Saudi Arabia, UAE poised to launch digital currency

Although there is much skepticism around bitcoin, the underlying blockchain technology is viewed as a groundbreaking system. (Reuters)
Updated 14 December 2017
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Saudi Arabia, UAE poised to launch digital currency

LONDON: Saudi Arabia and the UAE are working on the launch of a digital currency that could be used for transactions between the region’s banks by using blockchain, the technology that underpins bitcoin.
Citing UAE Central Bank Gov. Mubarak Al-Mansouri, Reuters reported on Wednesday that UAE and KSA banks would issue a digital currency that would be accepted in cross-border transactions between the two countries.
In a speech to a regional financial conference, Al-Mansouri explained that blockchain is a shared ledger of transactions, maintained by a network of computers on the Internet rather than by a central authority.
Although there is official skepticism around bitcoin, blockchain is viewed as a groundbreaking system with huge potential for saving time and costs for businesses and financial services.
Arab News recently reported that banks around the world were looking to create digital versions of their currencies. Unlike bitcoin, these digital currencies would be backed by the monetary authorities and could one day replace cash.
James Bernard, development director of the Dubai Multi Commodities Center (DMCC), told Arab News that a clear distinction should be made between blockchain, which offers huge potential, and cryptocurrencies that have faced hacking issues and massive swings in value. “Bitcoin is dependent on blockchain, but the blockchain technology is independent of bitcoin,” Bernard said.
The KSA and UAE central banks have in the past expressed skepticism about bitcoin, with the UAE Central Bank saying it did not recognize it as an official currency.
In July, the Saudi central bank warned against trading bitcoin because it was outside the bank’s regulatory reach.
On Wednesday, however, Al-Mansouri said the central banks wanted to understand blockchain technology better. He told reporters that the UAE-Saudi digital currency would be used among banks, not by individual consumers, and would make transactions more efficient.
“It is digitization of what we do already between central banks and banks,” he said.
At a panel discussion on banking and blockchain during November’s Global Financial Forum — hosted by the Dubai International Financial Center — speakers agreed that blockchain was in its early stages and had many years before going mainstream, but all agreed the potential was massive.
Leanne Kemp, CEO of Everledger, told the forum that banks could benefit from the immutable track-and-trace application of blockchain, which helps enhance trust and security.
Brian Behlendorf, executive director at Hyperledger, explained that there are two different types of blockchain: Permissioned and permission-less, with the latter used by bitcoin.
Behlendorf said he believed the potential benefits of the permissioned blockchain makes it attractive to financial institutions and other enterprises.
At the end of 2016, the Royal Mint of the UK announced plans to launch a digital gold product called Royal Mint Gold (RMG), a joint venture with US exchange, CME. A spokesman told Arab News earlier the system is now “up and running” and the Royal Mint is “in advanced discussions to sign up a number of corporate users.”
“By using distributed ledger technology, we can make it more cost-effective and provide increased transparency for traders and investors to trade, execute and settle gold,” said the Royal Mint.
A decade ago, the UAE and Saudi Arabia discussed the possibility of creating a single currency among members of the six-nation Gulf Cooperation Council but the UAE pulled out of the project in 2009.
However, diplomatic and economic ties between the UAE and Saudi Arabia have been strengthening this year, and last week the UAE said it planned to establish a bilateral committee with Saudi Arabia on economic, political and military issues.
 


Saudi crown prince’s India visit to boost bilateral investment

Saudi Aramco CEO Amin Nasser leaves after attending the Saudi-India Forum in New Delhi on Wednesday. (Reuters)
Updated 20 February 2019
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Saudi crown prince’s India visit to boost bilateral investment

  • Vision 2030 offers huge opportunities to Indian businessmen in non-oil sector

Many Indian businesses that already operate in the Kingdom are interested in expanding as part of Vision 2030. Retail company Lulu Group International, for example, plans to open 12 new hypermarkets and five malls in Saudi Arabia by next year. 

It already employs more than 2,700 Saudi nationals and plans to increase this number to about 5,000 by 2020.

“Saudi Arabia is a very important market and we will invest in the booming retail sector as we are upbeat about the vast opportunities in the Kingdom through its Vision 2030 initiative,” said Yusuff Ali M. A., the chairman of Lulu Group.

Saudi Crown Prince Mohammed bin Salman’s first visit to India will propel trade and bilateral business relations between the two countries to new heights, experts predict.

Saudi Arabia has long been an important trade partner for India, said Mir Gazanfar Ali Zaki, the general secretary of the Saudi Indian Business Network, and the crown prince’s trip could expand and enhance ties in diverse fields.

According to Saudi Arabia’s General Investment Authority, more than 420 Indian companies operate in the Kingdom through joint ventures or with 100 percent ownership. They have capital of more than $1.5 billion and cover sectors including management and consultancy services, construction projects, telecommunications, information technology and pharmaceuticals.

Saudi Vision 2030, the crown prince’s brainchild, aims to transform the country by diversifying its economy through a series of reforms in non-oil sectors. India hopes to play a significant role in this expansion. The key sectors that India can target to expand and boost trade ties with the Kingdom include software development, solar energy, jewelry, fashion, tourism, education and food, said Zaki.

The cultural reforms initiated recently by the crown prince also clear the way for a wide range of business opportunities in the entertainment sector that India is well placed to cash in on. Bollywood films and music rank high on the list of popular entertainment among many Saudis, and with the recent reopening of cinemas in the Kingdom, and ambitious plans to build hundreds of theaters across the country, there is a huge opportunity for an Indian film to grab a large share of the market.

India’s bilateral trade with Saudi Arabia was worth $27.48 billion in the financial year 2017-18, according to the Indian Ministry of Foreign Affairs, making the Kingdom the country’s fourth-largest trading partner. It is the main supplier of energy, providing more than 18 percent of India’s oil. However, bilateral trade has dropped by almost a half from a high of about $48 billion five years ago because of the fall in global demand for oil. This might soon change, analysts say, as more investors from India are tempted by the Vision 2030 opportunities.

This view is shared by a Middle East Institute analysis that said: “As reforms related to Saudi Arabia’s Vision 2030 are implemented, Indian investors are likely to be attracted to several sectors, including infrastructure, hydrocarbons, desalination, renewable energy, education, research and development, health and pharmaceuticals.”

“We have trained about 200 Saudi nationals to take our business forward,” P. A. Ibrahim, the chairman of Indian company Malabar Gold and Diamonds said. “It is really a huge success that gives us the confidence to open more branches in the Kingdom. Vision 2030 and the Neom project have opened up good opportunities for us to invest more. We are planning four more jewelry outlets in the Kingdom soon,” he said.

A growing area of trade cooperation between the two countries is the field of petrochemical projects. Saudi oil company Aramco, in partnership with the UAE’s Adnoc, recently announced a joint venture for a stake in the $44 billion Ratnagiri Refinery and Petrochemicals project. Cooperation in the sector is expected to grow and it is thought new agreements might be signed during the crown prince’s visit.

An enduring and tangible aspect of the bilateral relations is the presence of a strong, vibrant community of 2.7 million Indians in Saudi Arabia, the largest single group of expatriates in the country. In addition, the Kingdom welcomes more than 175,000 Indian Hajj pilgrims every year.

“We can transform the trade links and cooperation to people-to-people coexistence because of this,” said Zaki. “By promoting foreign direct investment at Saudi trade shows and Indian trade shows, businesses from both countries can benefit. India and Saudi Arabia can organize Indo-Saudi trade exhibitions in both countries so that it can be a common platform for bilateral trade. Both countries should organize as many business-to-business meetings as possible.”

He highlighted the recent efforts by the Saudi Indian Business Network to achieve this through exhibitions such as the Kerala Gems and Jewelry show, the Kolkata Gems and Jewelry Show, Indus Food 2019 in Greater Noida, the International Indian Jewelry Show Signature in Mumbai, the Food Festival of India in Jeddah, the Film Festival of India in Jeddah, Global Exhibition on Services in Mumbai, Business Opportunities in India in Jeddah, and Tea Around the World in Jeddah.

The crown prince’s visit has great political significance, too. While energy and economic cooperation will remain the mainstay of bilateral ties, the two nations are trying to strengthen their cooperation in defense and security. The Ministry of External Affairs has talked of a growing desire in Riyadh for stronger strategic relations and improved intelligence sharing.