TCA
ASTANA (TCA) — A prominent U.S.-based human rights lawyer has announced that his firm will represent Iskander Erimbetov, a Kazakh businessman who the attorney said has been tortured in custody, RFE/RL’s Kazakh Service reported.
EurasiaNet
DUSHANBE (TCA) — In Tajikistan, the country with a troubled banking sector and four large banks failing to meet their commitments to the customers, Islamic finance may become an effective alternative to traditional banking services. We are republishing this article on the issue, originally published by Eurasianet:
Many of Tajikistan’s traditional banks are wobbling due to years of chronic mismanagement. Their troubles are creating a space for up-and-coming Islamic lenders to flourish.
In 2014, the same year that the government adopted legislation regulating Islamic finance, Alif Capital opened its doors, becoming the first company in the country to offer banking services on strictly Islamic principles. Billboards sprung up around the capital, Dushanbe, advertising six-month, interest free loans for consumer purchases — quite a novelty at the time.
“We do not provide our services with the aim of Sharia compliance for the sake of marketing or capturing some ‘unmet demand’ or some ‘niche,’” Abdullo Kurbonov, the head of Alif Capital, told Eurasianet.org in an email. “We provide our services in a Sharia-compliant manner — as much as possible under existing regulations — because of our personal stance, our own personal principles.”
In broad terms, Islamic banking is predicated on the notion that using money purely to make more money is sinful. Accordingly, speculation and interest are forbidden. That gives rise to multiple alternative products, such musharaka, where the lender enters a partnership with the client and thereby makes a profit out of the business rather than just earning interest. With mudarabah, the lending institution acts as a silent partner providing all the funds. The returns are typically split down the middle. Businesses that source credit in these ways are not permitted to invest in sectors deemed haram, such as the manufacture of alcoholic goods or gambling establishments.
If the government has been tentative in its support of the emerging Islamic banking sector, there appears to be more enthusiasm among the general population. In her research on the prospects for Islamic micro-finance institutions in Tajikistan, Manijeh Sabi, a scholar at The Sage Colleges, found that while many people were not wholly certain what exact services and conditions Islamic lenders might offer, most are generally positive about the concept in the abstract.
“Tajik respondents reported that the reason for their preference was strong religious obligation,” Sabi wrote in her 2016 paper “Awareness and perceptions of Islamic microfinance among microfinance clients in Kyrgyzstan and Tajikistan.”
Some of the distinctions between traditional and Islamic banking are arguably technical.
On the consumer loan front, banks like Alif Capital assist their customers by dealing directly with retailers and paying for items — be it household appliances or cars — in full and upfront. The customer then pays back the bank in installments. The bank earns its cut by receiving a commission from the retailer.
Deposits are notionally considered an investment, not simply a fund that exists to earn interest for clients.
Mehurbon Burhonov, an expert on Islamic financing, told Eurasianet that the fact that creditors typically do not handle cash directly substantially reduces risks.
“If, for example, you want to take out a mortgage, payment is made in full directly to the owner of the apartment. Or if you want to get consumer credit, the bank will make the payment from one account to another. Even if you want to buy goods from Germany, the bank will transfer money to the seller in Germany, but you won’t get to have the money in your hands,” Burhonov said.
Burhonov said Islamic banks tend to be scrupulous about assessing investment projects, since they stand to lose heavily in the event of failure. This is a huge consideration in Tajikistan, where lax lending practices — in effect the widespread practice extending credit to “friends” and “friends of friends” — has been at the core of the meltdown in the banking sector over the last few years.
The fledging public backing for Islamic financing is not entirely without reservations, however. In the micro-finance surveys conducted by Sabi in Tajikistan, a robust majority of respondents were leery of requirements on splitting profits with lenders.
Kurbonov, the head of Alif Capital, said his institution’s desire to conform to Islamic principles means that it has always financed transactions that had a verifiable link to actual assets.
“Furthermore, in addition to making a list of things we wanted to do, we made a list of things we didn’t want to do. For example, we didn’t enter the foreign exchange market — buying and selling foreign currencies — because we believe this would shift our focus away from our target clients,” Kurbonov said.
It is that business model, Kurbonov said, that has seen Alif Capital expand its asset portfolio from $100,000, in 2014, to the current level of around $2.5 million. What began as a bank run by three people now employs 90 and provides services to about 10,000 customers.
While the scale might be modest, the rate of growth has piqued interest among domestic market peers.
In October, Sohibkorbank announced it had entered talks with a branch of the Saudi-based Islamic Development Bank — the Islamic Corporation for the Development of the Private Sector — on exploring ways to convert fully to Islamic banking practices.
“Sohibkorbank has every opportunity after its complete transformation to become a leader in Islamic financing in Tajikistan — [to become] a window for attracting investment into the economy and the banking sector from the Muslim world,” the bank said in a press release.
Experts worry, however, that even though legislation allowing for this sector to exist, the rules are not clearly defined. And there is a chronic shortage of personnel in Tajikistan with a suitable mastery of both finance and the intricacies of the Islamic legal canon.
For those reasons, among others, plans by Bonki Rushdi Tojikiston — a daughter company of crisis-stricken Tojiksodirotbank — to turn to Islamic financing have stalled. That lender announced with some fanfare in November 2015 that it had contracted the services of the Islamic Development Bank to assist in its conversion to an Islamic bank, but little progress has been made since.
Sorbon Rahmatov, head of the treasury department at Bonki Rushdi Tojikiston, told Eurasianet that the hitches were regrettable as Islamic financing could play an instrumental part in restoring public confidence in the lending sector as a whole. “Due to the fact that financing is carried out through forward sale contracts, or through mudarabah — and that through all this, debt obligations are not resold — this form of financing remains stable,” Rahmatov said.
Not that even the most ardent advocates for Islamic banking see it as a panacea for all ills in Tajikistan’s financial sector. Kurbonov said the main reason some banks are in such trouble today is a pattern of inadequate corporate governance.
“Islamic banking can provide a comprehensive framework for risk management and prudent banking. However, even before introducing new models, the financial sector can significantly improve by a stricter adherence to existing corporate governance practices,” Kurbonov said.
TCA
DUSHANBE (TCA) — Over the past six years Tajikistan has seen decreasing production of primary aluminum, Avesta news agency reported citing Tajik Deputy Minister of Economic Development and Trade Gulru Jabborzoda.
In her words, in 2017 Tajikistan produced 103 thousand tons of aluminum, 175 thousand tons less than in 2012.
The reasons for the decrease were outdated technology and delayed supplies of fuel from Turkmenistan.
“In 2012, high-quality aluminum of A-7 grade accounted for 70 percent of the total output of the Tajik Aluminum Company (TALCO). At the world’s commodity exchanges, the price of aluminum is determined based on A-7 grade aluminum. For other aluminum grades, prices are $200-$300 lower. Today, the Tajik Aluminum Company does not produce A-7 grade aluminum due to its outdated equipment,” the deputy minister said.
According to the ministry, last year Tajikistan exported 101 thousand tons of primary aluminum for $270 million, 3.2 percent less than in 2016.
In November, Avesta reported that a new aluminum plant will be built on the grounds of the existing aluminum company in Tajikistan.
Igor Sattarov, spokesman of Tajik Aluminum Company state unitary enterprise, then said that in 2018, Tajik Aluminum Company (TALCO) will start a program of phased modernization of its aluminum production with the introduction of the latest technology.
“The modernization program will allow in the near future replacing the outdated equipment with modern energy-saving equipment, which will help to greatly increase our aluminum production,” Sattarov said.
The company plans to use Chinese aluminum production technology, which has proven energy efficient.
During the visit of Tajik President Emomali Rahmon to China last year, Tajik Aluminum Company and China’s Yunnan Construction and Investment Holding Group signed a memorandum of cooperation on joint construction of a new aluminum plant on the grounds of TALCO.
The new plant is to produce 503 thousand tons of aluminum per year and will create 1,100 new jobs.
Construction will start in 2018 and should be completed in 1.5 years.
The project is estimated to cost $1.6 billion.
Aluminum is the largest export item of Tajikistan today.
TCA
ASHGABAT (TCA) — The 6th session of the Turkmen–British Trade and Industrial Council was held in London. A delegation of Turkmenistan took part in the event, organized by the Governments of the two countries and aimed at expansion of bilateral cooperation and establishing business contacts with British companies willing to enter the Turkmen market, the State News Agency of Turkmenistan reported on January 23.
The forum was opened by Co-chairman of the Council, Ambassador Ronald Nash, who spoke about the dynamics of Turkmen-British cooperation, and highlighted the role of the Turkmen leader in the comprehensive intensification of Turkmen-British dialog.
British business circles were represented by top managers of such companies as Shell, BP, Rolls-Royce, De La Rue, Aggreko, as well as London Stock Exchange.
The representatives of Turkmenistan introduced the priorities of the country’s economic policy, its modernization and diversification plans.
It was mentioned that cooperation between Turkmenistan and Great Britain is steadily developing. Fuel and energy sector, trade, economic and banking spheres, transport and communications, agriculture and education were highlighted among the leading spheres of cooperation.
The sides highlighted the presence of big potential for considerable increase in trade between the two states. In this context, important role is given to the Turkmen–British Trade and Industrial Council, which serves as an efficient platform for discussion of ideas and development of efficient partnership mechanisms.
Today, 24 companies with the participation of British capital and 174 investment projects with the participation of British companies to the total amount of 1.5 billion US dollars are registered in Turkmenistan.
TCA
ASTANA (TCA) — The first rail transportation of fruit and vegetable products from Pakistan to Kazakhstan has been organized by KTZ Express, a subsidiary of Kazakhstan’s national railways company Kazakhstan Temir Zholy (KTZ), the company’s press office said.
TCA
BISHKEK (TCA) — A new report launched on January 24 by the Norwegian Refugee Council says that seven out of ten Afghan refugees who return home are forced to flee again due to violence.
