Economy
THE Islamic Development Bank Institute (IsDBI) has initiated a project to explore the feasibility of developing a Smart Countertrade System for the Organization of Islamic Cooperation, OIC, member countries.
By utilizing the Institute’s existing patents such as Smart Vouchers, the digital system will aim to facilitate countertrade transactions between OIC member states, operating under the guidelines of the United Nations Commission on International Trade Law, UNCITRAL, Legal Guide on International Countertrade Transactions.
Countertrade is a transaction involving exports and imports between countries that are settled through non-financial means. The mechanism has the potential to enable the creation of new export/import markets while improving trade ratios between the OIC/IsDB member countries. Countertrade is a relevant modality to maintain trade flows by countries that may be experiencing balance of payment difficulties and consequential foreign exchange shortages.
Improving intra-OIC trade is particularly relevant as a recent IsDB report shows that the level of intra-IsDB integration has deteriorated during the last decade with downward trends in trade and investment integration being the dominant contributor. As technological advancements today enable big data processing and execution of e-contracts/legal documents in a seamless and secure manner, the Smart Countertrade platform can greatly enhance trade linkages between the IsDB member countries
The new Smart Countertrade project is aligned with the Institute’s mandate of designing and structuring innovative, knowledge-based solutions for the development challenges of member countries and Muslim communities in non-member countries.
The feasibility report for the project will cover four critical aspects for the development of the Smart Countertrade System, namely market feasibility, legal and regulatory considerations, technological prototype proposal, and Shari’ah governance and Islamic economics/finance perspectives. The report development process will be guided through a series of workshops/seminars inviting key stakeholders to clearly identify challenges, opportunities, and interest in participation in establishing the countertrade system.
Since its inception in 1975, the Islamic Development Bank has continued to work towards the expansion of trade cooperation among OIC member countries and has been promoting avenues to expand intra-member country trade. This is in line with one of the foundational functions of the IsDB to assist in the promotion of foreign trade among member countries.
A.
Tags: IsDBI UNCITRAL
