This sector is one of the main sectors that contributes to the economic growth and stability since it provides the means of increasing local investment in economies.
It doesn’t require finance concrete guarantees and approval terms whether this is in the form of long-term credit date or an asset base to be used as guarantees, since the financial leasing sector is built on the basis that profit comes from the use of assets not their acquisition, as well as the tenant’s ability to achieve cash flows resulting from the asset’s operation, thus leasing becomes of particular importance in small and medium-sized industrial enterprises. This sector also proceeds in accordance with the provisions of Islamic Sharia.
Being a financial instrument and a complement to the bank credit, financial leasing tends to increase the financial depth and contribute to the economic development through increasing the cash flows directed to the productive sectors of the economy, hence supporting the domestic production and improving the profitability of enterprises, particularly small and medium-sized ones, as well as creating more job opportunities which contributes to the alleviation of unemployment and increase of economic growth rates.
For the purpose of developing the services provided by the financial leasing sector and raising its contribution to the economy, Instructions No. “1” for the year 2016 for licensing and supervising financial leasing companies has been issued in 14/11/2016. During the year 2017, companies were monitored to make sure that their work comply with the requirements of the financial leasing contract No. “1” for the year 2016, in order to preserve the rights and obligations of either parties within the financial leasing contract.
Moreover, cooperation with the Ministry of Transportation have successfully introduced the Instructions No. “78” for the year 2017 for registration of leased vehicles and engineering equipment in 10/9/2017 through a series of meetings with the Ministry of Transportation.
The year 2017 witnessed a wide trend towards investing in the financial leasing sector, where PCMA granted 3 leasing companies the license to practice financial leasing operations, thus reaching a total of 14 financial leasing companies operating in Palestine.
Meanwhile, the total value of investment contracts reached $85 million at 1368 contracts by the end of December 2017, whereas the total value of investment contracts in 2016 reached $97 million at 2001 contracts.