Azernews.Az

It is common knowledge that Azerbaijan is a predominantly Muslim nation, therefore, the right of its citizens not only to live by Islamic canons but also to do business accordingly should be honored. One of the taboos in the Islamic world is profiteering by banks or private entrepreneurs from interest rates levied from lent funds.
However, a question arises as to how enterprises will otherwise be able to draw funds to operate in the banking sector. In Islamic business, this is done by attracting capital, in which case the investor becomes a party interested in the success of the project, as he thus not only gains the profits but also shares the risks involved.
One of such enterprises to operate in the Azerbaijani market was announced at the first investment conference of the Caspian International Investment Company (CIIC) held in Baku on Friday.
The CIIC was set up in November 2007 as a joint venture of the Azerbaijan Investment Company (AIC) and the Islamic Development Bank's (IDB) private sector arm Islamic Development Corporation (IDC).
Economic Development Minister Heydar Babayev told the event that its goal was to create favorable conditions for potential investors' doing business in Azerbaijan's non-oil sector. He noted that Azerbaijan is currently the regional leader for the attraction of foreign investment.
"The 96 per cent growth of the country's economy in the past four years laid groundwork for this. The state budget also grew in this period - by more than 10 times - with the per capita income of the population increasing 33 per cent. The oil sector is the main source of revenues for Azerbaijan, however, these proceeds are being channeled into the development of the non-oil sector. The CIIC will allow us to further expand the country's investment opportunities in this particular field."
AIC Executive Director Anar Akhundov said launching a company operating under Islamic law was the first such experience for Azerbaijan. "In the future, we plan to establish investment companies jointly with the CIIC. There is a great number of investment projects in the country, and we will get the CIIC involved in them."
IDC Director General Khalid al-Abudi cited vast investment potential in Azerbaijan. He said the IDB that has been allocating loans mainly in the country's banking sector so far now intends to allot funds to the production sectors.
Al-Abudi recalled that IDC started cooperating with Azerbaijan in 2003 -- at a time it was impossible to implement large-scale projects in the country.
"For this reason we were chiefly supporting small and medium entrepreneurship. But now, the private sector is rapidly developing here. The Azerbaijani side's interest in attracting investment to the country is commendable.
"Azerbaijan's dynamic development has given us the opportunity to set up the CIIC jointly with the AIC. Our task will be to inform the corporation's member states about the established organization to draw them to the implementation of projects within the CIIC framework," al-Abudi said.
The agreement to set up an Islam-based company in Azerbaijan was reached at an investment conference of the Islamic world in Baku in 2006. The AIC and IDC further founded the new investment company. The limit on investments in the company was set at $10 million, but the figure could rise on a decision of the CIIC's observation council. Unlike the AIC, which is not allowed to acquire more than a 25 per cent stake in any given project, the CIIC will be able to fully finance various projects.
The Baku-based company will operate both in and outside Azerbaijan. It will pursue two goals - ensuring the influx of investment to the country and gaining access of local companies to overseas markets. The priority fields for the company include agriculture, logistics, pharmaceutics, production of construction materials, and the services sector.
The company will focus on investing in local enterprises engaged in the non-oil sector with the exception of businesses disregarding Islamic values, such as companies selling alcoholic drinks and producing pork, as well as banks and firms providing traditional financial and insurance services. The IDC holds a 75% stake in the JV, while the Azerbaijani company - the remaining 25%. The CIIC has stock worth 2.95 million manats ($3.55 million