Kazakhstan’s financial centre expects the government to issue Islamic bonds, or sukuk, in coming months as part of efforts to develop Islamic finance business in the central Asian country, an official said.
Final legislative changes to allow issuance of sovereign sukuk are nearly complete, alongside registration of a special purpose vehicle by the Ministry of Finance, said Alibek Nurbekov, head of the Islamic finance department at the Astana International Financial Center (AIFC).
The AIFC, an economic zone modelled on Dubai’s International Financial Center, is the centrepiece of the former Soviet republic’s plans to become a regional financial hub.
“Issuance of sovereign sukuk is planned in the first half of 2018 in total up to $300 million dollars,” Nurbekov said.
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.
A central sharia board would be established in the first half of the year, said Nurbekov, while rules covering Islamic insurers and a fund for Islamic endowments are also planned.
Islamic banks have traditionally used internal sharia boards to ensure the religious compliance of their products, but a centralised model is gaining favour across the industry.
In December, the AIFC approved a set of regulations which are aligned with standards from the Islamic Financial Services Board, a global industry body based in Malaysia. Around three quarters of Kazakhstan’s population of 17 million are Muslim, but development of Islamic finance has been slow partly due to regulatory hurdles.—Reuters