Sector Overview

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. 

Within the efforts of the General Directorate of Mortgage Finance and Financial Leasing in the PCMA to develop the appropriate legal system for the work of the financial leasing sector, in a way that serves the achievement of the PCMA’s strategy and objectives. The year 2019 witnessed important developments about the ability of some companies to correct their conditions in accordance with the provisions of the licensing instructions for financial leasing companies and supervision No. (1) for the year 2016, as some companies were unable to pass the period of correcting the situation successfully, which led to the taking of disciplinary measures against these companies and the suspension of their work in accordance with the provisions of the instructions.

In another context, PCMA held a specialized workshop in cooperation with the Financial Follow-up Unit for officials in the financial leasing companies regarding combating the crimes of Anti-money laundering and terrorist financing, which included a detailed explanation of the concept and risks of the crimes of Anti-money laundering and terrorist financing and the international standards issued by the Financial Action Task Force FATF for the two crimes of Anti-money laundering And the financing terrorism, in addition to the results of the national evaluation process for risks, as well as presented the latest developments regarding the mutual evaluation process that Palestine state will be subject to during the year 2020.

A generalization has also been sent to the performing companies in the financial leasing sector in order to raise their efficiency in anti-money laundering and terrorist financing operations, also companies were requested to strengthen their measures to combat money laundering and terrorist financing, including the appointment and training of communication officers, and the adoption of a guide to anti-money laundering policies and procedures by the board of directors of the financial institution, maintaining records and documents, and conducting self-assessments of the risks of money laundering and terrorist financing, and other technical requirements related to the electronic systems starting from the inquiry and ending with the raising of suspicion reports.

During the year, an extended workshop was held over a period of two days in Jericho, that targeted the employees of the Ministry of Transportation and the Traffic departments from the various governorates, the workshop aimed to introduce the financial leasing, and clarify the mechanism in place for the registration of leased vehicles, this workshop was based on the PCMA's keenness to educate all workers in the Ministry of Transport, with regard to financial leasing and reaching one level of understanding of the procedures that should be followed in this regard, in all traffic departments in the various governorates.

By the end of the year 2019, the number of leasing companies licensed by PCMA were (9) companies. In contrast, the total value of investment contracts (Gross Investment = Advance Payment) if available (+ (Payment Value*Number of Payments) + Purchase Option (if available) registered with PCMA, is approximately reaches US 90.9 million dollars, which represent 1,998 contracts, as at the end of December 2019, the total value of contracts decreased by 1.3% compared to the end of 2018, while there was an increase of 21.5% in the number of contracts registered at the PCMA.