Economists experts called on Islamic countries to support trade and activate mechanisms of economic and financial cooperation between member countries, and reinforce efforts by the Islamic Development Bank to activate Islamic financing, and find alternatives to the traditional financial system, and strengthen small and medium enterprises as an engine of economic growth in Muslim countries.
They stressed the importance of coordinating positions in the field of trade and investment and promoting economic cooperation and create new markets, considering that changes and challenges can only be met by increasing cooperation in all sectors such as economy, investment , tourism and agriculture, in light of the huge potential enjoyed by the economies of these countries, which is not reflected in the size trade exchange between them.
Resources and potential
Based on a report prepared by the Studies and Research Department of Sharjah Chamber of Commerce and Industry on the occasion of hosting the 13th Islamic Trade Exhibition and the 14th Islamic Countries’ Private Sector Consortium simultaneously from April 24 to 29, 2011, experts indicated that the huge resources and potential enjoyed by the Islamic countries impose upon them the need to activate even further trade between them as to form a hub of economic integration, while pointing out the importance of such regional trade in the establishment of an economic bloc, that would strengthen its presence and position to be reckoned with among the world’s big economies blocs, given the growth expected to be achieved in establishing such a hub.
This would in turn enable them to enhance their economies’ performance and growth, away from that position of just being a market for Western countries products and a mere supplier of energy resources and raw materials.
The report pointed to efforts by the Organization of Islamic Conference to achieve this goal through increasing the volume of trade exchange between its members to reach up to 20% of the volume of trade in Muslim countries by the year 2020, an increase from 10% in 2000 to 16.2% in 2007.
Economists stressed that any political discourse between the Islamic countries will not be successful and fruitful unless making of the economy one of its principal pillars, especially since the figures underlined the sheer potential available in these countries that gives them indeed the crucial opportunity of economic integration.
Islamic countries top the world’s energy resource providers, as Arab Gulf states together with Algeria and Libya, are the main oil exporting countries, along with Indonesia and Iran. Qatar and Iran are also the biggest natural gas exporters along with Russia. Islamic countries own about 73% of global oil reserves and produce 38.5% of global production. They also own about 40% of world reserves of natural gas. Some of them have entered the field of manufacturing and exporting such as Indonesia and Malaysia, while many others are rich in agricultural and water sources, such as Egypt and Sudan.
The report pointed out that the weakness of the sectarian composition of the production structures in the Islamic countries is the main factor of weakness in bilateral trade between these countries, noting that the policies of production and development has taken different directions from one country to another. As a result there have been no real development in these countries as many markets developed without expanding with a low production. The report indicated that each of these countries singly pursued a policy of productivity without coordinating with the rest and imposed its own customs barriers, giving way to narrow and weak markets closed on themselves. These countries, says the report, focused on the industries of consumer durables used by a limited fringe of the community, and established modern and high-tech industries with a huge capital-intensive, but in goods involved in the formation of necessary inputs by industries of developed countries, and the focus was on the petrochemical industry, iron ore, phosphates, and cotton.
Obstacles and solutions
The report indicated that the most important obstacles are in the nature of exports from Muslim states, most of which focused on raw materials, as well as the utter reliance of developing countries on developed countries as a source of imports which represent 70%, as opposed to 74% of its exports to developed countries. The report also noted developing countries’ preference for imported goods in pursuit of huge profits.
As for the solutions to address the obstacles that stand in front of the bilateral trade between Muslim countries, the report called for restructuring of exports by Islamic countries to enable them meet their needs ,in keeping with international standards of competitiveness in terms of quality and price. The report also stressed the need to establish industrial policies complementary in Muslim countries to help the export sector stimulate productive sectors associated with it in these Islamic countries, instead of practicing isolationism policy in the export sectors whether within one country or the Muslim countries in general.
It also called for currency unification and monetary integration ,one of the ultimate goals of the regional arrangements that paves the way to the creation of crucial events in international economic relations.
The report also called to confront the great challenges facing the nation, most notably the support of food security, investment and trade, stressing the necessity of making use of wealth to achieve food security among the Islamic countries. It underlined the huge profits that can be generated from investment in the agriculture sector and its competitiveness, particularly through strategic partnerships between the sovereign funds, entrepreneurs and financing institutions, reminding that many Islamic countries enjoy huge water resources and rich agricultural land.
A majority of agricultural projects are concentrated in African countries, as some of them have provided facilities including tax exemptions for many investors, such as Morocco and Sudan. Other states like Egypt are considering offering tax breaks, while Sudan remains the main recipient of most of agricultural investments.
The figures indicate that the value of total trade of Member States of the Organization of Islamic Conference reached $1.28 trillion in 2009, equivalent to about 10.47% of the total volume of world trade, with a record decline of 31.2%, compared to the size of total trade of the Islamic countries in 2008, due to declining demand World, given the circumstances of the financial crisis
The value of UAE‘s trade with the Islamic countries in 2009 amounted to $50.5bn, representing 11.73% of with OIC member countries, followed by Turkey with a trade volume amounting to $46.34bn, that’s 10.86% of its total trade.
The Total trade value among OIC countries, including exports and imports reached $426.75bn in 2009 against $551.3bn in 2008, a drop of 22.5%.
The report stressed that any talk about Islamic trade ties should include a number of themes, most notably, trade financing, promotion and facilitation and development of goods. It pointed out to what it called a marked trend and a growing interest by financial institutions in Islamic finance, either by opening Islamic windows or with the emergence of new Islamic institutions, indicating the success of institutions Islamic in the face of the financial crisis. It added that there are many challenges that hinder trade between Islamic countries, including constraints of tariff and non-tariff barriers such as laws and banking and financial institutions that need to improve their services.
Economists indicated that there are real obstacles that linked the ability of these countries to carry out export and import activities, alluding to Turkey and Malaysia as models able to overcome all these obstacles in a short period, noting that Malaysia’s trade volume exceeded $280bn over a short period.
The Sharjah Chamber of Commerce and Industry is preparing to host the 13th Islamic Trade Exhibition and the 14th Islamic Countries’ Private Sector Consortium simultaneously from April 24 to 29, 2011 under the patronage of H.H. Sheikh Dr. Sultan Bin Mohammed Al Qassimi, Member of the Supreme Federal Council and Ruler of Sharjah.
The event to be held at the Expo Center Sharjah is supported by participating parties such as the Islamic Chamber Association, the Federation of UAE Chambers of Commerce and Industry, the Ministry of Economy and the Ministry of Foreign Affairs The Exhibition will provide a special platform for introducing and promoting the products and services of participating countries to the Arab region. It will also facilitate discussions on new policies and products and investment partnerships that will help serve Arab interests. In addition, it enables countries to discuss the best ways to bridge gaps in commercial and investment ties among the private sectors of Islamic states as well as the inter-regional transfer of Arab capital.
The well-timed event comes as current global economic shifts call for more investments, new job opportunities and the maintaining of high growth rates in developing countries.