Islamic Development Bank Group to review $1.83B of international financing at Jakarta summit

Published May 16th, 2016 - 07:00 GMT
Jakarta's Istiqlal mosque, the largest mosque in Southeast Asia. (Wikipedia)
Jakarta's Istiqlal mosque, the largest mosque in Southeast Asia. (Wikipedia)

Political and business leaders from Muslim countries are preparing to meet in Indonesia, to review last year's activities by the Islamic Development Bank Group (IDB).

Representatives of 56 member nations, as well as the bank’s governing board, will meet at the 41st IDB annual meeting in Jakarta on Sunday.

Turkey will be represented by Deputy Prime Minister Mehmet Simsek.

Speaking to Anadolu Agency before the meeting, the bank's president, Ahmad Mohamed Ali, said Turkey is best positioned to take advantage of IDB Group-wide solutions through joint support of many entities via the bank's country gateway office.

The bank has provided finance worth more than $115 billion to member countries in total since starting operations 41 years ago. It has granted $9.2 billion to Turkey for 459 projects and has offices in Ankara and Istanbul.

"This is particularly appropriate as Turkey’s strategic challenges of enhancing productivity and competitiveness are equally relevant for all group entities," Ali added.

Ali said that the IDB group is thankful to the Turkish government for the successful implementation of the first Member Country Partnership Strategy (MCPS) for Turkey between 2010-2013 when the state received $2.2 billion in finance from the bank. "The IDB Group is preparing to undertake the next MCPS (2016-2018) in line with the government’s Medium-Term Development Plan to support its development objectives and growth targets under 2023 Vision through the 25 Transformation Programs," Ali added.

During 2015, the IDB Group recorded an unprecedented amount of approvals worth $1.83 billion, representing 21 percent of the total since the bank's inception.

Ali said that the bank appreciated the Turkish government’s efforts to boost the participation banking industry, saying that "it is a privilege for IDB to contribute to these efforts".

"Indeed, [the] IDB has been playing an active role in the ambitious deepening of the Islamic finance sector through equity participation in Albaraka and Kuveyt Turk and Vakif Katilim participation banks," Ali said.

There are currently six Islamic banks operating in Turkey: Albaraka Turk, Bank Asya, Kuveyt Turk, Turkiye Finans, Ziraat and Vakif.

Ziraat and Vakif are state banks that have recently launched Islamic branches. Halkbank, another state-run conventional bank, is expected to also begin its own Islamic operation.

At least 16,000 people currently work in Islamic finance across 1,100 branches across Turkey.

Islamic banking comprises five percent of the total banking system in Turkey, which the government says it aims to increase to 15 percent by 2023.

Ali emphasized the bank is also fully supporting Turkey's plans for the development of Istanbul as an international financial center.

"Indeed, IDB Sukuk is currently listed in Borsa Istanbul. Moreover, the Bank Group continues to organize several workshops, seminars, training programs and conferences aiming at promoting the industry," Ali said.

The government has long aimed to turn Istanbul into a finance center, and it believes that Islamic finance is of critical importance to realizing this goal.

Islamic finance entails interest-free transactions, in accordance with Islamic law.

The IDB was established on Dec. 7, 1973 by members of Organization of Islamic Cooperation (OIC) and officially started operating in Oct. 20, 1975. The bank aims to contribute to the social and economic development of member countries and Muslim communities individually in line with the principles of Islam.

New Islamic ‘megabank’ in 2016

Establishing a new Islamic ‘megabank’ within the year is also on the agenda of the Jakarta meeting.

Turkey’s government has requested the Islamic Development Bank to found such a facility in Turkey. Indonesia has made a similar request, according to Deputy PM Simsek earlier this month.

Simsek said that Indonesia, Turkey and the Islamic Development Bank decided to set up committees to look into the matter during a visit to Washington in April.

“Turkey will host a megabank that will serve the region. Indonesia will have one as well. They will either be specialized or territorialized,” Simsek said, adding that the bank will be based in Istanbul. 

Turkish nanotechnology company to receive award

The IDB also gives awards for science and technology every year to recognize efforts which contribute to technological and economic research in its member states.

The 2016 IDB Prize for Science and Technology will be presented to a private Turkish company called Nanomanyetik Bilimsel Cihazlar Ltd. during the Jakarta meeting.

 

© Copyright Andolu Ajansi

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