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Opening Remark
Mr.
Charmeida Tjokrosuwarno Islamic Development Bank Field Representative for Indonesia Ladies
and Gentlemen, Assalamu’alaikum
warohmatullahi wabarokatuh, Allow
me, on this opportunity to give you some background on the work and
mission of the Islamic Development Bank. 1.
INTRODUCTION The Islamic Development Bank: A Brief Description The
Islamic Development Bank (IDB) was established in 1975. The purpose of the
Bank is to foster the economic development and social progress of its
member countries individually, as well as jointly, in accordance with the
principles of Islamic Shari’ah (Islamic jurisprudence). The membership
of the Bank has shown a significant increase over time and currently
stands at fifty-five countries. The Head Office of the Bank is in Jeddah,
Kingdom of Saudi Arabia. The Bank has Regional offices in Almaty
(Kazakhstan), Kuala Lumpur (Malaysia), and Rabat (Morocco). In addition,
the Bank has field representative in eight member countries, namely,
Algeria, Indonesia, Iran, Kazakhstan, Libya, Pakistan, Senegal and Sudan. The
IDB has overtime established a number of affiliated entities and funds to
address specific needs of its member countries and to provide additional
development banking solutions to the ever-changing conditions in the
global economy. The affiliated entities and funds of the IDB are: §
Islamic Corporation for the Development of the Private
Sector (ICD) §
Islamic Corporation for the Insurance of Investment and
Export Credit (ICIEC) §
Islamic Banks Portfolio (IBP) §
Unit Investment Fund (UIF) §
IDB Infrastructure Fund (IIF) §
Islamic Research and Training Institute (IRTI) §
World Waqf Foundation (WWF) §
Awqaf Properties Investment Fund (APIF) §
OIC Networks SD BHD (OICNETWORKS) §
International Centre for Biosaline Agriculture (ICBA) The IDB offers wide range of
specialized and integrated services such as: §
Public and private sector finance §
Trade (and intra-trade) finance §
Insurance services §
Social and Infrastructure sector finance §
Research and training in Islamic economics and banking §
Technical assistance support for capacity building §
Technical co-operation among member countries §
Scholarship for Member countries and Muslim communities in
non-member countries. §
Humanitarian assistance The IDB is a unique multilateral
finance institution in the sense that: §
It uses only financing instruments that are compatible with
Shari’ah for its operations. §
Its membership consist of developing countries and
consequently it uses the resources mobilized from countries in the South
to assist countries in the same region, thus making IDB Group a real model
and a true south-south cooperation institution. Its
raises resources from the financial markets through a special medium such
as sukuk (i.e. Islamic bonds) in conformity with Shari’ah. 2.
THE ROLE OF THE IDB IN SOUTH-SOUTH COOPERATION South-south
cooperation lies at the core of the Islamic Development Bank (IDB) mandate
and operation. The IDB’s financing activities are geared towards
enhancing cooperation among member countries in general and at the level
of regional and inter- regional cooperation in particular. The Bank
pursues this objective mainly through three different channels: (1)
transfer of resources in terms of share capital contributions where
relatively better-off member countries contribute more to the capital
stock of the bank; (2) concessional financing, where more than 60% of the
Bank’s concessional financing is being allocated to the Least Developed
Member Countries (LDMCs) of the Bank; and (3) specific schemes and
arrangements through which the IDB promotes cooperation among its member
countries individually as well as collectively. A brief description of the
IDB financing and non-financing activities is presented below with a view
to highlighting its role in promoting South-south cooperation. 2.1
Cooperation to Promote Growth and Development in
Member Countries The primary objective of
the IDB is to foster the economic and social development in its member
countries. The IDB discharges this responsibility mainly through providing
financial assistance to these countries. The major share of such financing
goes to relatively countries which are in more need for financial
resources in the spirit of promoting South-south cooperation and
solidarity.
The financing and related activities of the IDB Group can be
divided into four broad categories: (i) project financing and technical
assistance to these operations (together called ordinary operations), (ii)
trade financing assistance, (iii) Waqf Fund operations and (iv) operations
and activities of the affiliated entities and funds within the IDB Group.
However, IDB also extends ‘global’ lines of financing to government of
member countries, which, in turn, are provided to individual National
Development Finance Institutions (NDFIs) and commercial banks.
The IDB also support growth and development in its member countries
through its Infrastructure Fund (IIF) whose financial resources are also
mobilized from the Bank’s membership. This Fund is the first private
investment vehicle of its kind to focus on infrastructure development in
the member countries of the IDB. 2.2
IDB Promotion of South- South Trade One
primary area of concern and, thus, of major activity for the IDB has been
and continues to be the area of intra-trade among its member countries.
The 55 member countries of the IDB, spread over four continents,
constitute a large and highly heterogeneous sub group within the
developing countries. Although this diverse geography is rich in natural
resources and inhabiting over one billion people with immense human
resources potential, it is made up of countries that command limited
shares in world output, income, trade and finance. Furthermore, the shares
of intra-trade of member countries within their overall exports and
imports remain relatively low, about 12%. Consequently, financing of
intra-trade has become a priority area for the IDB because trade is an
engine of growth. The scheme and windows through
which trade financing is accomplished by the IDB are: Import Trade
Financing Operations (ITFO), Exports Financing Scheme (EFS), Islamic Banks
Portfolio for Investment and Development (IBP), and Unit Investment Fund (UIF).
The Islamic Corporation for the Insurance of Investment and Export Credit
(ICIEC) also aims at promoting intra-trade, besides promoting investment
flows among the IDB member countries. 2.3
IDB Promotion of Cooperation in Private Sector
Development The
private sector is one of the prime movers towards regional economic
integration. In order to meet the additional needs of its member countries
and especially of their private sectors, the IDB is continuously expanding
its resources mobilization efforts, which have culminated in the
establishment of several entities that make up the “IDB Group”. The
entities in the Group which are specifically aimed to promote private
sector activities are the Islamic Corporation for the Development of the
Private Sector (ICD), the Islamic Corporation for the Insurance of
Investment and Export Credit (ICIEC), IDB Infrastructure Fund (IIF), the
Islamic Banks Portfolio (IBP), and the Unit Investment Fund (UIF). The IDB
also provides lines of financing to the national development financing
institutions (NDFIs) in member countries for investment in small and
medium size enterprise (SME). The IDB has also been working closely with
the Association of development Finance Institutions in IDB member
countries (ADFIMI), mainly focusing on SME development and institutional
strengthening. 2.4
IDB Cooperation on Poverty Alleviation Poverty
remains a critical issue for the countries in the South. According to the
available data, more than 660 million people in the IDB member countries,
or three out of five individuals, currently live on incomes that are less
than US$ 2 a day, representing about a quarter of the world’s poor. This
underlines the IDB strong commitment to combat poverty and promote human
development in its member countries. Thus, the IDB is contributing to the
efforts of poverty alleviation in its member countries mainly through: §
Concessional financing §
Focusing on priority sectors §
Participation in the HIPC initiative §
The Sacrificial Meat Utilization Project of the Kingdom of
Saudi Arabia 2.5
Enhancing Technical Capacity of Member Countries The
promotion of South-south cooperation for enhancing technical capabilities
of member countries is pursued by the IDB mainly through the following: §
IDB Technical Cooperation Program §
IDB Assistance to Member Countries on WTO-Related Matters §
Cooperation through exchange and sharing of information §
Cooperation through research and training 2.6
Promotion of OIC Cooperation Activities Cooperation
with the Organization of the Islamic Conference (OIC) and its subsidiary
organs, specialized institutions and affiliate organizations, is one way
through which the IDB seeks to help promote and strengthen economic
cooperation among its member countries. In this regard, the IDB has both
participated regularly in the OIC Summit Conferences, the meetings of the
Standing Committee for Economic and Commercial Cooperation (COMCEC) and
the Islamic Conferences of Foreign Ministers (ICFM), and took on specific
tasks emanating from these for a. The IDB has also developed close ties
with the Standing Committee for Scientific and Technological Cooperation (COMSTECH),
assuming a series of assignment from it for helping to enhance scientific
and technological development of the member countries. It has also
developed close working relationship with the OIC Standing Committee for
Information and Cultural Affairs (COMIAC). 2.7
Cooperation with National Development Financing
Institutions The
IDB has taken a number of initiatives to strengthen its working
relationship with the National Development Financing Institutions (NDFIs)
in member countries. These include provision of “free limits” lines of
financing and additional remuneration to the NDFIs in order to encourage
the use of these lines. To encourage cooperation among these institutions,
the IDB holds an annual meeting with the NDFIs in conjunction with the
Annual Meeting of IDB’s Board of Governors. The aim is to discuss issues
related to cooperation and coordination among the NDFIs, provision of
Technical Assistance to the NDFIs, as well as to the private sector for
feasibility studies of bankable projects. 2.8
Promotion of Regional and Inter-Regional Cooperation
Regional
cooperation aims to bring together groups of countries around a set of
common objectives to help them achieve sustainable economic development by
promoting joint action and projects in different fields of economic
activity. The members of regional grouping not only are able to pool
natural, financial, human and other resources, but they also gain access
to richer stocks of varied experiences, expanded capacities and new
opportunities. They also benefit from a commonality of objective in facing
major economics issues and challenges as a group, especially in a rapidly
globalizing international environment. So they are set to achieve more as
compared to what they would be able to do individually, while they would
also attain faster and more efficient results as compared to what could be
possible within the arrangements. Such areas of cooperation include: §
Strengthening institutional capabilities through exchange
of experiences and technical expertise, including cooperation in the field
of banking and financial services; §
Promotion of trade through identification of areas of
production and trade complementarities;
identification and removal of trade barriers; encouragement and
assistance in harmonization of standards; greater cooperation at the level
of chambers of commerce; organizing trade-fairs, exhibitions etc. §
Promotion of Investment through identification of areas of
investment and dissemination of such information along with information on
investment incentives to potential investors. §
Co-operation in the development of infrastructure in the
form of providing infrastructure advisory services, arrangement of
co-financing with regional financing institutions, as well as assistance
in identifying suitable partners for implementing infrastructure projects. §
Islamic banking is one of the major areas of IDB’s
strategic orientation. It also has comparative advantage in the Islamic
banking. Therefore, the IDB has interest in exploring the areas of
cooperation with the regional organizations in the area of Islamic banking. Reflecting
the IDB’s adherence and strong commitment to the above principles, the
following initiatives have been taken by the Bank:
Enhancing Technical Capacity of
Member Countries in Micro Financing Islamic Development Bank shares
the concern of enhancing micro financing in member countries, which has
great impact in fostering real economic development process not only in
equal distribution but also in providing job opportunities. This Expert Meeting on Micro Financing shows IDB’s active
involvement in enhancing the role of financial system which incorporates
the majority of people who are mostly in the rural areas. Their economic activities of course fall within small and
medium enterprises, which are in limited economic resources and capacity.
They are in need of our contribution to support them in their economic
development. Empowering this sector obviously is an important effort which
would induce economic growth in rural areas and the majority of people,
which in the end would improve their standard of living and quality of
live. In this sense, we hope the result
of this meeting would be a realistic and implementable formula which can
be transmitted into the policy prescription and carry a positive impact
for the financial system in the developing world. Thank you very much for your
attention and good luck. Wassalamu’alaikum
warohmatullahi wabarokatuh. |