Sukuk as an Islamic finance alternative for investment in Infrastructure in Kazakhstan: institutional perspectives

Abstract

In recent years due to the international economic crisis, the most complex and long-term problems have aggravated in the Republic of Kazakhstan, the resolution of which is strategic importance for the economic well-being of the country and its resilience to external influences. The main goal of further economic development is not only the stabilization and growth of industry, but also the development of industrial and social infrastructure. Nevertheless, issue of infrastructure funding is still open and struggling. As a developing country it takes big deal to borrow from foreign banks. Moreover, the additional leverage appears in a face of currency volatility which is highly distress country economic growth. This paper unveils the actual issues of infrastructure development, adopting Islamic finance in Kazakhstan with legal perspectives and the solution for them in the form of Sukuk issuance model. In this regard, legal perspective should be addressed since regulation on Sukuk is not well accommodated in the existing regulation by both AIFC (Astana International Financial Center) as well as Kazakhstan jurisdiction. Sukuk can expand financial services, assist to develop domestic capital market and provide infrastructure funding without government budget support. Therefore, this paper implies to domestic regulation as set by both AIFC and Kazakhstan mainland jurisdiction.