H.E. Mr Mohammed Al-Jadaan, Minister of Finance, Kingdom of Saudi Arabia opened the Euromoney Saudi Arabia Conference 2019, organised by Euromoney Conferences in partnership with the Ministry of Finance under the theme ‘Growing the New Financial Ecosystem’.
In his keynote speech, H.E. Mr Mohammed Al-Jadaan, Minister of Finance said the conference took place after three years of positive progress and demonstrated Saudi Arabia’s commitment to the international economy. Then he added: “Saudi Arabia is committed to working with other nations towards achieving global economic prosperity and the Presidency of the G20 will consolidate the Kingdom's international standing and affirm its leadership in supporting the stability of the global economy.”
“Under Vision 2030 and the Financial Sector Development Program, Saudi Arabia is keeping pace with global developments and achieving qualitative leaps in the field of financial services, in line with business and service development. The growth of talented and active youth, as well as an increase in women’s participation in the labor market, are also important elements towards achieving our goals.”
He welcomed the Kingdom’s inclusion in the Financial Action Task Force: “Our financial sector is committed to introducing further reforms in order to expand financial services and implement legislation and measures to combat money laundering and terrorist financing. Our progress in these areas recently led to the Kingdom's inclusion in the Financial Action Task Force (FATF), taking place alongside 37 other countries and it was the first Arab country to achieve membership.”
He also outlined that the government spending in support of economic and social development had increased during last year: “The total expenditure growth, in both the operational and capital sectors, reached nearly 16.1% in 2018, while the increase in the first half of this year (2019) reached about 6.3%. At the same time, non-oil revenues increased during 2018 by approximately 15.2%. The increase continued during the first half of the year by 14.4% as a result of the economic activity improvement and continued implementation of reforms and initiatives aimed at developing revenues and diversifying their sources.”
“The budget deficit during the first half of the year amounted to SR 5.7 billion compared to a deficit amounting to SR 41.7 billion in the same period in the previous year and the real GDP growth rates in Q1 2019, which reached 1.7%, compared to 1.4% in Q1 2018. Non-oil sector grew by 2.1% driven by the private sector’s growth of 2.3%, compared to 1.7% in the same quarter last year, while the FDI inflows increased by 23.8% in the first quarter of the current year with increased investment opportunities for the private sector.”
“The total credit facilities provided by banks and financing companies to SMEs in the first half of 2019 amounted to SR 113 billion, compared to an increase of 11.6% in the corresponding period of the previous year. The banking performance also improved. The total assets and liabilities of commercial banks during Q2 2019 amounted to SR 2.4 trillion, an increase of 3% equivalent to SR 69.1 billion, compared to an increase of 0.04% in the corresponding quarter of the previous year.
On the other hand, the demand for investment in domestic and international debt issues increased by more than three times during the first half of the year. The first issuance in Euro was more than four times subscribed. The nominal value of government Sukuk was reduced to SR1,000 in order to diversify the investor segment and enhance trading and individual savings.”
Finally, the Minister congratulated the nation and Aramco for reestablishing full capacity oil production following the recent attacks: “I seize this opportunity to congratulate the country, and Aramco in particular, for bringing production back to normal which proves our ability to deal effectively and efficiently with the unprecedented crisis.”
The first day highlighted the transformation of financial institutions in the Kingdom including how emerging technologies are driving the explosion of FinTech fueled by digitally-savvy millennials. It also explored the use of FinTech to enhance database infrastructure and develop customer-centric business models as an important means of enhancing e-commerce-related areas.
Speaking at the conference the Chairman of the Capital Market Authority (CMA), H.E. Mr Mohammed El-Kuwaiz said the CMA was continuing to make huge advancements and highlighted the importance of new capital markets laws recently approved by the Council of Ministers: “These new laws will have two priorities, firstly to protect investors through improved mechanisms for compensation, strengthening the independence of judicial committees, increasing the scope of reporting, rewarding those who report violations and strengthening penalties to deter violators, and secondly to enhance the capital market by modifying financial organization through the introduction of a depository center and the creation of new categories including the establishment of a ‘clearing house’ to create a new derivatives market.”
He also outlined how judicial procedures in the capital market have been strengthened: “Prosecution processing time to deal with financial disputes has been reduced from 24 to 10 months, with the aim of a further reduction to 6 months. Many other reforms have also been completed including the automation of the judicial processes with everything to do with a claim now dealt with electronically and we are also moving towards the introduction of group claims which will also help to speed up the process.”
Mr El-Kuwaiz added that there will continue to be a range of positive indicators contributing to the growth of the capital market: “There has been an increase of 49% of investors in closed-end funds, an increase in the index by 6% compared to 2018 and foreign cash flows in the capital market have reached SAR 76 billion.”
Finally, he told the audience that he was proud of the Kingdom's accession to the international indices which he forecasts would contribute to a continued diversifying investor base, which would in turn enhance the stability of the capital market in addition to strengthening the principle of disclosure and injecting liquidity.
The conference was attended by key financial, business and thought-leaders including: Ammar Alkhudairy, Chairman, Samba Financial Group;Ghela Boskovich, Founder of FemTechGlobal; Maren Kasper, Acting President, Executive Vice President and Chief Operations Officer of Ginnie Mae and Brett Winton, Director of Research of Ark Invest. Also a number of sponsors from financial institutions including Al-Khair Capital, Al Rajhi Bank and Al Rajhi Capital, BNP Paribas, Citi, Dar Al-Arkan, HSBC, Samba, STC Pay, Global Investment House, Sedco Capital, SRC, Almarai, Moody’s Investors Service, Colliers International, Argaam, The Financial Academy, Direct FN, Baker McKenzie, Emirates NBD, National Bank of Bahrain and Sidra Capital.
The conference also introduced three exciting new initiatives created to provide a more interactive and informative experience: the Tech Tent to showcase local and international FinTech companies which received remarkable attention from the attendees; the Knowledge Hub which ran live briefings on Blockchain, big data and machine learning; and the Finance Labwhich provided a live global markets simulation for students and conference participants.