The Islamic Financial Services Board (IFSB) organised a Seminar on Islamic Finance in Kazakhstan, themed, "Prospects and Challenges in the Development of Islamic Finance for Kazakhstan" in Almaty, Kazakhstan on 16 June 2014. The Seminar was hosted by the National Bank of Kazakhstan.
Dr. Serik Akhanov, President of the Association of Financial Institutions, Kazakhstan, in his Keynote Address, emphasised that after the Global Financial Crisis, the potential of Islamic finance is now well appreciated around the globe. He stated, although the legal system of Kazakhstan has been subject to various combinations of models, the dual banking model well suits Islamic finance in Kazakhstan given the diverse ethnic and religious considerations.
He expressed confidence that Islamic finance can address the issue of social justice and financial inclusion to allow the wider community to participate in economic development. Given few academic institutions offering Islamic finance courses in the country, he highlighted the challenge of insufficient awareness and capacity building on the specificities of Islamic finance.
The shortage of Shari'ah scholars in the region, for example, is a concern for the industry. In his remarks, he also noted that harmonisation in the various legal and regulatory models is important and that the expansion of Islamic finance in the country is being driven by strong political will and continuous improvement in the legislative framework.
Meanwhile, H.E. Daniyar Akishev, Deputy Governor of the National Bank of Kazakhstan, in his Welcoming Remarks, highlighted that a gradual and consistent approach has been adopted towards the development of Islamic finance in the country. He said the government is committed to establish Kazakhstan as an Islamic financial centre for the region. He highlighted the role of the National Bank of Kazakhstan in introducing a series of regulatory reforms to implement the Roadmap for the Development of Islamic Finance 2020. The relevant authority is also planning to launch a screening methodology for equities to attract a wider range of investors from Middle East and South East Asia.
In his Opening Remarks, Mr Jaseem Ahmed, the Secretary-General of the IFSB stated that the global community is recognising Islamic finance as an important alternative source of finance for socio-economic development. He noted that the development of Islamic finance requires a set of explicit priorities over the medium term, and emphasised that, "designing and implementation of sequence strategies for the Islamic financial services industry is an important challenge for regulatory and supervisory authorities."
The final session held was a panel discussion entitled, "The Way Forward for the Development of Islamic Finance for Kazakhstan." It was chaired by H.E. Deputy Governor Daniyar Akishev. The panelists for this session were Prasad Abraham, Chief Executive Officer, Al Hilal Bank, Kazakhstan, Madzlan Mohamad Hussain, Partner and Head, Islamic Financial Services and Partner, Zaid Ibrahim & Co., Malaysia and Khurshed Mirakilov, Consultant and Head of Economic and Financial Department, The Association of Banks, Tajikistan. The panelists identified and discussed the national and regional opportunities and benefits, as well as key challenges for the development of Islamic finance in Central Asian countries, specifically in Kazakhstan in which they highlighted key issues relating to the tax regime, capacity building of accountants and lawyers and regulators on advanced Shari'ah-compliant structures, which are seen as hampering the development of Islamic finance in many new markets. The panelists noted that in order to have strong Shari'ah governance framework, enhancing the capacity of local Shari'ah scholars and external auditors will be needed.
The panelists also reflected that growing capital needs for the infrastructure sector in Kazakhstan and the region present strong opportunities for Sukuk to enhance its role as an important source of development financing. There is also a need to simplify the product approval structure through improving the legal framework. The suggested roadmap and a way forward included five key drivers for the development of Islamic finance in the region:
i) securing the political and business community's willingness and support,
ii) establishing a central Shari'ah supervisory body,
iii) pricing competitively,
iv) introducing liquidity management instruments, and
v) awareness and capacity building for Islamic finance specificities.