VIII.  TRADE AND PROJECT FINANCING

The general consensus is that the U.A.E. domestic financial market is
overbanked.  There are 19 local and 28 foreign commercial banks in the U.A.E.
There are 380 branches in operation, or one branch for every 9,400 people.
Each of the seven emirates has one or more banks in which the emirate
government holds a substantial share.  Of the 19 U.A.E. banks, only one, the
Dubai Islamic Bank, operates under a system of banking based on Quranic law.
Other banks operate under a system of regulation that reflects Quranic and
local custom and some aspects of western practice.  British and U.S. banks
concentrate on retail banking and off shore investing.  Indian and Pakistani
banks concentrate on remittances, retail banking and short-term construction
and trade finance.  Iranian banks are engaged in trade finance and foreign
exchange trading on behalf of Iranian businesses.  Presently two U.S. banks
are represented in the U.A.E.  Citibank operates a multi-branch full-service
commercial bank with a strong retail presence.  Bank of America has recently
announced the opening of a representative office in Dubai.

In May 1993, the central bank announced that all U.A.E. banks should achieve a
10 percent capital ratio by the end of the year.  This ratio is two percent
higher than the minimum level recommended by the Bank for International
Settlements' committee on banking supervision.  was not very well received by
the foreign banking community.  Foreign banks consider as discriminatory an
October 1993 ruling that a bank cannot lend to a single client a sum which is
more than seven percent of its capital base, and they have begun to book loans
to local borrowers outside the U.A.E.

The U.A.E. has no restrictions or regulations on foreign exchange.  Capital,
profits interest and royalty payments are repatriated freely.  The local
currently has been tied traditionally to the dollar at the rate of $1.00 =
3.67 dirhams.

Most commercial banks provide trade and consumer financing.  Project financing
in the U.A.E. is done mainly by government controlled banks.  Local commercial
banks may also provide project finance for real estate development projects.
Re-export financing accounts for a large portion of trade finance and is
viewed as having substantial prospects for growth as the local trading
community finds new outlets for re-exports.  Loan decisions are based on
project viability and creditworthiness of parties involved.  Short-term loans
(3-6 months) by commercial banks are at current interest rates.  Consumer
financing is growing rapidly.  The local banking system has well established
correspondent relationships with international banks.

Import transactions are paid for mostly through documentary letters of credit.
Documents against payment sight drafts are also used but normally only after a
satisfactory relationship between the foreign supplier and the importer has
been established.  Other forms of payment such as documents against acceptance
sight drafts, time drafts, and cash in advance are used less frequently
depending on individual circumstance and product.  Eximbank financing is
available for exports to the U.A.E., but Eximbank exposure is minimal.

Multilateral Development Bank:

The International Bank for Reconstruction and Development (IBRD), a member of
the World Bank group makes long-term loans at market- related rates primarily
to developing nations.  The International Development Agency (IDA), the soft
loan window of the World Bank, lends to the poorest of the development
countries.  Both the IBRD and IDA work to promote broadly based economic
growth and frequently focuses on structural adjustment, sectoral reform and
individual project lending and operate under the same set of procurement
guidelines.  Typically the World Bank does not finance the entire cost of a
project.  Rather, it finances the components of a project purchased with
foreign exchange, which on average is about 40 per cent of the total project
cost.  Each project may cover a wide variety of sectors and can involve
anywhere from one to hundreds of separate contracts providing export business
opportunities for suppliers worldwide.

CONTACTS:

U.S. Department of Commerce
Liaison to the U.S. Executive Directors Office
International Bank for Reconstruction and Development
1818 H. St., NW
Washington D.C.  20433
Tele:  (202) 458-0118
Fax:   (202) 477-2967

Office of Multilateral Development Banks
U.S. Foreign Commercial Service
U.S. Department of Commerce
Room H-1107
Washington D.C.  20230
Tele:  (202) 482-3399
Fax:   (202) 273-0927