In Kyrgyzstan, Government institutions need to implement Islamic economics. This was debated on January 11, 2011, at the meeting of the Economic Club “The Islamic economic model in Kyrgyzstan,” said the former Minister of Economic Regulation of Kyrgyz Republic Uchkunbek Tashbaev and current Minister of Land and mineral resources.
According to him, in Kyrgyzstan there is a legal framework for the regulation of commercial banks. “However, the legal framework for other financial institutions is absent, although the demand for services by the population is huge in Kyrgyzstan. These institutions include Islamic banking, Islamic investment funds, Islamic insurance, Islamic securities, Wakf funds, Islamic taxes. In Kyrgyzstan until 2006 there was no understanding of Islamic banking, in 2006 was launched a pilot project under a memorandum between the Kyrgyz Republic and the Islamic Bank “, – he said.
According to U. Tashbaev, in Kyrgyzstan there is legislation in respect of commercial banks and microfinance institutions only 4 operations, although the Islamic principles require 25 operations. “The Islamic economy is based on Shariah Law, we must have in Mufti Council it’s own Muamalat Department. If we will have a saturation in the Muftiate authority structures of Muamalat, then the development of Islamic economics can start in the country. Next problem is the lack of human potential and resources. There may be a problem of indexing for inflation. We must now investigate and work with the National Bank “, – said the former minister.
U. Tashbaev spoke at a meeting on the topic “The Islamic economic model in Kyrgyzstan.” Co-reporter was listener of CIFP programe, INCEIF Mamyrov Daniyar with the topic: “10 Steps in Kyrgyzstan towards the Islamic Financial Centre”.
Today, some experts believe it is quite an attractive alternative to traditional bank lending.
“So far we have talked about the liberalization of the economy in our country, has also been discussion of a socially oriented market economy, as major donors of Kyrgyzstan today are those who work in the traditional way of financing – said the President of the Economic Club Murat Shaymkulov – Islamic world is rich and willing to provide their money now in dire need of investment to Kyrgyzstan, but as a rule, capital mainly comes from personal relationships, both formal and an informal level. While Kyrgyzstan is able to demonstrate their relationship with the Islamic world is mainly on the Hajj”.
Economist and graduate of International Centre for Education in Islamic Finance Daniyar Mamyrov says: “In 2011, thanks to well-conducted organization of Hajj for the first time in the budget of Kyrgyzstan in form of taxes government has collected 1.4 million $. An amount of $ 13 million collected from the cost of the Hajj pilgrimage, in the amount of $ 2600 for each pilgrim. For the next 5 year period piligrims from Kyrgyzstan are ready to perform the Hajj and book their seats in advance, such as the amount of funds raised could reach $ 65 million. So there is an excellent possibility to create Hajj Fund “.
KR is a member of Islamic Development Bank and all its structures. Kyrgyzstan in 2006 has launched a pilot project in the Memorandum of Understanding between Kyrgyzstan and the Islamic Development Bank and JSC “Eco Bank” (now converted to “EcoIslamicBank”) on the implementation of Islamic principles of finance in our country. The memorandum is valid today, and it covers a few areas: the birth of a pilot research institution (one of the elements of his work is the creation of legal and regulatory framework for the “takaful” and the issuance of “sukuk”-islamic bonds).
“For professional accounting, taxation, the introduction of Islamic principles of banking and finance in this country is experiencing a lack of serious work – says Tashbaev – In Kyrgyzstan was registered Islamic microfinance institution, and on 26 October 2011 approved the provision of market regulation in the current Microfinancing organizations. But in Kyrgyz Republic legislation regarding lobbying Islamic financial Principles is only over a very narrow sector, the provisions cover 4-5 operations, although the Islamic economy has about 25 basic operations. It was implemented some projects, but in general there is no law ” .
According to domestic experts, if we want to attract Islamic financial institutions to participate actively in our economic processes, we need to make sure that investors were available, clear and comfortable to come to us with money. We do not have a complete legal framework for the deployment of large major Arab banks / investors.
Perhaps that is why Kyrgyzstan has recently turned to the very few Islamic region. Rather, it attempts were made to contact the authorities to release “there” and bursts of attention from “there”, but eventually managed basically to establish contacts with Saudi Arabia, but with countries such as Kuwait, for example, we do not work closely.
The investor does not come, if there is no “prescribed” standards in the legal field. Suppose an investor will come, but the investor from an Arab country must face the question: “If I pay the tax, but would it be qualified as” zakat “(accumulation paid obligatory in accordance with the Shariah principles )?
Implementation of Principles of Islamic Finance (PIF) requires that the following conditions are met:
-A legal framework governing eligibility and the procedure and order of their execution;
– The presence of population needs in Islamic financial products and services;
– Availability of Islamic financial institutions themselves, service providers of this type, regulators and other industry players.
“EcoIslamicBank” for now is the only bank in the Kyrgyzstan, which operates according to islamic financial principles.
Lack of finance is not there. According to experts, there is no demand for 3-year $ 5.5 million, and the bank does not know who will take it. In order for them to “take”, it is necessary to begin work on the Islamic financial principles. The demand is there, but today no one can justify the “EcoIslamicBank” that it applies the “right” tools and products.
Today we must mention, we have such entrepreneurs mostly Muslims who pay ten times more “zakat” to any house of orphans, rather than decide to pay out of their turnover to the state budget, because we do not have agreed understanding between the Mufti authority and the State to make these Muslims feel “clean before God.” It is important to set the legal framework in this field.
“Islamic economy model of Kyrgyzstan ” must exist in parallel with already-established traditional model, and must compete with her. Of course, this is an alternative to the existing system.
It allows one stratum of the population that adheres to Islam, to be credited. Muslim people refuse to borrow from traditional banks, since granting of loans and their reception, where there are interest loans, is a sin according to Islam.
Today, Kyrgyzstan is experiencing a transitional phase to transform its economy from a command-administrative (or soviet) to a new model of Islamic capitalism.
The Islamic economic model is not only finance and financial services, it is also a land and tax law, halal production and trade relations. Today, country’s market has many products and services under the name of “Halal” and “Muslim”. This proves that in the modern world has ceased to be halal only as religious concept, but firmly taken root in the sphere of market relations, where the total global turnover is $ 2.1 trillion.
“Only a comprehensive approach in the implementation of Islamic Economic Model will allow Kyrgyzstan to survive and continue to develop during the global financial crisis. The approach taken in addition to standard rules should take into consideration its ideology, national identity of society and its spiritual ambition, “- said Uchkun Tashbaev.