Islamic finance in Russia: a new scope of thinking
Islamic finance seems to be starting its implementation in Russia, although by very careful steps. The potential of the market got various estimations, from modest 10% of the practicing Muslims to over 30 millions ethnic Muslim population and above. However it is understood by the experts that definitely the demand of the population would not be the leading factor in the development of the sphere. It is more about business preferences with regard to ethical aspects.
There is no doubt that the near future will witness rapid development of the industry. Already a number of Russian companies like Linova, Safinat, and Islamic Finance House are on half way of starting new Islamic finance projects.
A lot of new programs and beginnings have seen development recently in this regard. From among them are the educational programs, expert organizations, working groups within different state and non-governmental organizations.
In October 2009 Moscow International business school was first to introduce short-term educational course “Islamic finance” following the objective to meet the high interest of the business audience to the industry. The course showed that there is high interest in studying Islamic Finance in Russia regardless of religious beliefs. Accordingly, some state universities are going to introduce Islamic finance disciplines within master programs.
And it is not only the business education that is being developed. Already two imams from Russia have obtained the shariah-expert certificate (CSAA) in Bahrain and others are in process of upgrading knowledge.
At the same time Russian Islamic finance professional business community is being formed. One of the examples of this is the working group on alternative (Islamic) financial institutions and products that grew into the Russian Association on Islamic finance experts in 2010. A number of business and trade unions have been formed in the Republic of Tatarstan.
In May this year AAOIFI two shariah standards have been translated and published in the Russian language. These are sukuk and murabaha, mostly used Islamic finance transactions by the Islamic finance institutions around the world. The other standards on takaful (Islamic insurance), ijara and mudaraba are to be published next months.
It should be expected that Russia, although having centuries old history of Islam, will hardly follow the way of its neighboring Kazakhstan, whose President Nazarbaev made a decisive political contribution to the development of the Islamic finance industry.
But at the same time strengthening economic ties with the Middle East countries is another important incentive for the industry. The Islamic bankers from the Gulf and other Arab and Muslim countries find Russia attractive and promising market given the guarantees for investors and partners. Islamic finance presently is seen as one of the most reliable way of cooperation and hence is becoming one of the bridges uniting Russia to the rest of the Muslim world.
During the last 12 months Russia has been visited by many international experts specializing in Islamic finance or representing Islamic finance institutions, including Islamic banks from Malaysia, Indonesia, Bahrain, Kuwait, Turkey, France, the UK etc.
The foreign experts point out that from among the main requirement for the development of Islamic finance in Russia are speeding up the process of the documents registration, improved understanding of Islamic finance by the authorities responsible for policy on taxation and financial regulation, formulating a Special Law in order to attract Islamic investors to the country and overcoming the legacy of Soviet mindset as a whole, where the culture of business and service is new, and need to be cultivated further.
It should be noted that Islamic finance should not be regarded apart from the real sector of the economy, that’s why the halal industry representing all spheres where Islamic investment can be made, is on the agenda.
Madina Kalimullina
16.07.2010
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