KUALA LUMPUR, June 16, 2005 (IslamOnline.net & News Agencies) – Malaysia is trying to convince member countries of the Organization of Islamic Conference (OIC) to use the gold dinar for bilateral trade and reduce their dependence on the US dollar, according to a Malaysian minister.

Tan Sri Nor Mohamed Yakcop said Malaysia also urged the Islamic Development Bank (IDB) to set up an Islamic bond to fund infrastructure development in poor Muslim nations and foster greater economic integration, Malaysia ’s Bernama news agency reported Thursday, June 16.

Yakcop, Malaysian Second finance minister, in an interview with TV1 Wednesday night, said Malaysia had been talking to a number of OIC countries to start using the gold dinar for trade.

"This is rather a complex matter and we have to take one step at a time to convince the other OIC countries on a bilateral basis to use the dinar. We will work hard on this because we feel that it is a noble idea," he said.

Asked whether Malaysia would raise the matter of using the gold dinar at the IDB annual meeting in Putrajaya next week, Yakcop said the meeting presented a golden opportunity to think of ways to enhance co-operation between Muslim countries, especially in Islamic banking.

OIC Trade Forum to be held in conjunction with the IDB Board of Governors' Annual General Meeting, will seek to enhance business and trade opportunities among member countries, Bernama reported.

To be held at the Putrajaya International Convention Centre (PICC), the two-day forum beginning Monday, June 20, is aptly themed "Maximizing Intra-OIC Trade and Investment Linkages."

Bernama added, citing Yakcop, that Prime Minister Abdullah Ahmad Badawi, who chairs the 57-member OIC, has suggested that IDB central banks invest a small portion of their huge reserves in the bond.

"By way of buying the bonds, that money could be used to build infrastructure projects in poor IDB and OIC countries," he was quoted as saying.

"The most important prerequisite for poor countries to reach a stage where they can take off towards development on their own is minimum infrastructure such as roads, rails and ports," he said.

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.

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 offices in Rabat, Morocco, and Kuala Lumpur, in addition to field representatives in eleven member countries.

Yakcop also said that the IDB meeting, to be hosted by Malaysia for the second time since 1978, is important because of the potential to enhance co-operation between Muslim countries.

If viewed from the trade perspective between Muslim countries, he said intra-trade between them only accounted for 12 percent of their total trade transactions while trade with non-Muslim nations was eight times more.

"This is very disappointing," he added.

The OIC comprises 57 countries in the continents of Asia, Africa and Europe with a combined population of 1.3 billion or 21 percent of the global population.

Yakcop said total trade of Islamic countries only accounted for seven percent of global trade although 15 percent of the world's population are Muslims.

"Although we have 60 percent of the world's natural resources, our trade is still small," he said.

Malaysia, Yakcop said, was the first country to move into Islamic banking.

"We may have forgotten that it was in 1983 that (former Prime Minister) Tun Mahathir Mohamad decided to establish an Islamic bank and at that time no other country was brave enough to start Islamic banking because of certain fears.

"Now Islamic banking accounts for 10 percent of the banking assets in Malaysia and I think our target of 20 percent by 2010 is achievable, " he added.

"We have much experience in Islamic banking and we can discuss and provide training and advice to the other countries (which want to embark on it), " he said, adding that only Malaysia has a dual system of conventional and Islamic banking, and both systems have advanced, adequate and sophisticated infrastructures.

Sudan and Iran, Yakcop said, both have Islamic banking while the other countries have Islamic banking "on the fringe and not in the mainstream" and there are others which do not have Islamic banking at all.