GCC economic boom boosts Islamic project finance

The Middle East’s premier business intelligence service, MEED, today launched the Islamic Project Finance Report. The report details how the economic boom in the GCC is fuelling the growth in Islamic compliant borrowings for major projects.

The report also includes details of the challenges faced by the Islamic project finance sector and the increasing number of western banks adopting Islamic banking regulations within newly created divisions.

The insights from the report reveal that:

The value of Islamic project finance deals being closed is projected to grow to US$30,000 million in 2012. This could represent up to 30% of all major structured deals finalised in the region.

The driving force behind the development of the Islamic project finance market has been the economic boom in the GCC, brought about by strong oil prices. High rates of economic growth coupled with record balance payments surpluses are fuelling unprecedented liquidity in the regional banking market.

Globally there are now 300 Islamic financial institutions in more than 70 countries. At the start of 2007 they had total assets of about $300,000 million.

Figures for the first half of 2007 show that the balance sheets of the top 20 banks in the GCC grew by more than 30% over the corresponding period in 2006. The positive trends are expected to continue for the foreseeable future.

Much of the impetus behind the development of sharia-compliant corporate borrowing products has come from banks and professional advisory firms that are non-Islamic.

Edmund O’Sullivan at MEED, commentetd: “As the economic boom continues in the GCC, so interest in Islamic project finance and banking increases. There have been challenges in the past with the GCC courts and a shortage of qualified advisers but we now find that standards are improving and many Western banks are adding Islamic banking divisions.

“Improvements in availability and quality of product will inevitably lead to greater integration of Islamic project finance in the GCC and other Islamic and non-Islamic countries”.

The report provides insights into key trends in GCC project finance and the relationship with the Islamic finance sector. It also has an in depth analysis of how the Islamic finance sector works and the challenges faced for clients wishing to use Islamic financial products.

MEED’s full report ' Islamic Project Finance: The Dawn of a New Era is available to purchase from www.meed.com