IslamicFinance.de

The Asian Infrastructure Investment Bank (AIIB) and the Islamic Development Bank Group (IsDB Group) have signed a Memorandum of Understanding (MOU) to establish a framework for strategic cooperation. The MOU will have a strong focus on sustainable infrastructure including development of energy and power, transportation and telecommunications, rural infrastructure water supply and sanitation, environmental protection, urban development and logistics. IsDB Group President H.E Dr. Bandar M.H. Hajjar said the Group looks forward to stimulate the region’s economic growth together with AIIB. The two banks intend to share knowledge and exchange experiences among employees through joint temporary assignments, secondments and training.

Bandar Hajjar, president of the Islamic Development Bank (IDB), announced that the bank would soon issue its largest sized Sukuk for $2.5 billion. IDB is a regular issuer of Sukuk having last issued in September 2017 with a $1.25 billion issuance which was priced at 2.261%. The bank has recently partnered with China-led Asian Infrastructure Investment Bank (AIIB) and plans to co-finance many projects in Africa. Africa has witnessed a growing share of mostly sovereign Sukuk issuances. Sudan, Gambia, Senegal, South Africa have all issued sovereign sukuk, the latest issuer is Cote d’Ivoire with its inaugural debut in 2015 of USD 260 million.

The Islamic Development Bank (IDB) is set to form a partnership with the China-led Asian Infrastructure Investment Bank (AIIB) to address the large infrastructure gap in developing countries. IDB president Bandar Hajjar said the bank would co-finance many projects with AIIB in the future in Africa to finance infrastructure projects. Co-operation between the AIIB and the IDB is set to create a new force in development finance for several developing countries. Many of the IDB’s 57 member countries overlap with the AIIB’s approved membership of some 80 nations.

With only roughly 20 million Muslims in #China, it is not surprising that Islamic finance has not taken off in China. However, some Chinese companies have expressed interest in tapping into offshore pools of Islamic funds. For example, HNA Group, the owner of Hainan airlines, is considering Islamic financing options for its proposed US$ 150 million acquisition of ships as well as a large offering of offshore Sukuk. Another example is that of Country Garden, which issued a Malaysian Ringgit 1.5 billion sukuk through its Malaysian subsidiary in December 2015. Chinese interest in Islamic finance can be motivated by the diversification of funding sources as much as financial diplomacy purposes. China’s growing geo-political clout via the Asian Infrastructure Investment Bank (AIIB) and the 'One Belt, One Road' initiative affords new incentives to facilitate the use of Islamic finance.