muhammad al - jasser : “ assessment ” project of small and medium size enterprises opening speech by his excellency dr muhammad al - jasser, governor of the saudi arabian monetary agency ( sama ), at the inauguration ceremony of the “ assessment ” project of small and medium size enterprises, saudi company for credit information ( simah ), riyadh, 8 october 2011. * * * your excellencies and dear audience, i am pleased to participate with you in celebrating the launching of the “ assessment ” project of small and medium enterprises. first, i would like to express my thanks and appreciation to the colleagues at the saudi company for credit information ( simah ) for the development of this important project, which i hope will be provided with all necessary means of support by all entities concerned for its success. dear brothers and sisters, the national economy consists of a large and integral variety of public and private institutions that use available human and material resources to produce continuous flows of goods and services to meet the domestic community ’ s needs and a part of the external demand. of course, domestic enterprises differ in size based on various criteria, the most important of which are : the number of workers, the amount of capital, sales and others. one of the misconceptions is that large enterprises are the main impetus of economic activity. this belief has arisen from the good news repeatedly published about those institutions in various mass media. however, the actual reality emphasizes that small and medium size enterprises play an important role in the economic activity in both the developed and developing countries, through their absorptive capacity in employing the workforce of the different levels of training and education. a study by the riyadh economic forum on “ the saudi business sector and meeting the economic challenges ” showed that the average number of workers in the saudi private sector stood at 8. 4 workers per one single institution, and, consequently, 90 percent of the institutions in the kingdom is considered within the scope of small and medium size enterprises. small and medium size enterprises are considered the best efficient and effective tool for accelerating economic and social development, especially in remote areas with the least opportunities for development. they also provide a fertile field for training workers and developing their skills. to this end, governments have paid great attention to such enterprises and established the basic regulatory framework needed for their growth and development, particularly after having proved their ability to reduce pressure on the government sector in providing job opportunities and training. governments also helped big enterprises in the marketing

subject to the same level of supervisory control as other financial institutions. any breach of standards, practices or application by islamic banks will not only be an obstacle to their services and products, but it will also serve as a hindrance to accepting their services and products by international financial markets. consolidating a bank ’ s financial data with those of all its subsidiaries and branches is another principle that must be applicable to all banks, and such principle is necessary for ensuring consolidated and comprehensive supervision by the supervisory authorities in the bank ’ s home country. central banks'governors in islamic countries, members of the islamic development bank realized the importance of such consolidation 25 years ago when a technical committee was formed, including a number of governors and specialists, of which i was honored to be the chairman, to consider the needs of shari'a compliant banking services. the most important recommendation was that islamic banks must be subject to the same supervisory rules and requirements as those that govern conventional banks, with the necessary flexibility, taking into account their specific work methods and products so as not to isolate these banks from global financial markets. encouraging islamic banking institutions to integrate into global markets will push them forward to compete with all other financial institutions, stimulating them to innovate to meet the needs of corporate and individual customers, expand their scope and base of work, and not to be tied to a specified category of customers or specific markets. this will help them adapt with the requirements of the global financial system, provide them with necessary instruments, helping them develop and reinforce their structures, and facilitate their spread. dear brothers banking business, in all its types and forms, is not free from risks that pose a challenge to banks and supervisory authorities. in this context, islamic banks, like their conventional counterparts, are financial institutions providing services to depositors and investors, on the one hand, and offer financing to companies, public sector and individuals, on the other. therefore, they are subject to many risks that are similar to those confronted by conventional banks. in addition, shari'a compliant banking has its own risks. in principle, there is a range of various activities through which islamic banks can work in different ways that enable them to provide funds. these activities are adapted to meet the principles governing islamic banking business, the most important of which is the principle of risk sharing. therefore, there is an urgent need to identify, measure, manage, monitor and control such potential risks and mitigate them within the capacity and capital adequacy of