Islamic Development Bank gears up for Jakarta summit

Political and business leaders from Muslim-majority countries are preparing to meet in Jakarta, Indonesia, to review last year's activities by the Islamic Development Bank Group (IDB). Representatives of 56 member nations, as well as the bank's governing board, meet at the 41st IDB annual meeting in Jakarta between 15 and 19 May. Turkey will be represented by Deputy Prime Minister Mehmet Şimşek.

Speaking to Anadolu Agency (AA) before the meeting, the bank's president, Ahmad Mohamed Ali, said Turkey is best positioned to take advantage of IDB Group-wide solutions through joint support of many entities via the bank's country gateway office. The bank has provided finance worth more than $115 billion to member countries in total since starting operations 41 years ago. It has granted $9.2 billion to Turkey for 459 projects and has offices in Ankara and Istanbul. "This is particularly appropriate as Turkey's strategic challenges of enhancing productivity and competitiveness are equally relevant for all group entities," Ali said.

Ali said that the IDB group is thankful to the Turkish government for the successful implementation of the first Member Country Partnership Strategy (MCPS) for Turkey between 2010 and 2013 when the state received $2.2 billion in finance from the bank "The IDB Group is preparing to undertake the next MCPS [from 2016 to 2018] in line with the government's Medium-Term Development Plan to support its development objectives and growth targets under the 2023 Vision through the 25 Transformation Programs," Ali added.

During 2015, the IDB Group recorded an unprecedented amount of approvals worth $1.83 billion, representing 21 percent of the total since the bank's inception. Ali said the bank appreciated the government's efforts to boost the participation banking industry, stressing that "it is a privilege for IDB to contribute to these efforts." "Indeed, [the] IDB has been playing an active role in the ambitious deepening of the Islamic finance sector through equity participation in Albaraka, Kuveyt Türk and Vakıf Katılım participation banks," Ali said.

There are currently six Islamic banks operating in Turkey: Albaraka Türk, Bank Asya, Kuveyt Türk, Türkiye Finans, Ziraat and Vakıf. Ziraat and Vakıf are state banks that have recently launched Islamic branches. Halkbank, another state-run conventional bank, is expected to also begin its own Islamic operation soon.

At least 16,000 people currently work in Islamic finance across 1,100 branches across Turkey. Islamic banking comprises 5 percent of the total banking system in Turkey, which the government says it aims to increase to 15 percent by 2023. Ali emphasized the bank is also fully supporting Turkey's plans for the development of Istanbul as an international financial center. "Indeed, IDB Sukuk is currently listed on the Borsa Istanbul [stock exchange]. Moreover, the Bank Group continues to organize several workshops, seminars, training programs and conferences aiming at promoting the industry," Ali said.

The government has long aimed to turn Istanbul into a finance center, and it believes that Islamic finance is of critical importance to realizing this goal. Islamic finance entails interest-free transactions, in accordance with Islamic law.

The IDB was established on Dec. 7, 1973, by members of Organization of Islamic Cooperation (OIC) and officially started operating on Oct. 20, 1975. The bank aims to contribute to the social and economic development of member countries and Muslim communities individually in line with the principles of Islam. Establishing a new Islamic "megabank" within the year is also on the agenda of the Jakarta meeting, and the government has requested the IDB establish the facility in Turkey. Indonesia made a similar request earlier this month, according to Şimşek. He said Indonesia, Turkey and the IDB decided to set up committees to look into the matter during a visit to Washington in April. "Turkey will host a megabank that will serve the region. Indonesia will have one as well. They will either be specialized or regional," Şimşek said, adding that the bank will be based in Istanbul.

The IDB also gives awards for science and technology every year to recognize efforts that contribute to technological and economic research in its member states. The 2016 IDB Prize for Science and Technology will be presented to a private Turkish company called Nanomanyetik Bilimsel Cihazlar Ltd. during the Jakarta meeting.