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[DUBAI] The Jeddah-based Islamic Development Bank said it was teaming up with an arm of Industrial and Commercial Bank of China to look for business opportunities, in a sign of growing Chinese interest in Islamic finance.
The Islamic Corporation for the Development of the Private Sector (ICD), the IDB's private sector arm, will cooperate with ICBC Financial Leasing, a wholly owned subsidiary of ICBC, China's biggest lender by assets.
The two companies aim to develop Islamic business in the ICD's 52 member countries, including the ijara type of sharia-compliant banking and liquidity management. They will seek to do syndicated financing for private sector projects, the ICD said in a statement on Thursday.
China's population of Muslims is estimated at over 20 million but there is very little if any Islamic finance activity inside the country, and it is not clear whether the industry will develop the legal and regulatory backing to develop there.
However, some Chinese companies see Islamic finance as a way to expand their trade and investment in fast-growing Muslim majority markets such as the Gulf and southeast Asia, and to access pools of capital there.
Last month two Qatari banks and Chinese brokerage Southwest Securities signed a memorandum of understanding to establish a company handling Islamic finance deals.
China's AVIC Capital Co said in December that its unit AVIC Securities would advise the government of the country's Ningxia Hui Autonomous Region, which has a large population of Muslims, on a global issue of up to US$1.5 billion worth of instruments such as Islamic bonds and US dollar bonds, with maturities of up to five years. Since then, no concrete progress towards an issue has been announced.