiya City will offer family-friendly entertainment complexes, sports venues, and cultural facilities.
“This launch underscores our commitment to developing a unique global destination. As one of the Kingdom’s flagship projects, Qiddiya City is central to the goals of Saudi Vision 2030, which aims to build a vibrant society, a thriving economy, and an ambitious nation,” said Abdullah Nasser Al-Dawood, managing director of Qiddiya Investment Co.
He added: “We expect Qiddiya City to welcome millions of visitors annually, accommodate more than half a million residents, and create hundreds of thousands of jobs and opportunities across a range of new industries.”
According to the Saudi Press Agency, the primary goal of the executive office is to promote and manage Qiddiya, positioning the city as a leading global tourism destination.
The office will also focus on establishing strong relationships with travel industry leaders, keeping partners informed and encouraging their active involvement in developing the entertainment hub.
“We are positioning Qiddiya as a destination that offers tourists the opportunity to explore, interact, and grow through immersive, interactive, and adventurous experiences,” said Ross McCauley, general manager of the Spirit of Play executive office.
He continued: “We’ve witnessed how rapidly the travel industry has evolved globally, with travelers booking tickets to concerts, sports events, and festivals. We’re working to create a destination that sets new standards for visitor experiences in ways that haven’t been done before.”
Earlier this month, Qiddiya Investment Co. entered into a partnership with the tech firm Globant to transform Qiddiya City into an immersive hub for entertainment, sports, and culture. Under the agreement, the two companies will collaborate on the Qiddiya PLAY LIFE Connected Experience, a digital ecosystem aimed at revolutionizing how visitors and residents interact with the city’s attractions.
Saudi POS spending hits $4bn as education sector surges with 2nd-semester start
RIYADH: Saudi Arabia’s point-of-sale transactions registered a weekly increase of 36.6 percent between Oct. 27 and Nov. 2, with the education sector leading the growth.
The Saudi Central Bank, also known as SAMA, recorded SR15.1 billion ($4.03 billion) in transactions over the seven-day period, with the education industry posting the highest sectoral increase at 79.3 percent to reach SR177.6 million.
This surge coincides with the start of the second semester on Nov. 17, similar to what was seen before the school year began in August.
SAMA figures showed that the clothing and footwear sector saw the second-largest rise, with a 63.7 percent jump to SR1.07 billion, reflecting a consistent trend in consumer spending during key academic periods.
This growth mirrored a similar pattern observed earlier in August this year, indicating a recurring trend in consumer spending within these two sectors.
Spending on telecommunication recorded the third largest surge, with a 51.9 percent positive change, reaching SR157.1 million.
Expenditure on food and beverages followed with an uptick of 48.1 percent, reaching SR2.5 billion, claiming the biggest share of this week’s POS transaction value.
Recreation and culture followed with a 40.9 percent surge, reaching SR296 million.
Restaurants and cafes accounted for the second-largest POS transaction value, with SR2.1 billion. Miscellaneous goods and services followed at SR1.8 billion.
Spending in the leading three categories accounted for 42.8 percent or SR6.4 billion of the week’s total value.
At 11.8 percent, the smallest increase occurred in hotel spending, boosting total payments to SR328.4 million. Expenditures on construction and building materials came second, surging 19.1 percent to SR386 million.
Geographically, Riyadh dominated POS transactions, representing 33.7 percent of the total, with expenses in the capital reaching SR5.11 billion — a 28.1 percent increase from the previous week.
Jeddah followed with a 27.7 percent surge to SR1.93 billion, and Dammam came in third at SR745.7 million, up 28.8 percent.
Hail experienced the most significant rise in spending, increasing 65.1 percent to SR280.1 million. Tabouk and Abha followed, with expenditure surging 55.9 percent and 43 percent to SR324.8 million and SR187.4 million, respectively.
Regarding the number of transactions, Hail recorded the highest increase at 34 percent, reaching 4,427, followed by Tabouk with a 28.7 percent increase, achieving 5,312 transactions.
Saudi Arabia, UAE invest $26.8m in Pakistan in Q1 of 2024
ISLAMABAD: Pakistan’s foreign investment surged by 48 percent in the first quarter of the current fiscal year, according to state-run media reports on Tuesday.
Saudi Arabia and the UAE contributed a total of $26.8 million during this period. In 2023, Pakistan established the Special Investment Facilitation Council, a joint civil-military body aimed at expediting foreign investment decisions in key economic sectors, including agriculture, mining, minerals, and tourism.
This initiative came amid Pakistan’s ongoing economic crisis, which had pushed the country to the brink of a sovereign default. The crisis was mitigated by a crucial $3 billion bailout from the International Monetary Fund last year, preventing further economic collapse.
According to a breakdown shared by Radio Pakistan, China led foreign investments in the first quarter with $404 million, followed by the UAE’s $25 million and Saudi Arabia’s $1.8 million. Other notable contributors included Hong Kong, with $98 million; the UK, with $72 million; and the US, with $28 million.
Radio Pakistan reported: “A significant increase of 48 percent has been seen in foreign investment in Pakistan in the first quarter of the current fiscal year, reflecting the effective strategies of the Special Investment Facilitation Council.”
During a recent visit to Saudi Arabia and Qatar, Pakistan’s Prime Minister Shehbaz Sharif held talks with leaders from both nations to discuss boosting cooperation in trade, investment, and energy. Notably, in October, Pakistani and Saudi businesses signed 27 agreements and memorandums of understanding valued at $2.2 billion.
During Sharif’s visit to the Kingdom last week, the two countries agreed to increase this figure to $2.8 billion.
The UAE remains Pakistan’s third-largest trading partner, after China and the US, and serves as an important export market due to its proximity, which helps minimize transportation costs and facilitates trade exchanges.
In recent months, Sharif has been actively pursuing economic diplomacy in the region, focusing on securing investments, boosting trade, and improving regional connectivity.
Pakistan has sought to leverage its strategic position as a trade and transit hub, connecting landlocked Central Asian countries with the global market while promoting mutually beneficial economic partnerships with Gulf nations.
Saudi Arabia’s CMF Select holds first-ever market event at LSE
RIYADH: Saudi Arabia’s CMF Select has successfully concluded its inaugural international market event, hosted at the London Stock Exchange.
The gathering marked a key milestone for CMF Select, an initiative under the Saudi Tadawul Group, according to a press release.
The event aimed to strengthen strategic partnerships between the Kingdom and global markets.
Organized by CMF Select, the event attracted more than 245 influential participants, including industry experts and investors from the UK, Saudi Arabia, and other international markets.
CMF Select is a targeted series of events under the CMF umbrella, focusing on specialized topics that are relevant to Saudi Arabia and its global partners.
Sarah Al-Suhaimi, chairperson of the Saudi Tadawul Group, said: “Today’s event is another step towards fostering strategic ties with international capital markets.”
She highlighted that the event “has strengthened the relationship between Saudi Arabia and the United Kingdom, facilitating growth opportunities, and setting the stage for enhanced cross-border investment across both capital markets.”
The chairperson added: “We are keen to continue this journey as CMF expands globally, creating new pathways for innovation in capital markets, and look forward to hosting a full-scale CMF London event in 2026.”
Michael Mainelli, the Lord Mayor of the City of London, saiid the event highlighted the strength of the Saudi-UK partnership, underscoring both countries’ roles as global financial hubs within their regions.
He added: “The dialogue embodied a shared vision for driving growth, connecting capital markets, and unlocking new investment avenues. Together, we are paving the way for more impactful engagement between our financial sectors.”
Discussions throughout the event focused on exploring economic and investment opportunities across a range of sectors, including finance, technology, and sustainable development.
One of the key themes of the event was sustainability and technological innovation – both central to Saudi Arabia’s Vision 2030.
Conversations explored how these areas could be advanced through international investment, with the goal of driving economic growth and resilience in both the Kingdom and the UK.
The press release also revealed that this initiative is part of a broader strategy to position Saudi Arabia as a global financial powerhouse, with the next edition of the event scheduled to take place in Riyadh from Feb. 18-20 2025, bringing together thought leaders and change makers from the world of global finance.
Saudi cabinet approves framework to boost foreign direct investment
RIYADH: The Saudi Cabinet has initially approved the national general framework and guiding principles for foreign direct investment, setting the stage for enhanced economic engagement with international organizations.
The session, chaired by Crown Prince Mohammed bin Salman, addressed significant developments on both domestic and international fronts, according to the Saudi Press Agency.
The Kingdom’s foreign direct investment inflows reached SR96 billion ($25.6 billion) in 2023, marking a 50 percent annual increase from the previous year.
The crown prince briefed the Cabinet on his recent discussions with leaders from several allied countries, focusing on bolstering ties across diverse sectors.
The Minister of Media, Salman Al-Dossary, highlighted that among these decisions the Cabinet authorized Saudi Arabia’s accession to the Cement and Concrete Breakthrough Initiative, launched on the sidelines of the UN Climate Change Conference.
This aligns with the Kingdom’s sustainability goals and commitment to the global climate agenda.
The Cabinet also approved an agreement with Qatar to avoid double taxation and prevent tax evasion.
This move underscores the Kingdom’s dedication to fostering economic cooperation within the Gulf region, facilitating smoother cross-border investments, and enhancing transparency in financial dealings.
In line with advancing Saudi Arabia’s capabilities in science and technology, the Cabinet also endorsed a framework agreement with the US to cooperate in civil aviation navigation and the peaceful exploration of outer space.
Additionally, the Cabinet also reviewed regional and international developments, with the crown prince briefing members on recent discussions with various heads of state focused on strengthening ties across multiple sectors.
The meeting highlighted the Kingdom’s efforts in regional peace initiatives, its commitment to global health challenges through the G20 platform, and recent advancements in the tourism sector.
During the session, the Cabinet commended the outcome of the second ministerial meeting of the Saudi-Indian Strategic Partnership Council economic and investment committee, highlighting the progress toward achieving the two countries’ shared goals.
This was mainly in the fields of industry, infrastructure, and technology, as well as agriculture, food security, climate sciences, and sustainable transportation.
Domestically, the Cabinet underlined the Kingdom’s significant advancement of 15 places in the 2023 international tourist revenue rankings compared to 2019, leading the top 50 rankings in an upward movement.
This achievement underscores the country’s global leadership and ongoing success in the tourism sector.
