Manila-based Asian Development Bank (ADB) and the Jeddah-based Islamic Development Bank (IDB) have teamed up to launch a pan-Asia Islamic Infrastructure fund.
According to a statement by ADB the fund will target an equity raising of $500 million. The vehicle will make Shari’ah compliant equity investments in twelve countries that are borrowers from either bank.
These countries include: Afghanistan, Azerbaijan, Bangladesh, Indonesia, Kazakhstan, Kyrgyz Republic, Malaysia, Maldives, Pakistan, Tajikstan, Turkmenistan and Uzbekistan.
In the statement, ADB said: “Most of Asia is in urgent need of additional spending on infrastructure but the conditions of infrastructure in the target countries are frequently worse than the Asian average.”
Robert van Zwieten , director in the capital markets and financial sectors division of ADB, said: “In Indonesia, only 39 percent of urban dwellers have access to piped water, only 9.5 percent of roads in Afghanistan are paved and only 42 percent of Bangladesh’s population has access to electricity. Without added investment to change that, economic growth and poverty reduction will be held back.”
Van Zwieten said the fund is aiming to attract investment from both Islamic investors and from institutional investors from around the world.
ADB was established in 1966. The bank provides loans and grants to projects aimed at reducing poverty across Asia and Asia Pacific. It also provides advisory services. IDB has 56 member countries which use the bank to aid their economic growth using Islamic law.