Saudi Arabia to join Turkey, Indonesia to find IFIB

Jakarta—Saudi Arabia has joined Turkey, Indonesia and the Jeddah-based Islamic Development Bank (IDB) as a prospective founder member of a new Islamic finance infrastructure bank, according to Indonesia’s finance minister. Speaking to Reuters on the sidelines of the annual IDB meeting of governors in Jakarta on Thursday, Bambang Brodjonegoro said the four could contribute around $300 million each for the project, with plans calling for the establishment of two regional Islamic bank.
Efforts to create an Islamic bank with the balance sheet to underwrite large infrastructure deals dates back more than a decade, but previous efforts have failed to materialise. The addition of Saudi Arabia, the IDB’s largest shareholder and home to some of the world’s largest Islamic banks, could spell success this time. The asset-backed nature of Islamic finance should in theory make it ideal to build highway networks and ports, with no shortage of projects across Muslim-majority countries.
But technical, legal and political issues have traditionally confined Islamic finance to mid-sized deals with shorter tenors. The IDB has also held discussions with the China-backed Asian Infrastructure Investment Bank (AIIB) to use Islamic finance in joint transactions.—Reuters

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