Author: World Finance

Maria Bianca Farina on insurance in Italy | Poste Vita | Video

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Following the financial crisis, Italy is undergoing social and economic change, representing interesting opportunities, but also challenges for the insurance sector. Maria Bianca Farina, CEO of Poste Vita and Poste Assicura, discusses Poste Vita’s strategy, how it tailors its solutions to meet the needs of Italian families and companies, and the impact the Italian government’s cuts are having on the Italian insurance industry.

World Finance: Maria, the Italian insurance sector was hit quite hard by the financial crisis, yet Poste Vita flourished, what are the reasons behind this success, do you think?

Maria Bianca Farina: Our success relies on many factors, but above all on our capability to protect and support Italy’s householders, through the offer of innovative experienced and savings solutions, tailored to fulfil the real needs of Italian families and companies.

To give you an example, thanks to our competitive pricing model, customers have access to affordable, high quality insurance coverage, as well as low premium investment and pension plans.

“The challenge insurance companies face is to make individuals aware today of their forthcoming needs”

World Finance: What challenges will the Italian insurance sector face over the next few years, and how do you plan to address them?

Maria Bianca Farina: Some convergent factors, such as the population ageing, the economic crisis, and the need to cut back on public expenditure, make it ever more and more urgent for people’s need to have access to covers to protect and manage both their present and future lifestyle.

The challenge insurance companies face is to make individuals aware today of their forthcoming needs.

Insurance companies can offer an essential contribution to promote a comprehensive, combined and efficient action, focused on designing affordable solutions that take into account daily problems.

With regard to the corporate and SME segment, we are developing collective welfare solutions for personal protection and health that employers can offer as an additional benefit to their employees.

Last but not least, the Italian insurance sector will have to face the impact of digitalisation on consumer behaviour. Given that in the future, traditional distribution channels will continue to dominate the scene, in the coming five to 10 years, we need to invest, to ‘digitally arm’ our distributors, as well as enhance our customer experience.

World Finance: What role will Italy’s insurance sector play in the future of the country?

Maria Bianca Farina: The decrease of the traditional welfare model increases people’s need to rely on alternative solutions to protect and manage their present and future. In this macroeconomic scenario, insurance companies have the opportunity to meet the new needs that have arisen in different fields – welfare, health, social services, and income security during the working age and afterwards – by supporting the development of new markets, and producing clients with a secure net compared to government expenditure cutbacks.

A greater access to insurance products could contribute to the whole welfare and health system, allowing public money to be allocated differently, and managing private assets more effectively.

“The decrease of the traditional welfare model increases people’s need for alternative solutions”

World Finance: Who do you target for your services, and how does that address the needs of the Italian consumer?

Maria Bianca Farina: We concentrate marketing new products that can meet people’s everyday needs, such as income assistance and health.

For example, Postapersona Sempre Presente, our new long term care cover, and Postaprotezione Casa Special, which includes all major house covers, plus the bill protection warranty, which covers all costs related to the household in case of job loss, disability, or long term illness.

We also intend to strengthen our position in the management of the new welfare, by making supplementary pension plans more easily accessible to companies for their employees through our new collective pension scheme that we will be launching very soon.

World Finance: So, what’s your strategy for the next few years, bearing in mind Italy’s current economic climate?

Maria Bianca Farina: Although we keep on improving our product range, our real commitment focuses on reinforcing sale assistance offered to post offices, developing new client services, leveraging on existing resources and competencies within the group, as well as continuing to improve and modernise information technology systems.

“Greater access to insurance products could contribute to the whole welfare and health system”

World Finance: Finally, the topic of boardroom composition is an interesting one; what does it take to succeed as a woman in this market?

Maria Bianca Farina: In fact, the world of insurance and finance is still predominantly male-dominated. But luckily, we are witnessing some changes. In the last decades, more and more women have become part of the financial services sector, and they brought in more feminine traits such as caution, reduced inclination to risk, and greater attention to taking action.

Today, a woman still has to make a much greater effort compared to a man to achieve the same goals. Nevertheless, her unique and irreplaceable features are what to put a stake on. Moreover, I believe that a woman doesn’t need to act like a man to break the glass ceiling. As far myself, I never changed my personal approach in a working environment, always preferring to be true to myself and my ideas.

World Finance: Maria, thank you.

Maria Bianca Farina: Thank you to you.

Christos Christodoulou, Frixos Savvides, and Mehran Eftekhar, on Cyprus insurance | Trust International | Video

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Cryprus’ insurance industry is relatively small, but EU membership is helping the country to attract international insurance management and reinsurance operations. Christos Christodoulou, Frixos Savvides, and Mehran Eftekhar from Trust International Insurance, discuss the challenges in Cyprus’ insurance industry caused by Solvency II and other EU regulations, but also the opportunities for consolidation as banks are forced to divest their insurance arms.

World Finance: Christos – you’re the fastest growing insurance company in Cyprus. Tell me what the secret is behind this success?

Christos Christodoulou: In 2009 we decided to enter the Cypriot market. The new board has said, from the beginning of its operations, that we will become a leading insurance company through innovation and customer service excellence. Because the Cypriot market was a very crowded and mature market; we needed to separate ourselves from the competition.

Therefore the board saw this opportunity to innovate. So we produced a new approach to general insurance, and we have established good systems, to provide to customers excellent support.

“The whole structure of the insurance business in Cyprus is changing”

World Finance: Tell us how the industry has developed from its British heritage to international influences.

Christos Christodoulou: In 1960, insurance was offered mainly from the UK, that maintained branches in Cyprus. It was not done until 1969 that the first insurance company was established on the island.

Currently we have 30 insurance companies operating on a small island with a population of less than one million. The Cypriot people are accepting insurance, and they are insurance-literate.

The market in Cyprus is relatively small, but due to EU membership, we expect it to grow.

World Finance: Frixo – what challenges does the Cypriot insurance market face?

Frixos Savvides: We have gone through a lot in these past few months. Definitely the whole structure of the insurance business in Cyprus is changing. And either it has to change by force, or it has to change voluntarily.

Traditionally, Cyprus insurance market was predominantly led by the two major banks through their subsidiaries. Now the two major banks: one of them is gone, Popular Bank has gone, and Bank of Cyprus is going through an unbelievable restructuring and redevelopment of the capital, and a load of other activities; and naturally as a process imposed by the European Union, the banks have to get rid of their insurance arms. And they have to be on the same level of competition as everybody else.

Thus, the major change which is going to be very painful to the banks, but also it will give the opportunity to young companies like us, to buy out or merge with other companies in order to absorb these unbelievably valuable businesses which will become available.

“Banks have to get rid of their insurance arms, presenting an opportunity to buy or merge with these companies”

World Finance: Mehran, how do you see cross-border business developing?

Mehran Eftekhar: In order to do cross-border, you need passporting. Passporting really means that your regulator, in the country that you’re operating in, will allow you to do business in other European Union countries, or actually any other country in addition to the EU. And for the regulator there to also accept you as a company that can transact business in that country, and therefore it will be very difficult.

World Finance: You already mentioned regulations – what are they key regulations, and what kind of impact have they had on the country?

Mehran Eftekhar: The main regulation is European Union directives on the insurance industry. We have also international financial reporting standards, that Cyprus applies through its local institute of accounting and other bodies.

We also have the local laws which they have to abide by, and now Solvency II.

“Trust International Insurance is a step ahead, because we are mostly ready for Solvency II”

World Finance: In terms of Solvency II, Christos, perhaps you can give us some detail about the technicalities?

Christos Christodoulou: As from the first of January 2014, the whole way of evaluating solvency in an insurance company will be changing. Depending on the speed things will change, it will affect the market, because due to the financial crisis we are going through the financial position of the different companies from the island has been affected. Solvency II makes things tougher; it corrects things, but it makes them tougher. So the timing of applying the Solvency II, and the speed with which it will be implemented, will change the insurance industry. Some of the players will not be able to take this rate.

This is again where Trust International Insurance is a step ahead, because we are not affected, and we are mostly ready for Solvency II. We are ready to implement all its provisions, and our assets are solid. Therefore we look to a future with a lot of prosperity, and we hope it will be turned to our favour.

World Finance: Christos, Mehran, Frixos, thank you very much for your time.

Christos Christodoulou, Fixos Savvides, Mehran Eftekhar: Thank you, thank you very much.

Mohan De Alwis on Sri Lanka’s infrastructure developments | Sri Lanka Insurance | Video

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Mohan De Alwis explained earlier how Sri Lanka’s Insurance Industry Act will provide investors easier access to the Sri Lanka’s economic growth; now he explains the other investments that are going into the country’s ports and roads, to help businesses work better and support Sri Lanka’s seven percent growth forecast.

World Finance: You spoke last time about the ongoing infrastructure projects; tell us more.

Mohan De Alwis: Some of the better-known projects that we have are Hambantota, the port at Hambantota is being developed; there’s an airport that is being developed at Hambantota; at the same time there are a number of other ports, and among them the Colombo port extension is the more important project that we have. And there have been many power projects that have gone through. There have been hydropower projects that have been going through.

The road network project, which is the Katunayake Expressway. There are some highways that are coming up; the highway from Kottawa to the southern area, which is at the moment, the first phase is on. The Katunayake Expressway will be open very shortly.

So there are huge infrastructure projects that are going on at the same time.

“The growth rate in Sri Lanka has been phenomenal, but it requires infrastructure”

World Finance: And how is Sri Lanka Insurance working to support these projects?

Mohan De Alwis: We get involved as the insurer to the nation, with all these projects. We cover the insurance requirements of the construction, as well as the machinery, and workmen’s compensation areas.

World Finance: And how will this help businesses and improve the economy?

Mohan De Alwis: Any economy requires the infrastructure to be developed. In the past four years, the post-war era in Sri Lanka, after the third year war ended in 2009, there’s been many infrastructure projects. The growth rate in Sri Lanka has been phenomenal. We’ve had growth rates of 8.3 percent, 6.5 percent, and now this year we are targeting somewhere around seven percent growth. Now, all of this requires infrastructure. And with infrastructure projects coming through, other business ventures would be in a position to come in.

“Sri Lanka is tipped to be one of the best-growing countries”

World Finance: So what do you foresee for Sri Lanka within the next five years?

Mohan De Alwis: There will be lots of opportunities for foreign investors, and it’ll be a country that will boom, in my opinion. With these kind of growth rates, Sri Lanka is tipped to be one of the best-growing countries, and better countries to invest.

World Finance: Mohan, thank you.

Mohan De Alwis: Thank you very much.

Mohan De Alwis on insurance in Sri Lanka | Sri Lanka Insurance | Video

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Sri Lanka’s insurance market is about to undergo wide-reaching changes. Mohan De Alwis, MD and CEO of Sri Lanka Insurance Corporation, talks about the impact that Sri Lanka’s new Insurance Industry Act will have on business, and how as Sri Lanka’s national insurer, SLIC offers more varied products for the Sri Lanka’s mass market.

World Finance: So tell us about the history of Sri Lanka Insurance Corporation – you have gone through some changes yourself?

Mohan De Alwis: Sri Lanka Insurance Corporation was brought in as a government organisation in 1962, January 1st 1962. And since then it has been coming through and facing a few changes.

In 1988, the industry was liberalised. There were lots of competitors that came into the market.

In 2002 the company went through a change when it was privatised; and back again in 2009, the ownership reverted back to the government.

“The Insurance Industry Act requires that life and general industries be separated, and separate companies be incorporated”

World Finance: How is the industry about to change, and how will this affect your clients?

Mohan De Alwis: The insurance industry is having the Insurance Industry Act. Which requires that both life and general industries be separated, and separate companies be incorporated.

A composite company like SLIC will have to go through this change. We would look at separating these two companies, forming two companies, and this has to be done by February 2015.

The second requirement that comes with the Insurance Industry Act in Sri Lanka is that by February 2016, these companies need to be listed in the Colombo Stock Exchange.

World Finance: What types of products and services do you offer your clients?

Mohan De Alwis: It’s a mixed bag of products. We’ve got endowment life policies, and you can couple that with the critical illness covers, surgical and hospitalisation, family protection, and that can be mixed together.

Then we have children’s products, investment products, and retirement products. That’s on the life side.

On the general industry, general insurance we have fire, engineering, personal accident, marine, bankers’ indemnity, workmen’s compensation, a whole host of products that we have.

“By February 2016, these companies need to be listed in the Colombo Stock Exchange”

World Finance: How does this offering differ from that of your competitors?

Mohan De Alwis: Being the national insurer, we always look at the mass market. I’ll give you an example: with regard to the migrant employees, Sri Lanka has a huge migrant employee population, which is incidentally the highest income earner, in terms of foreign exchange. So we’ve come up with a product for personal accident while they’re away.

Another factor that is very salient with us is that we’ve been able to pay the highest bonus for our life policy holders. Now, that is possible because we’ve got the highest life fund in Sri Lanka; at the moment it’s running at LKR 16bn.

World Finance: How important is staff training in delivering top quality products and services?

Mohan De Alwis: The insurance industry is a knowledge industry, and it requires qualified staff and also they need to be updated in the latest changes in the industry. There are very scarce insurance related professionals. Insurance professionals per se also are not freely available. Then you’ve got the actuaries, who are very scarce in Sri Lanka, so you need to train a good workforce, and sometimes train them even overseas.

“We’re looking forward to the listing, which will bring in many strategic partners”

World Finance: Tell us about some of the challenges you help your customers to overcome.

Mohan De Alwis: You need to understand the need of the customer, because there’s no common answer to all insurance problems, or insurance requirements. So what we do is, we have a good sitting with the client, understand their needs. The important thing is to do a good risk assessment and a survey, and make sure that we understand each other. And then we tailor the product to suit the client’s needs.

World Finance: And how do you give back to the community? What CSR projects do you have in place?

We take pride in preserving the culture and religion of our country. And also we do get involved in developing sports. Because we believe sports is important factor to develop people.

World Finance: And what does the future hold for Sri Lanka Insurance Corporation?

Mohan De Alwis: We have come a long way since 1962. We are a $1bn asset-based company now. We’re also a leader in insurance, and we are also already diversified into many other areas, such as hospitals, gas in energy sector, and now the latest is in the hotel sector.

We’re also putting up a hotel which is 475 rooms, and this is going to be operating in Sri Lanka with international operators. And so, we’re looking forward to the listing, which will bring in many strategic partners.

World Finance: Mohan, thank you very much for your time.

Mohan De Alwis: Thanks a lot.

Farhad Irani on banking in the UAE | Mashreq Bank | Video

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As one of the UAE’s top financial institutions, Mashreq Bank is leading the way in terms of innovation. Farhad Irani, Executive Vice President and Head of Retail Banking Group, discusses the developments in smart banking in the region, and what the new code of conduct from the UAE Banks Federation means for the financial services industries.

World Finance: What are the major challenges facing banks in the UAE?

Farhad Irani: We see the population target market and the opportunities emerging and growing in the next 8-10 years. However, with this dramatic growth come challenges. Fundamentally, we’ve got changing consumer behaviours. Customers are moving significantly and fast towards digital channels. 75 percent of the existing set of mobile phones in the UAE are smartphones, and the penetration of smartphones to the population is about 1.3-1.5. Banks have to move with the times in developing interfaces that are more digitally inclined.

The UAE is a very interesting market; it has a target banking population of about 4.5 million that’s growing very fast, as I mentioned, perhaps 6.5-7.5 million in the next couple of years. But you have 51 banks, and about 30 of them are operating the retail banking space. So one can imagine the amount of competition. Finally, a very positive step forward for the UAE is the emergence of the credit bureau. But, as in any environment, when the bureau is initially launched, there is a certain amount of disruption. Disruption in the segments that are slightly over-leveraged.

World Finance: The UAE Banks Federation has adopted a code of conduct for its members. How do you see this impacting banking?

Farhad Irani: It’s a commitment to the customer, in that banks will operate in a fair, transparent manner, and that redress will be swift and just.

World Finance: Well Mashreq has achieved uninterrupted, profitable growth for the last half decade, so what would you say your key to success is?

Farhad Irani: 50 percent of its success comes due to its leadership. The other attributes to our success is, I think, we’re the right size. Because we are privately owned, we have all of 4000 people, we operate in 13 markets, we are the right size, and we able, nimble, agile, and we can deliver change pretty quickly.

World Finance: What unique services do you offer and how are they tailor made towards the customer?

Banks have to move with the times in developing interfaces that are more digitally inclined

Farhad Irani: Coming to a bank is not exactly the most exciting objective of one’s day. But what if this experience in the bank branch were akin to the experience one has when you walk into an Apple store? Touch, feel, the excitement, the game-ification. It’s these attributes that we brought into our branch. Bank loyalty is fleeting, especially in this day and age where competition abounds and it’s so easy to open another account online. At Mashreq we aim to hold on to our customers through thick and thin, through generations of customers if you will. And we’ve invested specifically in universal reward programs that allow the customer to get something back.

World Finance: Mashreq leads the way in terms of smart banking. Why is this important in the UAE?

Farhad Irani: The UAE has a bankable population that is wealthy, that is upwordly mobile, very educated, and just about everyone holds a smartphone and an ipad and a tablet. These consumers are worldly-wise, haven’t been raised in the UAE but come in from the west, from Europe, from Asia, from Australia, and they have to juggle many balls. They’ve got to manage their finances onshore and, at the same time, handle their finances back home.

Smart banking in Mashreq is usually termed as EQ: engage, experience, and evolve

At the same time, on the ground, Mashreq has 48 branches, and we have about just over half a million customers. If we keep increasing our branches to cater with growth, the economies of scale get disrupted. So a win-win situation emerges: what if we were able to cater to emerging and futuristic consumer needs by investing in the digital stream?

Smart banking in Mashreq is usually termed as EQ: engage, experience, and evolve. Our investments in technology are manyfold, but the most notable of them relate to what we’ve done with our branches. Three of them already, 10 of them before the first quarter of next year is out. In these smart branches, customers engage with digital wallscreens, where they explore services that the financial institution has to offer by hand gestures. When they walk into the branch, they have access to smart tablets. There’s no paper on the telecounter, the transaction is punched in through tablet, the transaction goes straight to the telecounter where the consumer goes and consumes the transaction.

If the consumer seeks advice, he walks up to a relationship manager. Microsoft aids smart tables instead of normal word furniture and the relationship manager actually takes the customer through many simulations. That simulation can be fitted into the customers needs in terms of affordability, return, yield, etc.

World Finance: And finally, you’re now looking to develop your services domestically and overseas, so what’s in the pipeline?

Farhad Irani: Dubai was created on the back of trade, Mashreq was created on the back of trade. You have a whole bunch of countries within the region that have growing trade ties with the UAE. This is what Mashreq leverages. We have a presence in over 13 countries at this point in time. Moreover, the prowess that we have in retail banking in the UAE, being the leading retail banking presenter of financial services in this market, we aim to leverage that capability, that skill set, that management team into other neighbouring countries that throw up big retail opportunities.

World Finance: Thank you.

Farhad Irani: It’s been a pleasure. Thank you.

Ho Ngoc Yen Phuong on oil in Vietnam | PV Drilling | Video

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Over the past few decades, Vietnam has emerged as an important oil and natural gas producer in South East Asia. Ho Ngoc Yen Phuong, Vice President and CFO of Petrovietnam Drilling and Well Services Corporation, talks about Petrovietnam’s plans to invest $1.5bn per year in exploration and production activities, and how Vietnam’s new refineries will allow the country to become an exporter of oil products, instead of crude oil.

Kweku Awotwi on renewable energy in Ghana | Volta River Authority | Video

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For the past 50 years, the Volta River Authority has been powering electrical energy supplies throughout Ghana. Having recently started to increase production on an international scale, its CEO Kweku Awotwi talks about where Ghana’s energy industry is headed, what Ghana’s growing renewables sector means for the country’s GDP, and how Volta River Authority is dealing with its investment deficit.

Lee Jim Leng, Lee Wai Sing, Cheah King Fui | Hong Leong Investment Bank | Video

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Malaysia’s capital markets are booming: last year assets under management grew nearly 20 percent to over $150bn. Hong Leong Investment Bank has capitalised on this growth to expand into the region; its CEO Lee Jem Leng, CRO Lee Wai Sing, and Head of Treasury Cheah King Fui, discuss the challenges and opportunities in Malaysia, and the trends in the capital markets moving forward.

World Finance: Tell us more about this expansion.

Lee Jim Leng: OK, in terms of expansion, we have basically achieved what we consider ourselves in Malaysia the mature stage, where among our competitors our earnings have grown to a stage where we are fairly comparable to our competitors. So the next phase of growth that we are looking for in terms of expansion will be the regional markets, and the first being of course Singapore which is a place closer to home. And the next will be we’ll hope to work on with our sister company in Hong Kong, where we are hoping to use our same level expertise to build on our homegrown brand, and create the same level of business that we hope to achieve out of these markets.

“Our clients are looking to expand beyond the Malaysian shore, and we are there to expand along with them.”

World Finance: What challenges have you faced and how have you dealt with them?

Lee Wai Sing: Well, for the last couple of years I think the most challenging part is the increase in regulations. We have definitely a lot of guidelines to adhere to, for example there is Basel 3, and there is ICAP. So with that the cost of capital has increased, so for us to maintain the older rate, to do the particular transaction is getting more and more difficult because the margin has been compressed, and with that, as an investment bank where most of our assets are traded, you’re not the first to meet the net stable funding ratios and the Basel 3 liquidity requirements. It’s a bit hard because most of our deposits are mainly corporate sites, and for wholesale interbank deposits are not taken into account as stable deposits, or stable liabilities for that matter. And of course, on managing the volatility of the market, whether it’s credit or interest rate, is difficult for us as well because we do not really have a stable policy of default, which is published specifically for Malaysia, so for the assets class that we trade it in it’s very difficult to calculate the credit risk capital charge for the particular assets, unless we are doing a standardised approach, so that will make our cost of capital a lot higher. And with that of course, market competition would definitely decrease the margins that we are going to make, and I think moving forward is definitely going to be more challenging.

World Finance: Looking to the future, how is the industry going to change?

Cheah King Fui: Our clients are continuously looking at new ways of raising funding, as well as financing, and we are there to help our clients. We are the first to raise SPAC financing in Malaysia, in fact we did the first and the second SPAC in Malaysia, and our clients are also continuously looking to expand beyond the Malaysian shore. They’re expanding regionally as well as globally, and we are also there to expand along with our clients, and along with it to help them come up with innovative financing as well as fundraising. In terms of investors, they are also expanding beyond the Malaysian shores. That’s where we will come in to help them as well.

World Finance: There have also been opportunities during this process. How have you been able to capitalise on those?

Lee Jim Leng: We see that the market has recently been active with a lot of mergers among the big bracket banks, especially CMB, they just bought into RBS. MayBank, another dominant investment bank, have bought into Kim Eng. In the middle of all these mergers, we see a lot of competitors being disrupted by integrating the so called operations and cultures among the two entities. We saw a lot of opportunities where we can catch up with our competition and stay close with our clients, and during this process we’ve been able to successfully garner market share, and in this process also we’ve been able to actually bring some first-to-market initiatives. For example, we listed the first pac on the Bursa Malaysia, we also were the first to do a Tier 2 bond for an insurance company, which has not been done in the Malaysian market. So that helped us when our competitors are busy, for us to make some traction into the market and gain market share. So being opportunistic in this instance has actually borne us some first to market deals and in the process, also we listed one of the most innovative REIT and we actually one an award for that by Alpha Assets.

“In each of the markets that we operate in, we hope to be judged as one of the top few investment banks the industry.”

World Finance: So what are Hong Leong’s future aspirations, and how will you achieve them?

Lee Jim Leng: In as far as Hong Leong is concerned, we hope to build along with our commercial bank. As you’re probably aware, we are part of a bigger financial group that manages across a whole spectrum of financial services, as Hong Leong builds its footprint among the regions. As you’re probably aware, Hong Leong Bank has set up operations in Cambodia, we have a fully fledged licence in Vietnam, and we also have an associate, Bank of Chengdu in China. So as they grow, we hope to also be able to grow along with the financial group and expand into a relevant investment bank in the region. As far as investment bank’s aspirations, of course, in each of the markets that we operate in, we hope to be judged as one of the top few in the industry. As for what we have done in Malaysia, we are fairly happy with what we have achieved, and of course winning this award is one of those. But in terms of the market share, league table positions, we are very happy with what we have done and achieved for the last four years since we started in Malaysia, and so for the regional markets we hope to be able to replicate that, and we hope to be able to do just as well, and be able to make a significant presence and also to be an innovative financial services institution in each of these markets that we operate.

World Finance: Thank you.

All: Thank you Eleni.

Rob van Kuijk, Robert-Jan van Hoorn and Cliff Go on growth in Asia | Finles Capital Management | Video

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The Netherlands is a leading financial centre, with hedge funds and alternative asset managers, ranging from start-up size to $10bn. Rob van Kuijk, Robert-Jan van Hoorn and Cliff Go from the Singapore Office of Netherlands-based Finles Capital Management discuss the huge opportunities of population and consumer growth in Asia, and how the Finles Lotus Fund is designed to capitalise on this.

World Finance: Rob, maybe you can start by telling me a little bi about Finles, and the unique services and products you offer.

Rob van Kuijk: We were founded as a company in the mid-70s, doing financial services. Over time we evolved to become only doing hedge fund services. Since recently – basically the last two years – we are giving consultancy services, which you see with more fund of hedge fund providers. They’re moving into this space of consultancy and advisory. We did the same, and today we’re delivering predominantly tailor-made services, in-house products for banks, pension funds, insurance companies, wealth managers; things like that.

“People do need to invest in Asia. That’s where the growth is”

World Finance: Robert, how do you go about your investment process?

Robert-Jan van Hoorn: The investment process is both focused on the investment side, as well as on the operational side. If you look at our due diligence process, we check numerous factors and items. So, the focus is on added value and underlying investment managers. There has to be skin in the game by the underlying investment manager, so they have to have an investment in their own funds.

We are conducting checks on the service providers of the funds, so there has to be a separate auditor, there has to be a separate administrator. So, it’s a lot of work – normally full due diligence takes around three to six months, so, you can imagine that this is a serious issue.

World Finance: And how do you approach managing risk?

Robert-Jan van Hoorn: We are absolute-return type of investors, so, the actual risk management framework depends on several things. So, for example, for our Finles Lotus Fund, that one has a higher risk toleration than, for example, our Finles Fountain Fund, which is a 100 percent fund of hedge funds, which invests globally.

But, for example, for the Finles Lotus Fund, it’s a hybrid product. So 75 percent is invested in long-only funds, 25 percent is invested in hedge funds, so with that 25 percent we are trying to manage our left-field risk. So during market stress this 25 percent needs to kick in, needs to make up the performance for the long-only funds in the portfolio.

If we look to the 75 percent which is invested in long-only funds, what we’re trying do over there is, we target absolute-return type of long only funds. So during market stress, if these fund managers have a top-down view of the market which is not that positive, then they can raise their cash balances, for example.

“75 percent is invested in long-only funds, so it’s predominantly trying to capture the betas in the Asian market”

World Finance: Rob, your Finles Lotus Fund will receive an award for Best Emerging Markets Hedge Funds, so can you tell me about the features of this fund?

Rob van Kuijk: Well, the Lotus Fund is not exactly a hedge fund in the way people think of the phrase hedge fund. It is predominantly long-only, so it’s predominantly trying to capture the betas in the Asian market. And by being long-only as Robert-Jan just said, 75 percent of the portfolio is pure equity-related.

It’s not only in fund of long-only funds, but it’s also for tactical trading in ETFs and things like that. But 25 percent of the fund is predominantly meant to cover the risk, because the Asian markets are always having sharp downsides.

With this fund, I think the most specific interesting thing for clients is that you’re talking about a multi-strategy fund in Asia, but it has daily liquidity. And that is something really unique that you hardly ever see.

World Finance: Cliff, over to you now; what opportunities and challenges do you see in Asia compared to the rest of the world?

Cliff Go: I think the challenges that you see in Asia is because of the rapid growth that we’ve seen over the last decade. The distribution of wealth, the have and the have-nots, cause a lot of tension. That has to be well managed, and obviously that’s a challenge. I think in countries like China, for example, where we have seen this growth, we see now that we have to see whether they can unlock value from social and government enterprises into much more of a commercial enterprise, without actually compromising the middle-class and the people who really work to achieve what the country can achieve.

Everybody knows that Asia is where the growth really is. Vast demographics, fast consumer growth, fast population growth, leads to opportunities. I think what we have seen in the past is very much that a lot of these countries are very export-oriented. I think much more going forward, is that we have to identify opportunities that relate to the consumer domestic consumption. And I think if we, together with our capabilities within Lotus, can identify those opportunities, it’s going to be an extremely opportune and exciting time to be part of.

“25 percent is to cover the risk, because the Asian markets are always having sharp downsides”

World Finance: Rob, finally, what differentiates the Lotus fund from other managers in your sector?

Rob van Kuijk: Well, the key thing as I said before, is daily liquidity. Clients can buy and sell on a daily basis, which is extraordinary for a fund of this structure.

Secondly, what’s very important is, people do need to invest in Asia. That’s where the growth is. The biggest part of this world is emerging, and emerging rapidly. If you look at the middle class, the growing middle class in Asia? It’s unbelievable. You’re talking about so many people emerging. So if you want to make returns over the long term, you need to invest long-only in Asia. That is absolutely a must for every portfolio.

What is interesting in this product is, you also have the downside protection. And I think that combination is very interesting for people.

World Finance: Gentlemen, thank you.

Rob van Kuijk, Robert-Jan van Hoorn, Cliff Go: Thank you.

Steve Troop on banking in Qatar | Barwa Bank | Video

Posted on by World Finance

The ‘Global Financial Centre Index’ has ranked Qatar as the top financial centre in the Middle East, with its GDP growth expected to reach 6.5 percent for the full year 2013. Barwa Bank CEO Steve Troop talks about the ways the Qatar banking industry is changing to meet the National Vision 2030, the challenges facing Sharia compliant banks, and the affect declining interest rates are having on banks in the region.

World Finance: So tell us how the banking industry in Qatar has changed in recent years and the role of Barwa in the national vision.

Steve Troop: The industry in Qatar is growing rapidly, it’s very competitive, it’s increasingly sophisticated, it’s increasingly international and internationalist in its approach and its attitudes. It’s very well capitalised, it’s profitable. The structural developments are of course part of the national vision, 2030; I think a lot of people tend to think of those developments as associated principally with the World Cup in 2022. Roads, schools, hospitals, the airport, a new port, electrification, electricity generation, desalination, that sort of thing. And of course, core to the national vision is this idea of an economy in transition, a move away form hydrocarbon dependence towards a more diversified economy, a knowledge based economy. So building Qatar as a regional services centre, as a conference centre, as a tourist destination, and as a base for light industry in service companies. The bank’s role in all of this is obviously to assist and support the major infrastructural commitments, but also to help finance some of the SME developments around these new industries.

“I think Qatar is in a remarkably fortunate position: it has both the plan and the wherewithal to execute that plan.”

World Finance: Qatar has one of the fastest growing economies but significant funds are needed to deliver the planned infrastructure projects, so what tough decisions does this mean for the country?

Steve Troop: I think Qatar is in a remarkably fortunate position in as much as it has both the plan and the wherewithal to execute that plan. The country has very very significant surpluses, principally through the export and sales of hydrocarbons. I think there are some issues that we need to tackle around the maturity of projects. Some of these are very, very long-tail commitments. Deposit bases tend to be an awful lot shorter of course, so that has structural challenges from a banking perspective. But other than that, I think we’re in great shape to take them forward.

World Finance: What makes Qatar an attractive destination for global business investment and enterprise?

Steve Troop: I think it’s a very business friendly place. It has superb communications, both physical in terms of connectivity, telecommunications, a relaxed and relatively liberal environment in the context of the Middle East. It has an established legal system, very very low or very little taxation indeed, principally for companies operating there. And indeed, very significant opportunities to participate in what’s going on in terms of a rapidly growing economy.

World Finance: What are the major challenges facing a Sharia compliant bank such as Barwan, how do you overcome these?

Steve Troop: The first one would be the challenge around short term liquidity management; the options available to Islamic banks in terms of short term deployment are considerably narrower than those available to conventional banks. The situation’s improving, of course; we’re starting to see shorter term instruments available to us for deployment, though it remains challenging. I suppose the second issue would be the question of consistency of the application of Sharia compliance and what constitutes Sharia compliance. There are no internationally recognised standards for Sharia compliance rule, we’re reliant upon the views of our scholars and our Sharia boards, and from time to time that does create confusion and disagreement as to what exactly is a Sharia compliance structure.

“Islamic banks are recognising the need to become increasingly sophisticated, and increasingly customer focused in their approach”

World Finance: How is the demand for Sharia compliant services developing and how do you see it evolving in the future?

Steve Troop: Certainly if one looks at Qatar, and Qatar is no exception but if one looks at the banking aggregates in Qatar, the Islamic aggregates are growing at a considerably faster rate than the conventional ones. In Qatar we’re up to about 25 percent of total aggregates now, almost a quarter of total aggregates are now Islamic, both assets and liabilities. There is clearly demand at both individual and personal level. Purchasing decisions are more personal, particularly in the SME area, business owners, owner-managers, do elect for Sharia compliant structures, and there are of course corporations, particularly government sponsored corporations that do prefer Sharia compliant structures. So it’s growing very rapidly indeed.

World Finance: How are Islamic banks developing when compared with conventional banks in the region, and what impact are the deflating interest rates having?

Steve Troop: The pressure on rates of course is universal, and that affects both conventional banks and Islamic banks. Islamic banks are recognising the need to become increasingly sophisticated, and increasingly customer focused in terms of the way they approach their businesses. Certainly from our perspective, our view is that Sharia compliance is central to what we do, but we also have to have a compelling customer proposition. Sharia compliance of itself is not enough to guarantee success. So a Sharia compliant bank, but also a good bank that meets customers’ needs and expectations in terms of service, sophistication, product range.

“We are selective, we are not a universal bank and have no ambition to be one.”

World Finance: Barwa Bank recorded strong growth to the first half of the year. What do you credit to this success and how do you plan to sustain this?

Steve Troop: I think we put our success down to a number of different things. I think we’ve been very focused. I think when you are a new entrant to what is already a congested and very competitive market place, you’ve got to have a differentiated strategy, and we’ve sought to be as differentiated as possible. We are selective, we are not a universal bank and have no ambition to be one. We’re not in mass market retail for example, there’s already plenty of capacity in that space. So we pick out areas where we feel we can compete, and compete as hard as we possibly can. Our retail banking proposition is very upscale, almost boutiquey, targeted very much at the mass affluent. We are a corporate bank that probably punches a little bit over our weight for the size that we are, and we’ve made a lot of progress over the last year or so in the Islamic capital markets, particularly through things like Sukuk issuance and that sort of thing. We feel there is a particular scope and opportunity for a dynamic approach to the development of Islamic capital markets, which we think are going to be very, very big and substantial in the years ahead.

World Finance: Steve, thank you.

Steve Troop: Thank you Nick.

David Suarez on Banorte’s acquisition of Afore Bancomer | Banorte Grupo Financiero | Video

Posted on by World Finance

Banorte, one of Mexico’s biggest banks, has acquired Afore Bancomer. This makes it the largest pension fund manager in the country, and the third-largest in Latin America. Chief Financial Officer David Suarez explains how the acquisition has had a transformative effect on the company, and how the bank’s strategy is based on Mexico’s changing demographics.

World Finance: How has this acquisition affected the company as whole?

David Suarez: Well, that acquisition has been both strategic and transformative. The reason for that is, the Mexican population is very young. And therefore there’s going to be a lot of young people entering the workforce in the next few years. This business, Afore, is the one that manages the retirement savings funds, and so therefore what you’re going to see is that the assets that we’re going to be managing over the next few years is going to accumulate substantially.

It’s also transformative because, with the acquisition of Afore Bancomer, the Afore becomes one of the most significant subsidiaries of the group. We became a very significant player in the market; we have now 28 percent of the market share, versus 17 percent of our nearest competitor, which is Banamex.

This business is going to continue consolidating, because of the way that the fees are charged. In terms of assets under management, right now the Afores in Mexico manage 12 percent of GDP in terms of assets, and in the next six to 10 years, that’s going to more than double. So, all of the long-term infrastructure projects and investments that are going to be done in Mexico are going to be done by the Afores, and Banorte’s going to be present in all those very significant infrastructure projects.

World Finance: What has been your strategy for success in Latin America?

David Suarez: Focusing on the Mexican market allows us to have incremental returns, because the expansion of credit in Mexico has been significant, and it will continue.

We are expanding our loan book, even in a very tough economic environment right now, by more than 10 percent. And we are expecting it to expand to levels of close to 20 percent as the economy improves, which we’re expecting that to happen next year.

So, overall being in Mexico has allowed us to become a much larger bank. In terms of other elements, well, we have been able to expand organically substantially. Our retail network has expanded to become the third-largest in Mexico. And actually, in ATMs and POSs, we are the second-largest in the country.

The other thing is that in the business segments, we have done acquisitions like the one that we discussed previously. That has also been a key ingredient of our success. The other one is as I mentioned at the beginning, being local. This has allowed us to take decisions in Mexico, which is not the case with some of our international competitors. So, those have been the main elements of our success.

World Finance: How has volatility in international financial markets affected your operations?

David Suarez: On the wholesale banking unit, we’ve been able to defend ourselves, and actually right now in Mexico, the interest rates have been coming down. They just came down last Friday, and there’s a possibility of an additional rate cut in October, so the Mexican yield curve is shifting, and there’s a lot of value now in the securities positions that we have. So, the impact was short-lived and was not very significant.

In terms of our retail operations, nothing has happened, and that’s because we are a local player. We continue to grow our consumer loan book significant. And we haven’t seen any of our clients retrench because of this volatility.

As you know Mexico’s very linked to the US, to the export cycle in the US, and the US economy is doing well. So, as long as the US economy does well, Mexico has the possibility to expand its GDP. So therefore the type of volatility that you’ve seen in foreign exchange in countries in other parts of the world initially happened in Mexico, but recently it’s been much calmer in the markets. Because people are now realising that even though Mexico is an emerging market, we’re very linked to the US cycle, and they’re positive about that.

World Finance: And what moves are you making towards greater financial inclusion?

David Suarez: We have a lot of contact points with the telecom telegraph company in Mexico that has more than 1,500 offices. We’ve also done agreements with 7/11, with extra stores that are also very significant small retailers in Mexico. In some cases in municipalities where there’s no banking presence, in order to be able to open deposit accounts, and also so that people can transact and not go to the branch.

Right now what we’re doing is, we’re also working with the Mexican public markets, especially in Mexico City. People there are very excited, because now they’re seeing that a lot of their clients that used to go to large retailers, because they were the ones that accepted these means of payments – credit and debt cards – now they’re coming back to the public markets. And the public markets in Mexico are part of the community.

We’ve also done many things in terms of financial education. We participate very thoroughly in Mexico’s financial education week. And additionally we have basic products, entry level products, like a credit or a debit card, where people can have a basic product that doesn’t charge any fees. So they’re not money-makers for us, but we know that as people start using them and they progress through their lives, they’re going to start using more sophisticated products.

So we have all those initiatives, and many others. But in the end what Banorte is trying to do is, we’re trying to get more people into the formal financial system.

World Finance: How significant is good corporate governance to a company like yours?

David Suarez: Well, Banorte is now the most public company in Mexico. We have 90 percent of our shares floated in the Mexican stock exchange, and we don’t have a majority shareholder. And so we have made a lot of advances in terms of adopting the best international practices in corporate governance. Right now our board – if you like at the composition – 67 percent of the board is independent. That is not only unique for Mexican companies, but it’s also unique to if you compare that to many companies in developed countries.

We also have more than 50 committees that support the board in its functions. We also have been making strides in terms of developing the protection of minority shareholders’ rights, so, for us corporate governance is a rule. We need to continue advancing, we know that we still have a lot of challenges, we have adopted of course all of the disclosure requirements of the Mexican regulator, and we follow that strictly. But we also know that many of our investors and many of our shareholders are asking for more thorough information on all of our daily operations.

So, we are going to continue advancing in terms of modernising all of our disclosure, our transparency policies. And additionally we’re going to continue trying to run the firm more professionally.

World Finance: And finally, how do you envisage the future for Banorte?

David Suarez: Banorte recently, just this past month of July, carried out an equity offering. We were able to under very tough market conditions obtain $2.5bn of equity that will allow us to grow into the future. And so therefore we now have the elements and the ingredients to be able to grow in the business segments that we’re trying to attack. Mainly consumer products, which are the ones that consume our capital.

We’re also undergoing a major transformation with an alliance that we’ve done recently with IBM. We’re going to overhaul all of our IT, all of our processes, and through that what we’re trying to do is become a more client-centric institution.

So what we’re trying to do, and this is how we envisage Banorte, is becoming a much more efficient bank, because we’re going to have more automisation, much quicker response to our clients, and also we see ourselves as a bank that is going to be more attentive to our clients’ needs, and therefore if you combine that efficiency and much better client service, we’re going to be a much more profitable bank.

World Finance: David, thank you.

David Suarez: Thank you very much.

Prime Minister Daniel Kablan Duncan on the Henri Konan Bedie bridge | Cote d’Ivoire | Video

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The Henri Konan Bedie toll bridge, named after Cote d’Ivoire’s former leader who was ousted from power in 1999, is the focal point of the country’s reconstruction project. Prime Minister and Minister of Economy and Finance Daniel Kablan Duncan explains what the project means for Cote d’Ivoire, the unique challenges presented by developing PPPs in times of conflict, and the future for private investment in the country.

World Finance: What does this project mean for Côte d’Ivoire?

Daniel Kablan Duncan: For those who know Abidjan, which is the economic capital of Côte d’Ivoire, we have two bridges, one called Houphouët-Boigny built in 1954, and the second called Charles de Gaulle built in 1967. These two bridges link the northern part of Abidjan to the southern part. In the southern part of Abidjan you have the port and also the airport, so these links are really important, not only for Côte d’Ivoire, but also for the sub-region. But we have more than 200,000 vehicles crossing the two bridges each day. So it is not sufficient to have two bridges, that’s why we need a third bridge.

World Finance: This project was developed even through times of conflict. What have been the challenges?

Daniel Kablan Duncan: Côte d’Ivoire was a stable country from 1960, the year of independence, until 1999 when we had a military coup. We had the election in October 2010, but since then we have some difficulties because the former president did not want to quit. Finally we obtained President Ouattara to come into office in April 2011. This project was in mind since the mid-90s. It is 1.5km over the lagoon and more than 5.7km of roads linking the bridge and the other parts of the city of Abidjan. So it was a challenge because we had to come back again, and with privately managed projects. And the amount was also important, it was about €269mn, and because of the situation it was difficult to have a BOT(?), so the government had to take part of it, that’s the reason why it’s a PPP.

World Finance: What were the social and environmental impacts of the project?

Daniel Kablan Duncan: There were 6.7km of works to be done, and so we had to move some people from there. And in 1998, the government paid $10mn to compensate the people who had to move out. But because of the difficult situation in Côte d’Ivoire, the bridge was not built and we had to do it again. But the people went back to the place. So we had to move them out again, and also to pay back again, but we had to do it in a short period of three months. We will finish it on December 27 of next year. That will be important because, apart from the bridge, we’ll have an internal change of the three level platform in the centre of Abidjan.

World Finance: The bridge is part of the country’s reconstruction project. How is it bolstering the country’s economy?

Daniel Kablan Duncan: Job creation, partnership with the private sector, but also the opening of possibilities for other PPPs in Côte d’Ivoire.

World Finance: And in terms of the opportunities for investors?

Daniel Kablan Duncan: There is some possibility for the future. Not only for the construction firms, but also for the financial institutions. For example, when we met in Paris in December of last year, the World Bank, through the IFC and MIGA, decided to finance $700mn in Côte d’Ivoire for five years, just two years after we have already used the same amount, so they have decided to double the amount for the future, and so there are more and more investments in Côte d’Ivoire

World Finance: And finally, how do you see the country developing?

Daniel Kablan Duncan: The economic development is on the way. After the crisis, last year in 2012 GDP increased by 9.8 percent. This year will reach nine percent, but we hope that we will reach double digit growth by next year, in 2014. But the main ambition of the President is to turn this country into an emerging market by 2020. Within 7 years is not a long time, but we can achieve it because there are very important possibilities in Côte d’Ivoire, in the agricultural sector for instance. You may know Côte d’Ivoire is the world’s largest producer of cocoa, used to produce chocolate of course, and we are the world’s largest exporter of cashew nuts for instance, and we also produce pineapples, bananas and so on. But the other sectors which are important for growth are mining and oil. We found iron ore in the western part of Cote D’Ivoire, we have 4mn tons. We have oil in the deep sea, and we produce gas too. We used to produce electricity as well, but also we have found a new mineral called schelium. It is used in the aerospace sector, and we have been told that we have the biggest deposit here, so we have some possibilities in the area. But also we are trying to improve the sector for services, like the ports, and the aerocity which is a $2bn project that can help Abidjan to be the hub of this evolution.

World Finance: Mr Prime Minister, thank you very much for you time.

Daniel Kablan Duncan: Thank you again, thank you.

Luis Andrade on PPPs in Colombia | Bonus Banca | Video

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Two years ago, the Colombia government consolidated a new national infrastructure agency. The new body has the responsibility of securing over $27bn in investment by 2021. Luis Andrade, the President of the National Infrastructure Agency of Colombia, discusses Colombia’s ambitious PPP programme, and especially its Prosperity Highways project, design to connect financial capital Medellin to Colombia’s ports.

World Finance: Luis, maybe you can start by telling me the importance of the Prosperity Highways Project for Colombia?

Luis Andrade: So, we need to make the country more competitive, and therefore we need to make the roads straighter. We need to have trucks going at 80km/h through tunnels and bridges, and we also need to add lanes.

The Prosperity Highways is the biggest component of this programme. It’s centred around the city of Medellin, the second-largest city of Colombia, and the objective is to connect Medellin to the ports in the Caribbean and the ports in the Pacific.

To give you an idea of the impact of this programme, today to go from Medellin to the closest Caribbean port takes 10 hours. That’s in the Gulf of Uraba. With the new road it’s going to take four hours, less than half the time. So it’s a lot of competitiveness for the country, and a lot of employment during the period of construction.

The Prosperity Highways programme alone is likely to generate 60,000 direct jobs during the five year period of construction.

World Finance: How much interest have you seen from foreign PPP sponsors in participating in Colombia’s infrastructure projects?

Luis Andrade: A lot more than expected. We’re actually quite satisfied. In our pre-qualification rounds, we’ve had the participation of more than 25 international developers. Those 25, a big number of them are in the top 10 list of the world, and to our satisfaction they’ve also teamed up with local players.

And I think this is happening because we’ve invested a lot of money preparing the projects, reducing the risk of the projects. We’ve invested $100m in viability studies, in engineering, environmental and financial studies. We have a very transparent and simple process that gives them guarantees that they have an equal chance. And we’ve also worked a lot on making the projects attractive to them.

World Finance: What are the key elements of the business model for these PPP projects?

Luis Andrade: Well, we’ve looked at the business with our financial advisor Bonus, to make sure that they’re definitely attractive to the private sector. The first thing that we had to do was set a target rate of return on equity. So we set a target rate of 13 percent plus inflation, which we think is an attractive rate for foreign investors.

We also defined 25 year projects, where we have a total revenue guaranty over the life of the contract. So if the developer is not able to get the revenues it expected, it gets additional years, and if not, a lump sum payment from the government. That reduces risk very significantly.

World Finance: What are the main financial challenges for these projects?

Luis Andrade: Well, we have two big challenges, and I think the first one is common to many project finances around the world, the second one is very particular to Colombia.

The first one is, going from the construction financing to the long-term financing. Most banks are willing to lend on a 7-10 year basis during the construction period, but these projects really have a cashflow for 25 years. So we need to have a refinancing event at that point. That’s a big challenge.

Another big challenge is the size of the Colombian financial system. The projects are quite large for the capacity of our financial system, so, we’re working on ways of making this possible.

World Finance: And finally, what role will the Colombian government and multilaterals play in financing these projects?

Luis Andrade: We’ve been discussing with our finance ministry and our development bank on what role the government can play to help catalyse the inflow of money from the private sector. And we think there’s two ways we can do it.

One way is by providing subordinated debt, kind of a quasi-equity, to improve the rating of the senior debt provided by banks, and eventually in a securitisation. But also by providing some of the cashflows in US dollars, in such a way that we can tap the foreign markets, and we can attract financing by foreign banks and foreign institutional investors.

In all this process we are accompanied by the multilaterials, for example, the IFC, the Inter-American Development Bank, and the CAF. So we expect that the subordinated debt provided by the Colombian Development Bank will be accompanied by subordinated debt provided by the multilaterals.

World Finance: Luis, thank you.

Luis Andrade: Thank you Jenny.

Prime Minister Daniel Kablan Duncan on the Ivory Coast economy | Video

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From the wealthiest country in west Africa, to a civil war and a nine year political crisis: the Ivory Coast has seen its fair share of turbulence. But now the country is enjoying peace, political stability, and economic growth. Prime Minister Daniel Kablan Duncan talks about the economic situation in the Ivory Coast today, the changes needed to encourage more private investment, and the country’s plans for its $22bn development fund.

World Finance: The Ivory Coast has had its ups and its downs, but what is the economic situation on the ground today?

Daniel Kablan Duncan: Well the economic situation is improving on the ground, and to confirm it, last year in 2012 we had increase in GDP by 9.8 percent. This year we expect nine percent, and next year we will have a double digit growth. It’s a rapid growth, and that’s necessary because the President wants to turn Côte d’Ivoire into an emerging market by 2020. So we have to have to a longstanding economic growth so that we will be in a position to improve the situation of the people in the country.

World Finance: How have you been affected by the global financial crisis?

Daniel Kablan Duncan: Africa as a whole was not too much affected by the financial crisis, because the links are not so important with the financial sector. In fact, they affect some developed countries to buy more from African countries, and that’s one of the reasons we are trying to diversify our trade with the different continents.

World Finance: What areas are strongest today, and how do you see the financial services sector developing?

Daniel Kablan Duncan: The main basis of the economy in Côte d’Ivoire is agriculture. We produce a variety of products. As you may know we are the world’s largest producer of cocoa, with $1.5mn each year. We are now diversifying the production – (? 2.00), palm oil, rubber, and so on – but we want to process more of it locally, and we are trying also to help foreign partners to develop mining, the oil and gas sector, and also to have some PPP to finance the infrastructure.

World Finance: The World Bank’s 2013 “Doing Business Index” ranked The Ivory Coast as the ninth hardest place in the world to do business. Do you think this is fair?

Daniel Kablan Duncan: We are among the ten best performers in reforms in the world. We have 189 countries that have been ranked, and Côte d’Ivoire is among the ten best performers. I think there is a merit to that, and that means it is really important for us to improve the environment of business in Côte d’Ivoire.

World Finance: What changes are needed to encourage more private investment into the country?

Daniel Kablan Duncan: We have a bilateral meeting with the private sector, chaired by the Prime Minister every three months. Maybe we can do it in a shorter time, so that we can be in contact with the needs of the private sector. We also have to improve the situation as far as the trade with other countries who have a special non-stop shop relating to (? 3.53) trade, so that we can also shorten the delays. To improve the situation, the port and airport are our major work, to more welcome the people who are coming from abroad to invest in Côte d’Ivoire.

World Finance: There’s obviously a lot of talk about the country’s new development plan, so what does this have in store?

Daniel Kablan Duncan: We have an amount of $22bn to invest, and we have 114 projects, 54 of them are public and 60 are private. The question is that we should have the financing for that. Out of this we have the agricultural sector, which is the basis of the economy, in which we have $4bn, and 60 percent of it is financed by the private sector. We are in the way to achieve all this and that is the reason why we would like to have more and more diversity of foreign investors.

World Finance: Moving on to the continent now, and obviousy The Ivory Coast is very well situated as a trade route with the rest of the continent. So what is your relationship with the rest of Africa?

Daniel Kablan Duncan: The trade within the countries in Africa compared to the total trade is 11 percent. Côte d’Ivoire’s trade with other African countries is 23 percent, so we are performing more, but that is not sufficient. Because if you take the trade between European countries, it is at 80 percent. We have to do more. We need more roads, highways, railways, airports and ports to make this connection with the other countries. We are on the way to do that. For instance, we are building a highway that will link Côte d’Ivoire to Ghana, to Togo, to Benin, and to Nigeria. It will be a highway of about 1000km. We are doing the same thing in the north so that we can enable an increase in trade between African countries, but it’s not just infrastructure, we also have to have a change in energy because that’s one of the keys to development.

World Finance: 2015 will see a common external tariff implemented with the 15 nation economic community of West African states. So how will this boost international trade, especially with the EU?

Daniel Kablan Duncan: We are a member of the ECOWAS, the 15 countries you mentioned. We have 300mn inhabitants, that’s a real market. What we are trying to do is have a better common approach of development in the area, I mentioned already the railway and the roads, but we will have an external tariff. The decision was made in Dakar last week and we hope to achieve it by 2015. The other possibility is also to have the same currency for the 15 countries, and we hope that will be achieved as soon as possible so that we can have an external tariff, the same currency that will enable us to have inter-trade with the different countries, but also to have a common approach towards the external world, and to have negotiations as a bloc with different countries in Europe, or Asia, and so on.

World Finance: And finally, future economic success really does depend on political peace and stability, so how do you see the future of your country?

Daniel Kablan Duncan: Well we went through a difficult period, of course, and I can understand your question, but we are working hard on it. Once the government was settled and put in place by the President Ouattara, he gave three aims to the government. The first one is to restore peace and security, the second one is to make national reconciliations, and the third one of course is to boost the economy. Well, as far as peace and security is concerned, as we have some light arms circulating the area, we have work to improve the security in our country and in the region also. Our security index was 4 when we ended the crisis, it is now 1.4, and by the end of the year we will have 1. So that’s normal, and I think that’s also the reason why the African Development Bank is coming back to Côte d’Ivoire, and we have more and more businesses also come back, and some of the international companies have chosen our region as the headquarters to cover the sub-region. So peace and security is back, but we have to work harder on it to prepare for the next election that will take place in 2015.

World Finance: Mr Prime Minister, thank you.

Daniel Kablan Duncan: Thank you again.