KUALA LUMPUR, April 16 (Bernama) -- The Russian market is becoming even more accessible. Since 2023, an experiment in partnership financing has been successfully implemented across various regions of the Russian Federation.
A new mechanism for attracting investment from the Islamic world has emerged. Now, the experiment is planned to be expanded and extended until autumn 2028.
At the beginning of 2025, it became known about the plans of the Russian parliament to extend the experiment for another three years, as well as to expand the list of permitted transactions under Shariah law, including the possibility of mutual insurance of property interests.
The changes should increase the attractiveness of partnership financing instruments, including for investors from the Organisation of Islamic Cooperation (OIC) countries, which includes Malaysia.
These details were provided in a press release issued by the external press service of the International Economic Forum "Russia - Islamic World: KazanForum" 2025.
The release, made available to Bernama International News Service, dwells further on the readiness and what is in store for Malaysia.
Significance for Malaysia
According to the Head of the Investment Development Agency of Tatarstan, Talia Minullina, the volume of Islamic banking transactions more than doubled last year. The experiment is developing and may eventually become a permanent practice.
Tatarstan is one of the four regions of the Russian Federation where the experiment is taking place.
This is important for Malaysia, where partnership financing and investment programmes, according to experts, are usually designed for a long period of up to 7-10 years.
Projected Investment Potential
In general, the estimated amount of investments in Russian projects through the format of Islamic financing is estimated at more than US$10 billion.
In the next two years, experts expect tenfold growth in this area.
"To work with investors from the Organisation of Islamic Cooperation countries, it is extremely important to form an exchange market in Russia, so that large issuers can enter the market and issue various instruments of different orientation within the framework of the current Russian legislation.
“When these mechanisms work and clear standards are prescribed, there will be much more investments," said Minullina.
Development of Human Capital
To develop the new investment market, the Russian regions have strengthened the training of specialists - financiers, lawyers and managers.
Personnel are trained in cooperation and according to the standards of AAOIFI - Accounting and Auditing Organisation of Islamic Organisations, based in Bahrain.
AAOIFI's goal is to maintain and promote Shariah standards for Islamic financial institutions.
This work is now increasing in Russia and a fully halal investment platform is already being prepared for launch.
It will be compliant with AAOIFI standards and managed by Islamic finance experts.
The project is being implemented jointly with two Arab funds and is aimed at financing promising start-ups in Russia and the Commonwealth of Independent States (CIS).
Those wishing to invest will be able to receive a share of future profits according to Shariah principles, while businesses will be able to attract partner funds and issue the Islamic equivalent of bonds - sukuk.
Now the platform is in the process of registration, the full launch is scheduled for May 2025.
Also, in 2025, AAOIFI will, for the first time, hold an international conference in Russia on the theme: "Islamic finance and investment: promoting sustainable development and global partnership" within the framework of KazanForum 2025.
Islamic Finance as a Trade Booster
The development of Islamic finance will also be positive for trade.
Russia's trade turnover with countries of the Islamic World for the first nine months of 2024 amounted to US$106 billion.
Of that amount, US$5.9 billion—representing a 40 per cent growth over the year—was generated by Tatarstan, where the experiment in the application of Islamic finance is most active and successful, the leader in the Russian Federation, in terms of the volume of partnership financing transactions.
It is assumed that this very region can become a connecting bridge between Russia and the OIC countries.
"Over the last two or three years, not only the figures of trade turnover have grown, but also the number of transactions between Russia and OIC countries," Secretary General of the General Council of Islamic Banks and Financial Institutions (CIBAFI), Abdelilah Belatik at the opening of a training programme on partnership finance in Kazan, said in February 2025.
According to him, these are primarily Turkey, the UAE, the Gulf countries, as well as Malaysia and Indonesia.
Malaysia's Strategic Role
Further development of Islamic finance in the Russian Federation in the near future may bring economic ties with the countries of the Global South to a new level.
Among the leading participants of the new market may be Malaysia, the leader in terms of share in the total world assets of Islamic banks and one of the largest countries in terms of Islamic finance assets.
The readiness to establish cooperation with Russia in the field of Islamic finance sector was announced in autumn 2024 by the Prime Minister of Malaysia Datuk Seri Anwar Ibrahim.
According to him, this is one of the areas in the bilateral relations of the countries where cooperation is overdue.
Potential Areas for Future Cooperation
Among the new areas for cooperation in the future, one can assume, is joint investments involving Islamic finance in the assets of Russian and foreign companies.
Russia is rapidly developing the "halal industry" - the production of goods and services that meet Islamic standards -.
A number of products have prospects for export to OIC countries and Malaysia.
In the Tatarstan region alone, there are more than 100 halal industries, and more than two dozen are export-oriented.
Other areas includes development of halal lifestyle - halal tourism, halal production, fashion, finance, IT and media -, and in halal medicine and education.
OIC countries, including Malaysia, can offer competencies in these areas.
KazanForum 2025 as a Key Event
The XVI International Economic Forum "Russia - Islamic World: KazanForum" 2025, set for May 2025, will show how joint projects in partnership finance.
It will be held in Kazan, for six days from May 13, 2025.
Interested parties may register for expert participation in the Forum at https://reg.kazanforum.ru/en/registration while accreditation is open for media representatives on the official KazanForum website: https://reg.kazanforum.ru/en/registration/media by April 20, 2025.
The aim of the forum is to strengthen trade and economic, scientific and technical, educational, social and cultural ties between the regions of the Russian Federation and the countries of the OIC, which includes 57 states.
-- BERNAMA
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