International Islamic Trade Finance Corporation (ITFC) (A member of the IDB Group) Islamic Finance Awareness Seminar in Brazil San Paulo, October 4-5 Copyright.

International Islamic Trade Finance Corporation (ITFC)

(A member of the IDB Group)

Islamic Finance Awareness Seminar in Brazil

San Paulo, October 4-5

Copyright © ITFC 2010

ITFC Management

Copyright © ITFC 2010 2

3

We exist to be a catalyst for the development of trade among OIC member countries and with the rest of the world

ITFC is to be a recognized provider of

trade solutions for OIC MCs needs

We are fostering OIC MCs trade and trade-integration

We are responsive to customers’ needs with innovative shariah compliant solutions

We are the preferred choice for trade solutions

We are delivering fair returns for our shareholders

ITFC’s desired future intended state:

visionMission

ITFC Mission & Vision



Major Objective – Catalyst Role:

> Article 5 of the Articles of Agreement of ITFC states :

“ The purpose of the Corporation shall be to promote trade of member

countries of the Organization of Islamic Conference through providing

trade finance and engaging in activities that facilitate intra-trade and

international trade”

> Makkah Declaration (2005).

Increase the intra-OIC trade volumes to 20% of the world trade by

2015.

Members of ITFC


Co

unt

ries

Fin

an

cial

In

stitu

tion

s

Total is 55

IDB is the major shareholder of ITFC


ITFC Establishment:

> Resolution to establish the ITFC was approved during the IDB Board of

Governors meeting in 2005 in Malaysia

> The ITFC’s Articles of Agreement was signed during the IDB Board of

Governor’s meeting in Kuwait in 2006

> ITFC Became operational as of 10 January 2008.

> Authorized capital is US$ 3 billion

> Subscribed capital is US$ 750 million


Operating Performance :

Approval of Trade Finance ( 1429H – 1430H )

US$ million



> Analysis of approvals :

> Geographic : US$ million



> Analysis of approvals : > Public/Private Sector

US$ million

> Least Developed Member Countries:

> 1429H 1,082 43%

> 1430H 987 46%



> Analysis of approvals > Intra-OIC trade “Source of Supply”

> 1429H 2,071 83%

> 1430H 1,769 82%

> Major Commodities

> 1429H Crude Oil, Agricultural inputs and Fertilizers, Aluminum,

Industrial Materials

> 1430H Crude Oil, Industrial raw materials, Sugar, Aluminum, Food

products

> Disbursements

> 1429H US$ 1.3 Billion

> 1430H US$ 1.5 Billion



> Lines of Financing for SMEs

> 1429H 9 Lines US$ 98.50 million

> 1430H 12 Line US$169.10 million

> Funds Mobilized : Syndications & Co-Financing

> 1429H US$ 878 million 35 % of approvals

> 1430H US$ 794 million 35 % of approvals


Key Operational Partners:

> IFC

> AfDB

> SFD

> OFID

> ATFP

> Banks and Financial Institutions in the Middle East, Far East and

Europe e.g. HSBC, JP Morgan, BNP Paribas and other local and

regional banks.


Trade Cooperation and Promotion Program(TCPP):

> Activities carried out in the last two years TCPP classified into :

> Trade Promotion

> Trade Facilitation

> Capacity Building

> Development of Strategic Commodities


Modes of Financing

> Murabahah (Cost-plus sale) : Under this mode, ITFC will purchase goods or commodities from a supplier at the request of the Beneficiary and then sell them to the Beneficiary with a deferred payment arrangement. The difference between the Purchase Price and the Sale Price is a reasonable mark-up added to the Purchase Price

> Other Products:

> Bai Ajel (Installment Sale)

> Istisna’a (Manufacturing Contract)

> Ijarah (Leasing)


Main Features of Import Finance :

> Transaction Structure : Murabaha

> Currency of Finance : US Dollar

> Eligible Goods : All goods acceptable under ITFC’s Trade Financing Rules

> Tenor : 3 – 12 months

> Mark-up : According to the market

> Security : Bank Guarantee, Sovereign guarantee, Structured trade

Finance.. etc.


Modes of Finance :

> Direct Finance

> Co-finance

> Syndication

> Structured Trade Finance

> Lines of Financing to local banks for the benefit of SMEs.


Key ITFC-financed strategic commodities

> a) Oil and related products

> b) Raw sugar

> c) Plastics

> d) Chemicals

> e) Coffee, wheat, cotton, etc…

Example: Raw Sugar Deal between Indonesian Importer and Supplier from Brazil

1. ITFC receives 20% deposit of the invoice from Indonesian Importer. Money is transferred to ITFC.

2. Goods are shipped and documents are presented.

3. ITFC pays the Supplier.

4. Sugar is delivered to the Warehouse under Collateral Management.CM issues Warehouse Receipt to ITFC on sugar under custody.

5. PT AP pays for the value of sugar it requires into the Collection Account.

6. Escrow Account Bank gives release instruction to CM upon receipt of payment.

7. Indonesian Importer takes delivery of sugar for refining.

ITFCCM

(Warehouse)

3.

Importer

1. 5.2

7.4.

Collection Account

Bank Suppliers

1.

Documents presented

payment

6.


Contact Info

International Islamic Trade Finance Corporation:

> Tel : +966 2 6361400

> Fax : +966 2 6371064

> E-mail: [email protected]

> P.O. Box 55335, Jeddah 21534

Kingdom of Saudi Arabia

mailto:[email protected]

Thank you for your attention

Thank you


International Islamic Trade Finance Corporation (ITFC) (A member of the IDB Group) Islamic Finance Awareness Seminar in Brazil San Paulo, October 4-5 Copyright.

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