Riyadh, Asharq Al-Awsat – Islam was introduced to Kazakhstan after Qutayba Ibn Muslim al Bahili became governor of the Khorasan province in 704. Al Bahili extended the Islamic conquests to territories beyond Mesopotamia. Kazakhstan is one of the Islamic republics of Eurasia, which the former Soviet Union annexed to its Communist camp in 1917. However, with the gradual break up of the Soviet Union, Kazakhstan declared its independence in 1991. Muslims represent the majority of the population in this republic, constituting more than 48 percent of the overall population, which stands at approximately 5 million people, most of whom are of Turkish origin.
Kazakhstan owns substantial reserves of oil and natural gas and is home to around 3.3 percent of the world’s oil reserves. Its economy relies on oil as it makes up 56 percent of its exports. Oil revenues represent 55 percent of the state budget meaning oil is crucial to this country. Kazakhstan is scientifically and technologically advanced, especially in the fields of astronautics and nuclear sciences. It served as one of the key strategic bases during the era of the Soviet Union and was home to the Baikonur Cosmodrome and the Semipalatinsk Polygon. Russia still launches its spaceships and shuttles from Kazakhstan. Until the independence of Kazakhstan, the capital of the republic was the border city of Almaty (meaning apple) but in 1998, President Nursultan Nazarbayev built the city of Astana in the heart of Kazakhstan to be the new capital of the republic. Nevertheless, Almaty remained the major commercial center of Kazakhstan. Stock exchange in the republic was closed to foreign investment for quite a long time, as supervisory bodies were very strict with regards to granting permits to foreign banks.
One story comes to mind in this respect; there was a giant investment financial institution in the Gulf region that was forced to take possession of a local Gulf bank that had a branch in Kazakhstan. However, as the international financial crisis further intensified and led to deficiency in liquidity and credit loss in the international markets and since the banking sector in Kazakhstan was dependent on world markets to finance growth inside the republic, it found itself facing a dilemma, which prompted supervisory authorities to search for new funding and investment channels to diversify sources of finance. Since Islamic banking and its related institutions were in possession of this liquidity, monetary authorities in Kazakhstan sought to attract those institutions so they enacted laws and regulations to allow Islamic banking institutions to run [in Kazakhstan]. Supervisory bodies in the republic issued a guide stating the procedures and prerequisites needed for Islamic banking institutions to work in Kazakhstan. They also facilitated the process of issuing the necessary permits for those institutions to begin their operations.
As a result, several Islamic financial institutions expressed the desire to establish themselves in Kazakhstan such as the Islamic Bank of Qatar, Ithmaar Bank of Bahrain and Al Hilal Bank of the UAE. Without doubt this is one of the blessings that the international financial crisis has brought. In the past I have said that sometimes disasters actually end up being blessings in disguise. This is clearly manifested in the Quran: ‘It may be that you dislike a thing, and Allah brings about through it a great deal of good,’ (Surat Nisa: 19).
Therefore I call on Islamic financial institutions and Muslim business representatives who are in this field to seize this rare opportunity and enter this republic that enjoys political and social stability, great financial power, as well as a highly qualified academic and professional labour force. Undoubtedly, these factors make up a successful environment for any kind of investment. If we add to that the desire of the majority of Kazakh citizens to receive financial services that are compatible with Islamic Sharia law then there is no doubt that Kazakhstan can be considered one of the most promising and strategic markets for Islamic banking; a market that will enable this industry to grow and expand in the future.