What's happening in Intra Asia





Is intra-Islamic trade in intra-Asia region all it can be - or can we expect it to do better - much better?

While the world map has Islamic turf including much of the land mass in the west, that is Africa and the Mideast, the bulk of the Muslim population lives in the east - lands served by the intra-Asia trade.

Sixty-two per cent of the world's Muslims live in the intra-Asia region from Turkey (pop 80 million) to Indonesia (pop 264 million), with over one billion adherents. The largest Muslim population in one country is in Indonesia, followed by Pakistan (pop 220.8 million), Bangladesh (pop 161.3 million) and India (Muslim pop 143 million) and Malaysia (Muslim pop 19.8 million).

One would have thought that Muslims, who share a common culture and a unique banking system and a trust-based method of transferring funds, would have developed, perhaps even dominated, the intra-Asia trade, as indeed they did in pre-colonial times.

There have been steps in this direction, but it seems that the Muslim reach has exceeded its grasp. One substantial step forward was the creation of the Malaysia International Islamic Financial Centre (MIFC), an initiative of Malaysia's financial market regulators to develop Malaysia's Islamic finance market by engaging with industry and government. The initiative was launched in 2006 and is based in Kuala Lumpur.

The MIFC is supported by Bank Negara Malaysia, Securities Commission Malaysia, Labuan Financial Services Authority and Bursa Malaysia. The MIFC's private sector partners include Islamic banks, conventional banks with Islamic banking windows, investment banks, brokers, lawyers, Sharia advisory firms, Sharia scholars, accounting and tax advisers, ratings agencies and takaful providers, a co-operative system of reimbursement or repayment in case of loss.

Even more substantial is the 57-member state Organisation of the Islamic Conference (OIC), set up in 1969 with its head office in Jeddah, hardly a commercial centre at the time during the 1967-75 Egyptian shutdown of the Suez Canal.

While there was a clause in the OIC charter, that might have effected a robust economic thrust for this intra-Muslim organisation, its statements had to do more with "human rights" and "Jewish crime" than advancing the economic fortunes of the Islamic world. Sidelined in the red hot rhetoric of the '70s, was the constructive Ninth OIC Objective: "To strengthen intra-Islamic economic and trade cooperation; in order to achieve economic integration leading to the establishment of an Islamic Common Market."

But most of its concern was political, expressed as being "the collective voice of the Muslim world" and works to "safeguard and protect the interests of the Muslim world in the spirit of promoting international peace and harmony".

Back in 2003, when the current Malaysian prime minister Mahathir bin Mohamad, was then prime minister before his 2018 re-election, he tried to move the OIC forward.

"Given the right motivation, individuals, businesses and corporations stand to gain from embarking on vigorous intra-trade initiatives among the OIC nations," he said.

Dr Mahathir said the OIC was the custodian of more than two-thirds of the world's oil reserves and there were about 200 financial Islamic institutions in the world. There were also more than 100 multinational corporations originating from Islamic countries with a combined asset value of more than US$200 billion.

As such, Dr Mahathir said there was no reason why the OIC could not become a cohesive and dynamic emerging economic power in the new millennium.

"The Muslim market offers exciting and challenging opportunities to Malaysian businesses to meet the global demand for quality products and services," he said.

He said even an OIC trade directory would serve as a "dynamic pulse of activity that seeks to find ways and means as well as opportunities for Malaysian businesses to penetrate the rich potential markets of the global Muslim community.

"This is a manifestation of Malaysia's belief and commitment in the merits of the global ummah to embrace trade as the single resilient weapon to face the many challenges of the new millennium," he said.

It is ironic to think that Islamic expansion in pre-colonial days followed the pathways of existing trade routes, which defined the spread of the faith. According to scholars Stelios Michalopoulos, Alireza Naghavi and Giovanni Prarolo, writing in The Economic Journal, published by London's Royal Economic Society, the bulk of what trade there was, was conducted by Muslims or people who would adopt the faith, and it was along these trade lanes that Sharia Law was imposed first in Africa and then, farther east.

"African Muslims reside on geographically unequal territories that are close to pre-industrial trade routes. Muslim societies in Africa are characterised by activities skewed towards pastoralism, featuring little surplus-producing agriculture," they said in their paper "Trade and Geography in the Origins and Spread of Islam."

"The presence of an unequal geography and proximity to trade opportunities intensified the need for cooperation among heterogeneous clans. Such cooperation could be achieved by adopting a religion , which, besides the appropriate economic rules, would provide a coordination mechanism that penalised those who deviated from prescribed norms," they said.

Thus, Islam united very different tribal societies by crafting shared economic principles. To make them work, Islam became a state-building force, gaining a hearing across tribal populations, thereby politically integrating them into more centralised units, said the scholars.

"Our findings show that Islam flourished in very challenging geographical terrains. These terrains bred conflict because of unequal opportunities. Any political platform that attempted to bring clashing populations together had to address these inequities. Islam was certainly such a movement," they said.

Of course, that was then and now is now. While the scholars provide a deeper understanding of how the Islamic state got to its present state, they tell us little about what can be expected. Not that they intended to do so. What is important today, is not so much eye-catching resurgence of religious fundamentalism, but Islam's inability to harness its own economic might, beyond the sale of natural resources which has been the mainstay of the Islamic economy worldwide.

Secular purists fear that if religiosity is given access to the public square, it will snuff out rational thought altogether. Secular purists, who hold sway in the world's media, academic, bureaucratic complex, assault the most extreme of faith-based bodies because they are the most vulnerable to rational attack. But secular purists are now becoming irrational themselves, increasingly eluded by the obvious when they suggest such things that there are 70 genders and that constitutional rights are merely outdated sentiments of a bygone age that can be rescinded at will.

While religiosity was the foundation of Muslim trade, indeed a tool that was instrumental in its development, it can no longer be so. There are many who seek the religious life, but it is no longer a useful to trade as it once was. Nonetheless, a useful residue remains. It is shared faith that provides an understanding of how the game is played among many millions of people, and an understanding common to all, even if they do not follow every precept to the letter.

Looking at the intra-Asia trade, one sees, the Islamic world punching far below its weight. Its attempts to bring its intra-Islamic trade a level of high performance have been feeble. While not strictly an Islamic trading bloc. the Association of Southeast Asian Nations (ASEAN) Muslims clearly dominate. Yet, there seems so little progress in erasing barriers to trade among nations who one would have thought would do better - a lot better.


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Do you think there is any chance of the Islamic states, sharing the same moral code, would do better than they have done in the field of intra-Muslim trade, which is largely intra-Asian trade?

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Intra Asia Trade Specialists

Nippon Express (HK) Co., Ltd.
Visible & Strategic Logistics