Bank of China opens branch in Saudi Arabia

China’s most internationalized state bank on Tuesday opened its first branch in Saudi Arabia in a move to expand the use of yuan amid a growing number of economic deals between the two countries.

Bank of China (BOC), one of China’s four biggest state-owned banks, opened its branch in Riyadh, the capital city of the oil-rich Middle Eastern country, more than two years after being given approval by the Saudi Arabian government.

The branch has more than 20 staff, with a majority hired locally – a condition requested by local authorities.

It is the second Chinese bank to open a branch in Saudi Arabia after the Industrial and Commercial Bank of China (ICBC) opened its first branch in Riyadh in 2015. ICBC also opened a branch in Jeddah in May.

China’s ambassador to Saudi Arabia, Chen Weiqing, said the opening of the branch was a result of positive developments in the bilateral relations between the two countries, and new stage of financial cooperation.

“It also shows that China highly recognizes the financial regulations, investment environment, and geographical advantages of Saudi Arabia,” Chen said, as he attended the opening ceremony with Bank of China president Liu Jin.

Saudi Central Bank governor Ayman al-Sayari and Saudi Arabia’s deputy investment minister, Saleh Ali Khabti, also attended the opening ceremony along with 250 guests.

The Saudi-listed ACWA Power, Saudi Arabia’s Ministry of Investment, Ajlan & Bros Holding Group and Zhejiang Rongsheng Holding Group signed memorandums of understanding involving internationalizing the yuan and green financing with BOC during the opening ceremony, the statement added.

The move came as part of a growing series of economic activities between China and Saudi Arabia, with their bilateral relations described as being at the best stage ever following President Xi Jinping’s state visit in December 2022, with both countries facing souring relations with the West.

During the trip at the end of last year, Xi pledged to work towards widening the use of yuan in oil and gas trade in the region, amid a push to establish the currency internationally and weaken the US dollar’s grip on world trade.

Saudi Arabia is China’s largest source of crude oil imports, with 87.5 million metric tons (641 million barrels) shipped in 2022.

Amid efforts by state banks to tap potential in the Middle East, BOC’s new branch has been licensed to provide basic commercial banking services to individual consumers and small- to medium-sized businesses, ranging from deposit accounts and loans to mortgages and yuan transactions.

At the weekend, BOC president Liu also met Khaled Mohamed Salem Balama Al Tameemi, the governor of the central bank of the United Arab Emirates, to court more support for its yuan clearing in the region and potential cooperation with the nation’s sovereign wealth funds.

In an interview with local media in June, BOC said the new branch aimed to offer the yuan to the wider Middle East region to assist commercial and financial trade between China, Saudi Arabia and beyond.

As there are many Chinese companies entering the market in the region, being able to trade and make financial transactions using the yuan would encourage Chinese companies to invest in the area.

The Saudi Arabian government first agreed to allow BOC to open its branch in January 2020. At the time, Saudi Arabia had only 14 foreign banks, including ICBC.

BOC also has existing branches in Abu Dhabi and Dubai in the UAE, as well as Bahrain, Turkey and Qatar.

Li Tong, president of the bank’s investment banking unit, Bank of China International, said in June during the Arab-China Business Conference in Riyadh that the new branch in Riyadh would push for financial cooperation, and further boost economic cooperation between the two countries.

The bank has also been in discussion with local counterparts to offer panda bonds – yuan-denominated bonds sold by overseas entities in China’s onshore bond market to raise investments in China.

A number of other banking sector collaborations have also been announced this year.

In March, the Export-Import Bank of China announced a first loan cooperation with Saudi National Bank, Saudi Arabia’s largest bank, in yuan.

Hong Kong has also been named as a major hub for financial cooperation between China and Saudi Arabia.

In July, the Hong Kong Monetary Authority, the city’s de facto central bank, signed a memorandum of understanding with the Saudi Central Bank, pledging initiatives in financial infrastructure development, open market operations, market connectivity and sustainable development.

 

 

DP World to invest half a billion dollars in India

Dubai-based ports giant DP World will invest around US$510 million to build a new container terminal at the Kandla port in the Indian state of Gujarat, its group chairman said on Friday.

"It will enable the delivery of trade opportunities by connecting northern, western and central India with global markets," Sultan Ahmed Bin Sulayem, who is also DP World's CEO, said after the signing of an agreement between the Deendayal Port Authority and DP World officials.

The Indian government earlier this year approved a plan by Hindustan Infralog, a joint venture between DP World and the state-owned National Investment and Infrastructure Fund, to develop the terminal on a Build-Operate-Transfer (BOT) basis.

DP world, which operates in 73 countries, last week reported a nearly 10% fall in first-half profit to US$651 million despite a 13.9%YoY rise in revenue to more than US$9 billion.

The new terminal, which should be completed by early 2027, will boost container traffic in India and reduce the cost of logistics, company officials said.

DP World operates five container terminals in India – two in Mumbai and one each in Mundra, Cochin and Chennai – with a combined capacity of about 6 million twenty foot equivalent units (TEUs), giving it a market share of 28% of container traffic volume in the country. The new terminal will take the combined capacity to 8.19 million TEUs, a company statement said.

DP World’s Indian port and terminal investments are aligned with the country's Vision 2047, which aims to quadruple port handling capacity and develop logistics infrastructure to boost economic growth, the statement said.

 

What caused fire at ship at Jebel Ali?

Unconfirmed reports suggest that the explosion and subsequent fire on board a container ship anchored at the quay side in Jebel Ali was caused by a container load of fireworks. The ship, thought to be the 210 teu Ocean Trader owned by Sash Shipping Group, based in Dubai endured a loud explosion that shook buildings in the city.

An industry source said that the vessel was a feeder ship and the cargo would have been transshipment freight. He suggested the vessel had called at a number of ports in the Gulf and at Karachi in Pakistan before arriving in Jebel Ali.

Dubai media office Director General, Mona Al Marri said, “The fire at Dubai’s Jebel Ali port was caused by an explosion from a ‘normal accident’ in a container holding flammable material.”

After the explosion, emergency services quickly brought the fire under control – in less than an hour, according to a Jebel Ali Port statement.

Director General of Dubai Civil Defense Maj Gen Rashid Thani Al Matrooshi confirmed the fire was fully under control and the cooling process is under way.

No deaths or injuries were reported and the security company Dryad Global, investigating early reports that Israel had retaliated following last week’s attack on the CSAV Tyndall in the ongoing Israel/Iran shadow war, was adamant that there was no military involvement. “It is not how they [the Israeli armed forces] would target a vessel or Iran,” said a spokesman.

Jebel Ali port is owned and operated by the Dubai-based DP world. The port is located at the northern tip of Dubai and has 4 tumbling container terminals that can dock some of the largest vessels present globally. This busiest American warship's port of call outside the US is the largest established deep-water harbor on the globe.

DP world often describes the Jebel Ali port as the lifeline for Dubai and "gateway hub", as it has some vital links connecting the eastern and western markets, serving as the point of entry to the global trade network. The state-run company didn't issue any public declaration immediately after the explosion.

United Arab Emirates appoints first ambassador to Israel

Ruler of Dubai and Vice President of United Arab Emirates, Sheikh Mohammed bin Rashid Al Maktoum has sworn in the country's first ambassador to Israel, Mohammed Mahmoud Al-Khaja, according to the Dubai Media Office.

The UAE's cabinet last month approved the establishment of an embassy in Tel Aviv in Israel, state media said, while Israel announced its embassy had opened in Abu Dhabi, after the UAE and Israel agreed to normalize relations.

Hundreds of Israelis booked flights and went to visit the Gulf state after the historical signature of the Abraham Accords. In light of this, the Tourism Ministry is hoping to attract many new tourists from the UAE as soon as travel returns when COVID-19 infection rates drop.

However, due to Israel closing its border in efforts to contain new coronavirus variants, hundreds of Israeli remained stuck in Dubai. 

In addition to tourism, Israel and the UAE are currently building bridges in a variety of sectors, from hi-tech to space exploration and ag-tech.

The UAE's Hope Probe success in entering orbit around Mars last week places it in the unique club of only five agencies able to reach the red planet so far. The Gulf state even has plans for settlements on Mars, which it hopes would become a reality in less than a century. 

Israel's own Beresheet moon project is meant to launch a second mission in three year's time. The scientific cooperation between the Start up Nation and the UAE is likely to be at the focus of diplomats, and think tanks, from both countries in the near future.

Israel and the UAE both had important milestones last year points to how important the current relations are. Israel and the UAE have many shared interests, whether it is a shared regional outlook about threats and instability, or the fact that both countries are close partners of the United States.

Both countries are also pioneering technology products, whether in fintech or food tech or other sectors, many of which have been on display, or will be soon, in joint ventures and exhibitions in the UAE which Israelis are taking part in.

For instance, Israeli companies flocked to the GITEX trade show last year and hope to be at IDEX in Abu Dhabi this month and also GISEC this summer.