PUTRAJAYA, June 20, 2005 (IslamOnline.net & News Agencies) – The Organization of the Islamic Conference (OIC) member states must unleash their potential by focusing on economic development and building trade links with each other, Malaysia's Prime Minister Abdullah Ahmad Badawi said Monday, June 20.

"It is economic strength which can give the OIC greater clout and secure for itself a more influential voice in international affairs," Abdullah told the OIC Trade Forum and Exhibition, reported Agence France-Presse (AFP).

He said that governments and business communities in the Organization of the Islamic Conference (OIC) members must develop existing institutions like Islamic banking and chambers of commerce in order to promote economic integration.

"Let us look at ways in which we can leverage on our strength. Clearly these must be areas where we not only have a natural advantage but also the critical mass to make our initiatives successful."

Abdullah, current OIC chair, said focus to economic development and integration was in line with Malaysia's own "prosper-thy-neighbor" policy that has worked well in bringing prosperity to its partners.

The Malaysian capital Kuala Lumpur is playing host this week to a range of meetings on the Islamic finance, including the annual meeting of the OIC's financial arm, the Islamic Development Bank.

IDB officials have said the meeting may approve the creation of an international Islamic trade financing firm, with an initial paid-up capital of $1 billion, to spur intra-IDB trade.

About 2,400 people, including finance ministers, central bank chiefs and Islamic bankers and government officials, will attend the meeting, held in Malaysia for the first time since 1978.

Malaysia has been pushing for closer economic integration in the grouping and for nations to develop their Islamic finance sectors as a way of strengthening their economies.

Abdullah hailed a new preferential trading system to be signed by 14 of the OIC 57 members this year as an initiative to kick-start the economic integration.

"This is an important first step towards the larger goal of greater economic integration among OIC countries," he said.

Abdullah said it was up to member countries to ensure that the preferential trading system was successfully implemented.

"I hope the system can be adapted or another system put in place to promote greater involvement of the less-developed members in economic development as a whole," he said, adding that this was the best way to create wealth.

The countries that have already signed and ratified the framework agreement are Malaysia, Iran, Turkey, Bangladesh, Tunisia, Lebanon, Libya, Egypt, Pakistan, Cameroon, Indonesia, Guinea, Jordan, Uganda, she said.

Under the system, countries will reduce tariffs in a gradual three-stage process, while there will also be fast track mechanisms, said Malaysian International Trade and Industry Minister Rafidah Aziz.

"The negotiations are now regarding tariff reduction modalities and implementation period. It will cover 7 pct of total tariff lines.

"Increasingly we'll be offering market access and duty free (access) to each other in the longer term".

Current negotiations, expected to be concluded by September, are on how to reduce tariffs and the implementation period for the agreement, she said, adding that the protocol will be finalized in November.

Rafidah noted that the preferential trading system will complement a parallel system for eight OIC countries, including Malaysia, Egypt and Pakistan.

"In other words within the OIC itself there are already two parallel market-opening mechanisms being established, which is good," she said.

Rafidah told the OIC trade forum that member nations must address their very low participation in global commerce, which accounted for only 1.8 percent of the total in 2003.

Abdullah said one of the biggest challenges confronting the OIC is the deep economic imbalances between members, which "should be viewed as an imperative for cooperation rather than as an obstacle."

He said statistics show vast wealth possessed by few of its members juxtaposed against the dire straits faced by a major portion of the 57-member OIC, Bernama news agency reported.

Abdullah said ten out of the eleven members of Organization of Petroleum Exporting Countries (OPEC) are OIC members.

Saudi Arabia, Iraq, Iran, United Arab Emirates and Kuwait together possess 700 billion barrels of proven oil reserves.

The economic imbalance, he said, was obvious as the Gross Domestic Product per capita of the six richest members exceed US$10,000 a year whereas 45 others had per capita incomes of less US$1,000.

Abdullah also described as disconcerting the unemployment statistics of the OIC which ranged from three to 20 percent.

Given the diversity and varying levels of development, he said, there could be no one-size-fits-all economic model to address the challenges facing the grouping.

He named wealth creation through trade, investment expansion, access to credit, improvement to education and human resource development as ingredients towards a successful economic future of the Jeddah-based organization.