Islamic Finance Industry in Kazakhstan: Then and Now

Abstract

Kazakhstan is the first Central Asian State to have established the Islamic finance sector and introduced its legal and regulatory framework. This article reviews the history and development of Islamic finance in the Republic of Kazakhstan. The first section outlines the events and experiences of this industry chronologically, and examines it historically. The second section scrutinizes laws on Islamic financing and amendments hereto, considers the various institutional initiatives, and critically analyses the implementation of the Islamic finance master plan. The research assessed the effectiveness of Kazakhstan’s Islamic finance master plan of 2012-2020 and analyzed the content of the new master plan of 2020-2025. The findings suggest that Kazakhstan’s Islamic finance market has not grown to date as expected despite numerous reforms and measures aimed at developing the industry. The research also revealed the following major challenges impeding its growth: 1) a weak legal and regulatory framework; 2) tight regulations inhibiting the incorporation of Islamic financial institutions; 3) a dearth of Islamic finance experts; 4) a low public awareness of the Islamic financial products. Hence, taking the proper measures to address these challenges is crucial for the growth of Islamic finance industry in Kazakhstan. Keywords: Islamic Finance, Kazakhstan, Challenges, Legal Framework