IslamicFinance.de

Despite the attempts of the government of Kazakhstan to make its Islamic finance market more attractive, Islamic products are still rarely used in Kazakhstan. Nevertheless, the government is continuing its efforts to create a favorable legislative and regulatory framework for the development of Islamic finance so that Kazakhstan can become a regional hub. The recently established Astana International Financial Center (AIFC) aims to become the most attractive platform for the development of Islamic finance in the region. To ensure Sharia compliance, the AIFC established the International Expert Council for Islamic Finance (International Council) and the Central Council of the AIFC on the principles of Islamic finance (Central Council).

With the official opening of the Astana International Financial Center (AIFC), Kazakhstan aims to become the region’s main financial hub. The aspiration is for the center to draw $40 billion in finance by 2025 and in the process rebrand oil-rich Kazakhstan as a financial hotspot. However, at the moment it is very much a work in progress. The stock exchange is not yet trading. According to AIFC chief executive Kairat Kelimbetov, the center will operate according to English common law. A court staffed with English barristers and an arbitration center will be available for dispute resolution. But the sobering reality is that of the 49 companies registered at the AIFC, most are no-names. The mightiest player registered at the AIFC is the China Development Bank, a fact that signals a welcome vote of confidence from Beijing.

While China and Arab countries discuss ways to develop their bilateral ties, #Kazakhstan aims to become a new global financial hub. At the newly established Astana International Financial Center (AIFC) an economic event was carried out between July 3rd and 5th to talk about the main issues of global finance. Experts have emphasized China has a priority role in the global economy and that China’s support can be very instrumental in the development of Islamic Finance. Kazakhstan has also positioned itself to take advantage of China’s Belt and Road initiative as it strived to draw investors from Central Asian countries as well as from the Arab world. Lawyers have also stressed that because the newly formed Astana International Exchange will be operating under the principles of English common law, it will create even more opportunities for collaboration between Central Asian countries and the Arab world.

Astana International Financial Center (AIFC) aims to be the driver of the Islamic finance development in Kazakhstan. For this, the AIFC is strengthening its capacity building by establishing the Bureau for Continuing Professional Development. AIFC managing director Yernur Rysmagambetov said two programs habe been launched. One of them is aimed at the training of specialists for the banking sector. The second program is focused on literacy of the end users on Islamic finance. The corporate sector is the main customer of the Islamic banks in Kazakhstan. Attraction of the retail customers in the Islamic finance is another trend of the past years.

Kazakhstan plans to issue sukuk in the coming months as part of its efforts to develop Islamic finance in the country. Alibek Nurbekov, head of the Islamic finance at the Astana International Financial Center (AIFC), said the final legislative changes to allow issuance of sovereign sukuk were nearly complete. Issuance of sovereign sukuk is planned in the first half of 2018 in total up to $300 million dollars. The sale would follow sukuk issued by the Development Bank of Kazakhstan in 2012, a deal that raised 240 million ringgit ($61.51 million) via the Malaysian market. Nurbekov added that a central sharia board would be established in the first half of the year, while rules covering Islamic insurers and a fund for Islamic endowments are also planned.

Astana International Financial Center (AIFC) has gained the support of technology financier Malaysia Debt Ventures (MDV) to develop both green and Islamic finance in Kazakhstan. Under a newly agreed MoU, AIFC and MDV will work closely with each other to share best practices, expertise and knowledge in these two areas. Apart from sharing knowledge, both parties will also explore financing green projects using Islamic financing tools. While not fully operational yet, AIFC is keeping busy by setting the groundwork. Green finance received a huge boost earlier in January when the European Bank for Reconstruction and Development agreed to launch the Green Financial System for Kazakhstan project, financed by Finland. With eyes on a comprehensive green financial system, engaging MDV could culminate in a variety of Islamic financial products for sustainable eco-friendly projects including green Sukuk.

Kazakhstan is currently working on the launch of its new Astana International Financial Center (AIFC) in order to become a financial hub for the Commonwealth of Independent States (CIS), West and Central Asia. It is part of Kazakhstan President Nursultan Nazarbayev's vision entitled 100 Steps to lift Kazakhstan into the world’s 30 most developed nations by 2050. The creation of the AIFC is step 70 in the programme. Its regulatory framework is modelled after the Dubai International Financial Center and will open avenues for investors within the Eurasian Economic Union between Kazakhstan, Russia, Belarus, Kyrgyzstan and Armenia. Plans are to attract more than $350bn in foreign investment and to issue a total value of $91bn in sovereign bonds, mostly sukuk. The launch of the AIFC is anticipated for 2018 after the country will have had hosted the Astana Expo 2017 in the capital from June 10 to September 10 next year.