| Historically, Muslims have been very cynical of any intra-Muslim trade talk. Much publicized business cooperation announcements between dignitaries of various Muslim countries rarely shape into concrete joint ventures, investments or long-term business partnerships. |
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This occurs amidst a popular sentiment that Muslim countries should build upon each others tremendous economic resources and in the process help raise standards of living for the less-developed bloc of the Muslim world. Unfortunately, according to the ICCI (The Islamic Chamber of Commerce and Industry), in 2002 only 12% or so of total trade by OIC (Organization of the Islamic Conference) member countries was done amongst each other.
All this, however, seems to be changing or at least there are some positive signs to this affect.
Consider the following recent Telecom sector activity within key Muslim countries;
- Six firms short-listed for the mammoth 26% sale of Pakistan Telecommunication (PTCL) are Emirates Etisalat, Telecom Malaysia, Kuwait's Mobile Telecommunication, Saudi Oger, Turkcell, and Saudi Telecom -- all OIC (Organization of Islamic Conference) member countries
- The Egyptian Telecom giant Orascom Telecom, has become the most diversified GSM network operator in the Middle East and Africa with investments and network presence in Algeria, Pakistan, Tunisia, Bangladesh, Jordan and even Iraq
- The six investors short-listed for the Privatization of Turk Telekom includes Saudi Oger and a joint venture between Emirates Etisalat/Dubai Islamic Bank.
- Ettihad Etisalat, an Emirates based Etisalat investment, becomes the first competitor to Saudi Telecom in the Saudi Arabia's GSM market
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Source: Etisalat.com
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From Left: Dossongui Koné, Atlantique Telecom CEO, and Obaid Bin Mes'har, CEO of Etisalat International, at the signing ceremonyof Etisalat acquiring 50% stake in West African mobile operator Atlantique Telecom (operators in Benin, Burkina Faso, Gabon, Niger, Togo and Cote D'Ivoire.) |
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Examples of other sector activity include; recent investments by the Saudi billionaire Prince Alwaleed Bin Talal Alsaud, chairman of Kingdom Holding Company, in the tourism industry of Bangladesh and Pakistan; Malaysia and Indonesia are increasing joint venture activity in their aviation industries; and Turkish and Pakistani companies are continuing aggressive growth in the Central Asian Republics.
These examples and other supporting data show that there has undoubtedly been an increase in intra-OIC business activity in the last few years. An inspired Malaysia leadership is driving OIC economic cooperation efforts. Meanwhile, for the top three economies of the Muslim world; Saudi Arabia, Turkey and Indonesia, there has been a net increase of 57% in exports and 44% in imports with other Muslim countries between the periods of 2000-2003.
In addition, Organizations such as ICCI (The Islamic Chamber of Commerce and Industry ), an OIC subsidiary organization focused on the promotion of the private sector amongst Muslim countries, and the Turkish business organization MUSIAD are increasing their efforts to create business-to-business interactions between businesses in Muslim countries and identifying key opportune industry clusters for Muslim countries to focus on.
An Inspired Malaysian leadership
No one has been as vociferous and passionate about the desire of increased OIC economic interaction than the former Prime Minister of the of the most progressive OIC members Malaysia, Dr. Mahathir Mohammad. |
Trade Growth 2000 - 2003
Top 3 Muslim World Economies
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Turkey |
Source: State Institute of Statistics, Turkey |
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Saudi Arabia |
Source: Central Department of Statistics, Saudi Arabia |
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Indonesia |
Source: Central Board of Statistics, Indonesia |
Analysis by DinarStandard.com, 2005 |
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Today Malaysia is chairing the OIC and under its equally inspired new leadership, it's building upon Dr. Mahathir's vision to drive substantive business-to-business interactions.
On a four-day visit to Pakistan in February of this year, Malaysian Prime Minister Abdullah Ahmad Badawi brought with him a large group of Malaysia's corporate Who's Who, initiating concrete joint ventures and projects. Malaysia's famed Multimedia Development Corporation (MDC) met with the Pakistan Software Export Board (PSEB) to launch joint ventures and projects in the areas of life sciences, biotechnology, smart cards, wireless technology, innovative ICT solutions, ICT training, creative content development and telemedicine. Meanwhile, Telekom Malaysia through its wholly-owned international investment arm, TM International, announced a joint venture fiber optic backbone project with Multinet Pakistan (Private) Limited through the acquisition of a 78% stake in Multinet. This project would involve the laying of a very high capacity fiber optic backbone throughout the length and breadth of Pakistan, spanning over 4,000 km.
Also, in setting an example to have richer OIC members assist poor Muslim nations, Malaysia started three poverty alleviation programs in March. These include developing the palm oil industry in Sierra Leone, the resources sector in Mauritania and the fisheries industries in Bangladesh. Four other programs in Guinea, Comoros, Indonesia and Maldives are being planned as well. Prime Minister Badawi has noted that out of the 50 least-developed countries - the poorest in the world listed by the United Nations - 22 are members of the OIC. He suggests that even though the developed world should help out Muslim countries must take the lead. "We certainly cannot expect others to come to our aid if we do not begin by helping ourselves," he said.
Trade numbers show increased activity
Speaking to Dinar Standard, Mr. Aqeel A. Al-Jassem, Secretary General of The Islamic Chamber of Commerce and Industry (ICCI), said that current intra-OIC business trends are positive, and the interactions are poised to increase in the future as well.
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The Islamic Chamber of Commerce and Industry is the only OIC Institution with a mandate to bring the private sector to the forefront of economic development. As evidence of the positive trend Mr. Al-Jassem points to the growing interest in its regularly organized Private Sector Meetings. |
source: http://www.icci-oic.org/
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Mr. Al-Jassem says that the share of intra-OIC exports compared to global exports of OIC member states recorded a perceptible increase of 18% between 2000 and 2002. However, a weak increase was noted in intra-OIC imports by about 1.22%, going up from 13.46% in 2000 to 13.63% in 2002.
The value of intra-OIC trade showed an upward trend as well increasing to US $53.7 billion in 2002, i.e. an increase by about 10.37%, while intra-OIC imports rose from 56.73 billion US dollars in 2000 to 60.19 billion Dollars in 2002, an increase by 6.10%.
Top Three Muslim Economies Supporting Intra-Muslim trade
Saudi Arabia, Turkey, and Indonesia form the top three economies of the OIC. An analysis by Dinar Standard of their trade figures shows that between 2000 and 2003, their combined exports to other OIC member countries increased by 57% compared to an increase of 28% to non-OIC countries. Meanwhile, their combined imports from other OIC member countries increased by 44% compared to an increase of 39% from non-OIC countries during the same time period.
The graphs (above) illustrate the trade trends of Saudi Arabia, Turkey and Indonesia with OIC and the rest of the world between 2000 and 2003.
This analysis shows that within the top three economies of the Muslim world there has been an overall increase in trade with other OIC member countries. This increase is however tilted more towards exports than imports. While this is generally a positive trend the opportunities that exist provide much more room for growth.
Identifying Opportunities
Various Muslim countries are developing expertise around modern manufacturing and services industries including automobile, defense, information technology, financial, agri-business, energy, bio-medical and many others. These industry clusters can be identified with the help of organizations such as The Islamic Chamber of Commerce and Industry (ICCI) and others such as Turkey's business association MUSIAD that are trying to improve sector relations between the Muslim world's businesses.
| At the recent Jeddah Economic forum, Pakistan's Minister for Privatisation and Investment, Dr Abdul Hafeez Shaikh presented concrete proposals for accelerating economic cooperation among the OIC countries. His proposals identified economic clusters of financial, services, energy, agri-business and information and communications technology providing the greatest opportunities for businesses. |
Most Opportune
'Economic Clusters'
- Financial Services
- Energy
- Agri-business
- Information & Communications Technology
- Real Estate
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Mr. Aqeel A. Al-Jassem, Secretary General of The Islamic Chamber of Commerce and Industry (ICCI), points to Real Estate, Information Technology and the Banking Sectors as the key areas of potential. Moreover, he suggests that interaction amongst Small and Medium sized Enterprises (SMEs) is key to fostering business activities amongst the OIC member countries.
Much research and networking tools are still needed for private sector businesses to learn more about opportunities in the OIC member's marketplace. Perhaps greater coordination among OIC member countries' trade promotion agencies to enable easy access to information and opportunities for the private sector would be a valuable start.
Mr. Al-Jassem says the key incentive for businesses to pursue more opportunities within OIC countries is to gain a meaningful foothold in the OIC market place while benefiting from immense trade and investment opportunities therein. He also sees this as a means to forging solidarity and contributing to the welfare of the Muslim Ummah. Mr. Jassem however points out that businesses should engage in demonstrating that the gains are mutual and not one sided.
Many more opportunities yet to be availed
The short analysis in this article has provided some evidence of increased intra-muslim business activity. It's too early to make waves about this positive trend as, even with the tremendous resources and one fourth of the world's population, most Muslim countries still languish in the pool of underdeveloped nations. It is quite clear that there is much more that can be done to strengthen this network of economies. However, it's the positive efforts and trends that need to be recognized and encouraged for further development.
| Key Learnings: |
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Amidst a popular sentiment that Muslim countries should build upon each others tremendous economic resources, only 12% or so of total trade by OIC (Organization of the Islamic Conference) member countries was done amongst each other (in 2002). |
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However, recent years have seen a substantial increase in intra-Muslim trade with the top three economies of the Muslim world; Saudi Arabia, Turkey and Indonesia, showing net increase of 57% in exports and 44% in imports with other Muslim countries between the periods of 2000-2003. |
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Telecom Sector and an inspired Malaysian OIC leadership are driving additional activity. However, much needs to be done to benefit from key economic clusters of finance, information and communications technology, energy, agri-business, and real estate. |
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