Baku, Azerbaijan, May 25
By Azad Hasanli – Trend:
The introduction of Islamic financing in Azerbaijan can become a catalyst for attracting investments from the Middle East. But is the country's economy ready for this?
Today, in Azerbaijan, both at the governmental level and at the level of individual organizations, work is underway to identify opportunities for the use of Islamic financing in the country. Despite this, there is no progress in this area. The development of Islamic financing is also not envisaged in the strategic road maps.
Chairman of Cooperation of Azerbaijan and Arab Countries Public Association (AACC) Elshan Rahimov said the introduction of Islamic financing would significantly expand the flow of investments from Arab countries.
"I think that until our legal framework is adjusted to allow applying the principles of Islamic financing in general, and Islamic banking in particular, the future of Islamic banking in Azerbaijan can be seen as vague. This is also evidenced by the experience of the introduction of Islamic banking, for example, in the International Bank of Azerbaijan," Rahimov said in an interview with Trend.
He noted that a large amount of capital has accumulated in the Gulf countries, which are now largely stored in Islamic banks and funds.
"They [Arab investors] are interested in the possibility of using these funds within the framework of the financial rules permitted by the Sharia. If the system of Islamic financing is introduced in Azerbaijan, a huge amount of financial resources can flow to our country. Azerbaijan can become a financial center and become a catalyst for attracting Islamic investments," Rahimov said.
At the same time, he continued, there are many entrepreneurs in Azerbaijan who would like to work with Islamic financial institutions instead of traditional banks.
"The very system [of Islamic banking] is based on justice. In such circumstances, there are no cases when the risks fall only on one of the parties. In traditional banking, the borrower receives a loan, and if he can not return it, the bank confiscates his collateral, sells it and returns its own funds. In this regard, the entrepreneur is the loser."
"The Islamic banking is different. The entrepreneur establishes partnership with the lender, from whom he takes a loan. The bank, in turn, can act as a business manager and help to control risks and ensure the viability of the company. In general, there are a lot of partnership schemes - cooperation can be conducted on a joint management basis, on trade basis, it can be in the form of project financing, etc." the chairman of the association said.
Rahimov believes that the introduction of Islamic financing is particularly important in terms of entering new markets and attracting investments from new sources. "On the one hand, the European market is now oversaturated, on the other - they are already investing enough in our country, so it is time to attract the attention of the Arab world," he added.
---
Follow the author on Twitter: @AzadHasanli
