Opportunities of Islamic Trade Finance in OIC Countries

Abstract

The objective of this paper is to assess the opportunities and the importance of trade finance in Organisation Islamic Cooperation (OIC) countries. The issues highlighted are the evolution of trading in Islamic trade finance, the support from Islamic Trade Finance Corporation (ITFC), comparison Malaysia trading trend between OIC countries and world, and opportunities for Malaysia and to trade with OIC countries. In this study, it elaborated on the trend of trade and ITF between UAE and Malaysia, as well as Egypt and Malaysia. The methodology is theoretical dissertation published and literature review to generate the foundation and to elicit relevant information for the issues covered by this study. Findings show that there are great differences among the OIC member in terms of economic development and the structure of trade. IDB needs to investigate the market and helps to increase the trade financing approval amount by the ITFC to OIC countries. By doing trading business between OIC countries, each country will not only help each other economy but will also grow the ITF in each other country. Malaysia has many opportunities to increase their trading business in the OIC markets considering the huge population of the OIC countries. Supported by the international hub, United Arab Emirates through enhancing industrial coherence and integration with other economic sectors has created an attractive investment environment through a set of initiatives and incentives. Whilst, Egypt and Malaysia enjoyed significant bilateral trade relations since the independence of Malaysia in 1957 especially in the fields of culture and education. Malaysia’s Islamic finance industry needs to boost trade finance to increase largely untapped business opportunities using technological capture. Matrade plays an important role to encourage international trade. In conclusion, trade represents one of the important drivers for growth of the OIC economy. The evolution and emergence of ITF signify that it brings a bright future for the local and international trade financing. To expand the business or active in bilateral trade, OIC countries should alert with the development of each country members. As a recommendation, an aggressive involvement and adapting well with ITF platform will improve and strengthen the OIC economy.