Islamic infrastructure fund

The Asian Development Bank (ADB) and the Islamic Development Bank (IDB) have agreed to set up Asia's first major multi-country Islamic infrastructure fund.

The US$ 500 million fund will make Shari'ah-compliant investments in Afghanistan, Azerbaijan, Bangladesh, Indonesia, Kazakhstan, the Kyrgyz Republic, Malaysia, Maldives, Pakistan, Tajikistan, Turkmenistan and Uzbekistan.

"In Indonesia only 39% of those in urban areas have access to piped water, only 9.5% of roads in Afghanistan are paved and only 42% of Bangladesh's population has access to electricity," said Robert van Zweiten, director of ADB's capital markets and financial sectors division. "Without additional investment to change that, economic growth and poverty reduction will be held back."

The fund is structured to comply with Islamic law and Walid Abdelwahab, director of IDB's country operations department said, "Despite the tightening liquidity around the world, many investors are increasingly interested in putting their money to work in a way that complies with their faith."

Both the ADB and IDB expect the fund to attract capital not only from the Islamic world, and most notably the Middle East region, but also from a wide range of institutional investors all over the world.