IDB told about development of Islamic financing in Kazakhstan

Khaled Al-Aboodi, CEO of the Islamic Corporation for the Development of the Private Sector (ICD), a arm of the Islamic Development Bank (IDB) for private sector, told about the plans for development of Islamic financing in Kazakhstan at the 3rd Kazakhstan Conference on Islamic Financing, Tengrinews.kz reports. “First of all, we are establishing the first ijara company in Kazakhstan. ICD is opening the ijara company together with a big group of foreign and local investors. This is Islamic leasing in Kazakhstan to support development of small and medium businesses by providing them with alternative resources for the projects that comply with Sharia requirements. The company’s initial capital is $35 million. This will be a financial leasing that will be available for all sectors of the economy. All parties involved in opening of this company are currently completing the signing stage to start working in 2012,” Al-Aboodi said. Ijara agreement is equivalent to leasing agreement that serves a basis for special procurement of the equipment of other property by the Lessor (Bank) and renting it out to the Client for a certain payment and certain period of use. Sharia is the moral code and religious law of Islam. Sharia prohibits the fixed or floating payment or acceptance of specific interest or fees for loans of money. Investing in businesses that provide goods or services considered contrary to Islamic principles is also haraam (sinful and prohibited). Al-Aboodi said that Takkafu investment company and the second Islamic bank are going to be opened in Kazakhstan. Al-Aboodi noted that ICD launched several funds rendering consulting services that will focus on agricultural and food business, as well as search for renewable energy sources. These funds will work in Central Asian countries, as well as in Turkey, Bosnia, Albania and Kosovo. “The interest to renewable energy is high in these countries, first of all, for ecological reasons: changing climate, fossil fuels, their deficiency and the governments’ commitment to searching for new energy sources. The fund want to work on release the potentials of these regions. $50 million are already on the way into the fund from foreign and government investors. The fund has attracted interest of target investors. They are already planning to invest $25 million for the initial stage,” chairman of ICD said. The IDB’s arm is also dealing with food supply projects. According to Al-Aboodi, development of agriculturw is very important in many Islamic countries, considering the average population growth and food deficiency. Besides, according to Al-Aboodi, the organization is developing a project for real estate in Aktau with approved financing of $40 million. “Kazakhstan and CIS (Commonwealth of Independent States) countries have big opportunities for development in the real sector of the economy. This big opportunity in the Islamic sector in CIS countries has not yet been filled by the traditional banks; that’s why the Islamic financial institutes can use this opportunity. ICD is ready to cooperate and expand the experience and resources with our potential partners and important projects,” Al-Aboodi stated. By Aidana Ussupova