RTTNews - The Asian Development Bank or ADB and the Islamic Development Bank or IDB agreed Tuesday to set up Asia's first major multi-country Islamic Infrastructure Fund, a report from the ADB said.

The fund, valued US$500 million, will make Shari'ah-compliant equity investments in 12 countries, that are borrowing members of both banks. The countries would include Afghanistan, Azerbaijan, Bangladesh, Indonesia, Kazakhstan, Kyrgyz Republic, Malaysia, Maldives, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan. The investment marks the ADB's first Islamic fund.

According to the ADB, most Asian countries are in urgent need of additional spending on infrastructure, but infrastructure condition in these countries were mostly far worse than the Asian average.

The ADB said only 39% of urban dwellers in Indonesia had access to piped water, only 9.5% of roads in Afghanistan were paved and only 42% of Bangladesh's population had access to electricity. Without added investment to change that, economic growth and poverty reduction will be held back, Robert van Zwieten, Director of ADB's Capital Markets and Financial Sectors Division said.

Meanwhile, the IDB said due to the increasing demand for Islamic finance by investors and clients, the fund was likely to attract capital not only from Islamic countries, particularly those in the Middle East, but also from institutional investors all over the world. Despite tightening of liquidity worldwide, there was still substantial wealth among investors, who would want to make investments complying with their faith, the IDB said.

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