EDB and Eastcomtrans LLP Join Forces to Develop Islamic Finance in Kazakhstan
Almaty. The Eurasian Development Bank and Istcomtrans LLP signed a Memorandum of Cooperation for the MURABAHA Project Implementation; the ceremony was held on June 27, 2024, in Almaty, the Republic of Kazakhstan, as part of the EDB's Annual Meeting and Business Forum. The document was signed by Ruslan Dalenov, Deputy Chairman of the EDB Management Board and Marat Sarsenov, Chairman of the Istcomtrans LLP Supervisory Board.
Murabaha is a special financing structure in which banks not only lend money, but also actively participate in their clients' businesses. Instead of charging interest, the bank and the client share the profits and the risks from brought by the joint projects. This encourages both sides to take a responsible approach towards business, and also helps build trusting relationships. Murabaha helps develop the economy by financing projects that are of real importance to both the company and the society. This not only promotes economy, but also supports healthy climate for its growth.
"The signing of the Memorandum means that we are just starting to engage in Islamic financing. In the future, we want to offer more products and services within the Islamic Window framework, expand the partner network and contribute to the economic well-being of the region," said Ruslan Dalenov, Deputy Chairman of the EDB Board.
Marat Sarsenov, Chairman of the Istcomtrans LLP Supervisory Board, noted that the company's signing the Memorandum with the Eurasian Development Bank opens up new prospects in the sphere of joint implementation of investment initiatives based on Islamic finance principles. "The main goal of our cooperation is the development of the company's new projects in the field of transport infrastructure and logistics, which will contribute to the growth of trade and economic development of the Republic of Kazakhstan," the Istcomtrans LLP representative noted.
Istcomtrans LLP is a private rolling stock operator in Central Asia and one of the 50 largest privately owned businesses in Kazakhstan. The company has representative offices in 11 cities of Kazakhstan and Russia and manages a fleet of more than 12.5 thousand railway cars, about half of which are oil tankers.
Murabaha is the most common Islamic financing tool. This is a purchase and sale agreement where the price of the product includes an agreed profit margin. The bank buys the product at the client's request and sells it with a margin, having indicated the real price and the profit, and the client pays the amount in installments.
The EDB's Annual Meeting and Business Forum took place on June 27-28, 2024 in Almaty, Republic of Kazakhstan. The event’s sessions recordings are available here https://www.youtube.com/@infoEABR/streams
Additional Information:
The Eurasian Development Bank (EDB) is a multilateral development bank investing in Eurasia. For more than 18 years, the Bank has worked to strengthen and expand economic ties and foster comprehensive development in its member countries. The EDB's charter capital totals $7 bln. Its portfolio consists principally of projects with an integration effect in transport infrastructure, digital systems, green energy, agriculture, manufacturing, and mechanical engineering. The Bank’s operations are guided by the UN Sustainable Development Goals and ESG principles.
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