Malaysia’s government revealed last week that it is in the final stages of establishing a $100m fund dubbed Islamic Venture Capital Fund in collaboration with publicly-owned financial institution Islamic Development Bank (IDB).

Malaysia will sign the memorandum of understanding with IDB through its sovereign wealth fund, Malaysia Venture Capital Management (Mavcap).

IDB was established in 1973 to foster economic and social development across its 56 member states, including Malaysia, in accordance with Islamic law.

The fund was announced by Mohd Irwan Serigar Abdullah, secretary general of the treasury in Malaysia’s ministry of finance, at the launch of the country’s Elevate incubator, operated by growth debt firm Malaysia Debt Ventures (MDV).

Elevate will incubate startups for 12 months to help them mature to a point where they can secure capital from either MDV or other investors. Graduates will receive Rg2m ($500,000) in seed funding.

Abdullah also said the fund may be extended beyond the initial $100m in the future. The fund will be opened to Dubai and Indonesia once it is created – discussions are currently being kept between Mavcap and IDB because of time constraints.

The fund should mean Malaysia and Indonesia can share their expertise with the region and those Islamic countries that have so far relied on traditional economies and have struggled to establish a startup ecosystem that could significantly boost their gross domestic product.

In fact, this vehicle marks the first time a venture capital fund has been established that is specifically aimed at startups in Islamic countries. Islamic Venture Capital Fund will target startups in sectors including biotech and IT.

The fund is expected to be launched officially at an IDB Congress later this month in Jakarta – the bank currently lists only its annual meeting on May 15 on its website, though it is unclear whether that is the event in question.