Manama – MENA Herald : Thomson Reuters, the world’s leading source of intelligent information for businesses and professionals, the Islamic Research and Training Institute (IRTI), an affiliate of the IslamicDevelopment Bank Group and the General Council for Islamic Banks and Financial Institutions (CIBAFI), today launched a new report analysing the state of Islamic Finance in Kazakhstan titled “a future perspective of Islamic finance”. The report, produced in partnership with the National Bank of Kazakhstan, was launched during a dedicated Roundtable on Islamic finance emerging markets, ahead of the World Islamic Banking Conference (WIBC) in Manama, Bahrain. The WIBC is held under the patronage of His Royal Highness Prince Khalifa bin Salman bin Hamad Al Khalifa, Prime Minister of the Kingdom of Bahrain.
H.E. NurlanKussainov, Deputy Governor of the National Bank of Kazakhstan inaugurated the launch of the report, alongside official delegation of the National Bank of Kazakhstan. The Roundtable was inaugurated by senior officials representing some other emerging Islamic finance markets, including HE Arif Z Lalani, Canada’s Special Envoy to the Organisation of Islamic Cooperation; Janet L. Ecker. President and Chief Executive Officer of the Toronto Financial Services Alliance; Fadi Al Faqih, Chief Executive Officer of the Bank of Khartoum, and a number of other government and corporate representatives.
In addition to providing a comprehensive view of the current adoption of Islamic Finance in Kazakhstan, the report also considers the high potential for Islamic finance growth in the country.
H.E. NurlanKussainov, Deputy Governor of the National Bank of Kazakhstan says:”I believe that this report will serve as a further step to increase the image of Kazakhstan as a regional hub of Islamic finance and offer to the world a Kazakhstan’s unique model of the development of Islamic finance. We have done a lot of work in this direction and we have ambitious plans for the future: by 2020 the total assets of Islamic banks will amount to 3 – 5% of the total assets of the banking sector. We are planning that this indicator will reach 10% by 2025”.
The report predicts a positive economic outlook for Kazakhstan, with an estimated GDP growth of 2.4% in 2016, and sheds light on the government’s plans to strengthen the economy by diversifying income. Among the strategic initiatives planned, the development of arobust Islamic finance industry is key to realising Kazakhstan’s long-term development ambitions. Bydoing so, the country hopes to drive major economic initiatives such as enhanced public transport systems, an advanced ICT infrastructure, and resilient public institutions.
Professor Dr. MohamadAzmi Omar, Director General of IRTI says:”With strong macroeconomic fundamentals, intensified trade, significant government expenditure on infrastructure and a strong government support and political will, Kazakhstan has all the ingredients required for a successful Islamic finance sector to take off and be the hub for the Islamic Finance in the region. The report summarizes the strategic initiatives Kazakhstan is working on to create a stable and business-friendly environment focused on the enhancement of the competitiveness of its economy and the realisation of an inclusive and sustainable socio-economic ecosystem”.
Based on a combination of primary and secondary research, including aretail consumer survey and exclusive interviews with leading stakeholders, retail banking consumers in Kazakhstan have shown interest in Islamic banking.Driven predominantly by Muslims and millennials, 45% of survey respondents have expressed their interest in using shariah-compliant banking products and services.
Even though this form of non-conventional banking remains relatively new to the country, Kazakhstan has invested in building a solid foundation for it. The country has a legal framework for Islamic banking, Islamic bonds (sukuk), insurance (takaful), and leasing (ijarah)and the new amendments relating toconversion of conventional banks into Islamic.
With this, the report predicts an increase in competition as more products and banks are introduced, thereby strengthening the market.
Kazakhstan is setting up a strong and holistic infrastructure for Islamic finance that is expected to ensure promising growth in the next 5 years, the report highlights.
These measures, and many others, are part of Kazakhstan’s 41-point plan introduced earlier in 2012, “Road Map for Development of Islamic Finance by 2020.” Support from both public and private institutions is sought to push for a robust Islamic Finance economy that drives legislative reform, market education, public sector development, an increased emphasis on science and education, and a keen eye for investor relations.
While addressing the Roundtable delegates, Mustafa Adil, the Head of Islamic finance in Thomson Reuters said “The current plans for Islamic finance development in Kazakhstan are well prepared to position the country as a regional hub for Islamic finance in the CIS region, and to connect with other leading Islamic finance markets in the GCC and South East Asia. Kazakhstan provides a unique set of investment opportunities for shariahcompiant investors that are looking to building a diversified portfolio.”