OREANDA-NEWS. February 24, 2010. A representative of the Bahrain-based Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) stated that Russia was considering adopting its standards.

Safdar Alam, head of Islamic structuring at J.P. Morgan said that Kazakhstan would be leading partly because within the region it’s a strong financial player.

But Muslim countries in Central Asia, where economies are heavily dependant on energy resources such as natural gas and a economic structure Gulf Arab banks will know from home, are seen as the next growth areas for the Islamic finance industry after hopes of expansion into Western markets faded and Gulf Arab markets remain fragmented.

Banks have eyed Muslim minorities in Western countries such as France, the United Kingdom and Germany, but without proper regulatory support these markets will take time to penetrate and earlier hopes for Western issuance of Islamic bonds have faded.

"For many years it’s been viewed as an area with potential but realizing that potential is a lot more challenging than institutions realized," said Frederick Stonehouse, head of strategic M&A at Bahrain’s Unicorn Investment Bank.