The Islamic Corporation for the Development of the Private Sector (ICD) and Japan International Cooperation Agency (JICA) signed a Memorandum of Understanding (MOU) to set out a framework for collaboration in the development of Islamic Finance industry. In particular, ICD and JICA will cooperate in supporting the development of the Islamic money market and international capital market for the countries of common interest.
The MOU includes establishment of platform for international dialogue on Islamic Finance as a potential tool for inclusive and sustainable growth. Cooperation under the MOU will allow the two institutions to achieve synergies and to leverage their respective core competencies and comparative advantages. At the first setout, ICD and JICA is partnering to provide Technical Assistance on issuance of Sukuk*, the Islamic equivalent of bonds.
The signing ceremony was held during the annual meetings of the World Bank Group (WBG) and the International Monetary Fund (IMF) in Washington DC, U.S.A. on October 11th, and was performed by Kunio Okamura, JICA’s Senior Special Advisor, and Khaled Al Aboodi, ICD’s Chief Executive Officer.
JICA’s Senior Special Advisor, Kunio Okamura, stated: “We are glad to sign the MOU with IDB Group in the field of Islamic Finance following the one signed for the Palestine Assistance. Partnering with ICD, we are ready to utilize the Islamic Finance for the inclusive and sustainable growth for the ICD’s member countries. Technical Assistance for Sukuk issuance would be our very first cooperation. We are keen to implement the project incorporating Japanese financial institutions, which ultimately would achieve awareness-raising and penetration of the Islamic Finance in Japan for the better interaction of ICD’s member countries and Japan.”
ICD’s Chief Executive Officer, Khaled Al Aboodi, stressed: “By creating an Islamic money market, the member country would be able to provide an alternative to its treasury bills for Islamic Financial Institutions to invest in. Even though such area is not commercially viable for global Sukuk arrangers, we took responsibility to fill this gap in the market which naturally falls within the developmental principals of ICD”.
JICA is one of the world’s largest bilateral aid agency whose mission is to address global agenda such as climate change, infectious diseases, etc, reduce poverty through equitable growth, improve governance in various types of institutions, and achieve human security. Its main services are to provide technical assistance, concessional official development assistance (ODA) loan and grant aid, covering areas from large-scale infrastructure to grassroots projects.
ICD is a multilateral organization affiliated with the Islamic Development Bank (IDB) Group. It is an internationally recognized leader in developing the private sector and providing Shariah (Islamic law) compatible financing solutions in its member countries, and strives to strengthen the economic relations between those member countries on the basis of Shariah. This includes developing member countries’ capital markets, specifically Islamic debt capital markets through Sukuk.
*Sukuk: Commonly refers to the Islamic equivalent of bonds. However, as opposed to conventional bonds, which merely confer ownership of a debt, Sukuk grants the investor a share of an asset, along with the commensurate cash flows and risk. As such, Sukuk securities adhere to Islamic laws sometimes referred to as Shari’ah principles, which prohibit the charging or payment of interest.