Turkey and Indonesia are working on a lender project that will operate in compliance with Islamic law. Though talks are ongoing, the project titled “megabank” is expected to contribute to Turkey’s aim to expand the share of participation banking in the Turkish financial sector. Deputy Prime Minister Mehmet Şimşek, who held a meeting with the Indonesian Finance Minister Sri Mulyani Indrawati, said that they discussed the megabank idea, which was launched by Indonesia as an Islamic bank project, while stressing the importance of accelerating the process at the same time. Şimşek also highlighted that the project will strongly support the goal of increasing the participation banks’ share in the sector to 25 percent.

Speaking to the Anadolu Agency (AA) during his contacts at the 42nd Annual Meeting of the Islamic Development Bank (IDB) Group in Saudi Arabia, Deputy Prime Minister Şimşek stated that the vision and strategies put forward for the bank to support the member countries in a stronger manner were discussed during the annual meetings, which were highly productive.

Pointing out that many bilateral talks were held as well as meetings, Şimşek said that they met with Kuwait’s Deputy Prime Minister and Finance Minister Anas Khalid al-Saleh and Saudi Arabia’s Finance Minister Mohammed bin Abdullah Al-Jadaan alongside the finance ministers from many African and other Islamic countries. Noting that they held bilateral talks with many countries, Şimşek said it was very productive in that respect, adding that the small, narrow meeting spaces at the venue were a real advantage enabling many issues to be discussed with several countries at the same time.

Şimşek stressed that they also met with the Jeddah Chamber of Commerce and Industry (JCCI) chairman Sheikh Saleh Abdullah Kamel, as well as Sheikh Saleh, chairman of the Islamic Chamber of Commerce, and that they exchanged ideas on increasing mutual investments between Turkey and Saudi Arabia.

Şimşek said they held bilateral talks with Indonesia’s finance minister and the Islamic Development Bank’s (IDB) President Dr. Bandar M. H. Hajjar, adding that the negotiations on the megabank are ongoing.

Pointing to the fact that IDB’s president sides with the acceleration of the process, Şimşek said that the issue of the megabank needs more time due to its significance, adding that the project is a platform that will make a significant contribution to the development of Islamic finance, interest-free finance, interest-free banking and interest-free capital markets in terms of liquidity and resources.

Deputy Prime Minister Şimşek stated that Turkey’s approach towards the megabank has not changed, saying: “The whole point is whether it will be one or two separate regions. The IDB will be in it as well. I also believe that they will strongly support the dual or single structure.”

Şimşek said the megabank project will strongly support the goal of increasing the participation banks’ share within the sector to 25 percent and continued: “As Turkey, we are pushing hard to improve participation banking. There is a goal that President [Recep Tayyip Erdogan] has put forward. We have a very serious and ambitious goal to increase the share of participation banks in the sector up to 25 percent. That is why we have put forth a strong effort in this direction and we continue to do so.” He also added that the megabank should actually be seen as an initiative to provide the sector with liquidity and to contribute to its development, both locally and globally.

Previously Şimşek said Istanbul should be the headquarters for a new Islamic megabank.

Indonesia, which has the world’s largest Muslim population, and Malaysia have long-tried separately to establish an Islamic lender, which would serve as a central bank for lenders in the global Islamic finance industry, both for projects and companies. Malaysia’s central bank first promoted the idea in 2009 and a three-way merger that collapsed last year. Indonesia has been trying to establish a megabank since 2013. The project is supported by the IDB, and Turkey’s initial contribution to the bank’s capital is reported to be $300 million.

Originally published on www.dailysabah.com

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