Capital Market Authority: The Assets of Leasing Companies Increased Over 5 Years to More Than 227 Million Dollars

SadaNews Exclusive: The Capital Market Authority confirmed that the leasing sector has continued to achieve remarkable growth in recent years despite difficult economic conditions. The assets of leasing companies increased from about 155 million dollars to more than 227 million dollars during the period from 2021 to 2025. Additionally, net investment in leasing contracts rose from approximately 110 million dollars to about 163 million dollars. The sector achieved a compound annual growth rate of about 10% for total assets and 10.4% for net investment in leasing contracts during this period, while equity grew at a compound annual growth rate of 8%, reflecting the robustness of the sector's capital base and its continued expansion. 

In a question to "SadaNews" regarding why the leasing sector remains small despite the authority's efforts to stimulate growth, the authority stated: "The leasing sector in Palestine is not small in the traditional sense; rather, it is still in a growth and gradual expansion phase compared to the significant potential it can achieve in supporting the national economy. The sector has experienced consistent growth in recent years despite the exceptional economic and political conditions that Palestine has faced."

The authority noted that the sector's growth is tied to the nature of the activity itself, as it is primarily a financing tool directed toward investing in productive assets, vehicles, real estate, and equipment. Consequently, its growth is directly affected by investment levels and general economic activity. Given the economic and political challenges facing the Palestinian economy, the demand for new investments is not growing at a pace that allows the sector to realize its full potential. 

The authority pointed out that leasing is based on financing specific assets, necessitating a comprehensive legal and regulatory framework regarding asset registration, regulating rights over them, protecting contractual party rights, and ensuring the ability to transfer ownership or enforce rights upon the expiration of the contract. Therefore, the expansion of this sector does not rely solely on the availability of demand or the desire of companies to grow, but also requires an integrated regulatory and operational structure with relevant authorities.

From this standpoint, the role of the Palestinian Capital Market Authority has not been limited to supervision and regulation; it has also worked in recent years to develop the legal and regulatory framework for the sector to enhance trust in it and expand its usage. In this context, regulations for the mortgage of leased assets in leasing contracts were issued to regulate the use of leased assets as collateral for obtaining financing, protect tenant rights, and ensure that financed assets are not burdened with mortgages or real rights that prevent their ownership transfer to the tenant when entitled according to legal provisions.

Additionally, regulatory efforts included updating vehicle registration instructions for vehicles leased through financing in coordination with the Ministry of Transport and Communications, allowing the updated instructions to finance public vehicles, i.e., taxis, through leasing companies. This represents an important step in broadening the scope of financeable assets and opening a new avenue for the sector to serve professional and economic segments that rely on vehicles as a means of work and production, not just as personal use.

The authority confirmed that it has issued leasing company instructions compliant with Islamic Sharia law, contributing to organizing this activity according to Sharia governance requirements, expanding the base of beneficiaries from leasing services, and providing financing products that meet the needs of a segment of clients who prefer Sharia-compliant products.

As part of expanding the scope of assets that can be financed through leasing, the authority is currently working to complete the real estate leasing instructions in coordination with the Land Authority, paving the way for incorporating real estate into the assets eligible for financing through leasing. This approach is expected to open new avenues for the sector, enhance its role in financing non-movable assets, diversify leasing companies' portfolios, and transfer part of the direct market real estate financing into a more organized and clearer financial framework.

In parallel, the authority will prepare financial solvency standards for leasing companies to strengthen their financial positions and their ability to manage risks and grow sustainably, in addition to market discipline instructions aimed at enhancing transparency, organizing relationships with clients, and raising the level of disclosure and professional practices in the sector.

The authority emphasized that the real challenge lies not only in the leasing sector's ability to grow but also in creating a more stable economic and investment environment and completing the necessary legislative and regulatory framework to enable it to play a broader role in financing economic and productive activities. The authority believes that current regulatory efforts, alongside the expansion in areas of real estate leasing, Sharia-compliant products, and financing various types of assets that meet the needs of different economic sectors will contribute to consolidating the position of leasing as one of the main tools for financing investment and supporting economic growth in Palestine.

It is noteworthy that the leasing sector is one of the most important means of medium-term financing, and it is known as financing based on assets, meaning it is used to finance movable and immovable assets. This is achieved through leasing companies purchasing the assets chosen by the lessee from suppliers and then granting the right to use, possess, and benefit from these purchased assets for the lessee for a specified period in exchange for lease payments, which is referred to as economic ownership for the lessee, while legal ownership remains with the lessor. The leasing contract ends either with ownership transfer or the option to purchase.

Leasing is considered one of the financing means that complement the available and accessible means in the Palestinian market, whether from banks or micro-lending institutions.

It is important to emphasize that developing new financing tools can enable countries to deepen their financial sector activities, expand the base of beneficiaries, and introduce new parties offering new financial products, contributing to the rapid economic development through increased cash flows directed to various categories and sectors, especially productive sectors. This supports local production, improves the profitability of institutions, creates more job opportunities, and helps alleviate unemployment and increase economic growth rates.

What distinguishes leasing is that it provides a greater opportunity to obtain financing through a mechanism related to using the productive asset as collateral, especially in light of the financing market's inability to accommodate all the financing needs for capital assets for several reasons, the most significant of which may be the inability of the beneficiary to provide the tangible guarantees typically required by the financier as collateral.