KUALA LUMPUR , June 14, 2005 (IslamOnline.net & News Agencies) – The Islamic Development Bank (IDB) will launch next week a new financing fund with an initial authorized capital of $1 billion to boost trade volume among the member states of the Organization of Islamic Conference (OIC) and help them play a key role at the global economic landscape.
The fund, known as the International Islamic Trade Financing Corporation, will be formally launched during the June 23-24 30th annual meeting in Malaysia of the IDB board of governors, Malaysia ’s Bernama news agency reported Tuesday, June 14.
“This new entity, a major initiative for IDB, would be stationed at Dubai ,” Ahmed S. Hariri, IDB's regional director for the Kuala Lumpur office, told reporters.
Set up in 1973, the 55-member IDB is widely regarded as the investment arm of the OIC with the ultimate goal of fostering economic development and social progress of member countries and Muslim communities individually as well as jointly in accordance with the principles of Shari`ah.
The Jeddah-based bank has two regional offices in Rabat , Morocco , and Kuala Lumpur , in addition to field representatives in eleven member countries.
Intra-OIC Trade
Hariri said the new Fund came in view of the increasing demand for trade financing facilities and more so of the large untapped potential in intra-OIC trade.
He said the IDB, in general, was one of the few multilateral financial institutions in the world engaged in promoting and financing intra trade among its member countries.
Hariri regretted that the trade volume among OIC member states currently comprised only 11 percent of global trade, hoping that the new facility will raise that to 15 percent.
According to the IDB's 2004 annual report, trade among OIC members was close to $500 billion compared with the global value of $6,419.1 billion.
African Membership
Asked on new IDB memberships, Hariri said one African state would come on board at the meeting next week but declined to reveal the state.
However, sources told Bernama that the country is Nigeria which would raise IDB membership to 56.
The IDB official also said countries such as Russia and the Philippines , which had significant Muslim populations, have become observers of the meeting.
On the issues high on the agenda of next week’s meeting, Hariri said it will address how to make IDB loans as competitive as possible.
“It is true that IDB lines of credit are more expensive than prevailing rates,” he said.
“But we will try to reconcile this,” at the upcoming meeting, he added.
Hariri further said that the meeting will also tackle complaints about the expensive IDB lines of credit in comparison with those offered in the global market.
IDB's trade financing program consists of four basic braches; namely, the Import Trade Financing Operations (ITFO), Export Financing Scheme (EFS), Islamic Banks Portfolio (IBP) and Unit Investment Fund (UIF).