K E R A L A M O N I T O R

August 16, 2003

PRIME MINISTER ANNOUNCES MISSION TO MOON

Corporate governance key to boosting investment climate in the Arab World

Time to change family businesses into enterprises managed by professional board of directors

August 16, 2003

The lack of corporate governance in businesses in the Arab World is one of the factors dampening the investor climate in the region, slowing the conversion of businesses into corporates and impeding access to foreign
investments. This state of affairs is reflected in the Fortune 500 list, which features just one or two Arab companies, compared to several from the Asian and neighbouring non-Arab countries.

Corporate governance has become a prime requisite for attracting foreign
investors. According to the 2002 Global Investor Opinion Survey recently
released by McKinsey and Company, nearly 63% of investors cited orporate governance as a major factor that would spur investment decisions. These investors were prepared to pay a premium on investment in companies demonstrating high governance standards.

Hussein Rifai, Chief Executive Officer, Injazat Technology Fund E. C., the Arab World's leading Islamic venture capital fund said, "Arab family businesses need to be converted to business institutions, supported by
high corporate governance standards, if Arab businesses are to find acceptance in the global investor community and capital markets."

"Today's corporate scenario demands a complete paradigm change in the ttitude and mindset of business houses of the Arab World. It is only by applying globally accepted corporate governance standard in areas like separation of Board and management, elimination of conflict of interest, arms length business and transparency, can the Arab countries boost the investment climate in the region. For example; there should be a clear delineation between any company's management and its board of directors. The board should confine itself to providing direction, contributing to business strategy and monitoring performance though proper guidelines and steer clear from getting involved in the company's day-to-day management," said Rifai.

Corporate governance provides the tools for migrating traditionally run businesses into professionally managed market-driven enterprises, enhancing competitiveness in the global market. Rifai added, "It can lead to further integration with globalisation, and trigger transparency and accountability. Many of the obstacles to good governance can be overcome by developing an institutional environment, which requires that companies hire, and delegate specific tasks to qualified and independent, adequately empowered managers who have expertise in financial and managerial matters. This implies that the Board needs to appoint strong managers and try not to manage the company when going through difficult times."

"While good corporate governance has gained top priority in the world of investors , considerable time and efforts are often required to get to a better understanding of global benchmarks and to successfully implement a good reporting system. Injazat has been helping its portfolio companies achieve this goal by providing a system of 'checks and balances' in reporting systems, measuring systems and even processes for board meetings and interaction protocols between the directors and management," Rifai concluded.

Corporate governance is a key barometer of a mature or maturing economy.
It will enhance a company's performance. The performance, boosted by increased investor confidence and triggered by the presence of competent professionals at the helm will facilitate the attraction of capital and ensure that the company command higher value. Accordingly, creditors will reduce the costs of capital, as the business risks will have diminished.

Injazat Technology Fund is a US$50 million venture capital fund that was
established by the Islamic Corporation for the Development of the Private
Sector, an affiliate of the Islamic Development Bank (IDB) and Gulf Finance
House, in partnership with Dubai Islamic Bank, Saudi Economic and Development Company and Iran Foreign Investment Corporation. Injazat Technology Fund is a US$ 50 million Venture Capital Fund operating
in compliance with Shari'a principles and targeting technology companies
within the MENA region under the motto, 'From the region, For the region'.
The Fund was initiated by the Islamic Corporation for the Development of
the Private Sector (ICD) and affiliate of the Islamic Development Bank
(IDB) and Gulf Finance House (GFH), in partnership with Dubai Islamic Bank, Saudi Economic and Development Company (SEDCO) and Iran Foreign Investment Corporation (IFIC).