MANAMA, 8 October 2003 — The 5th International Conference on Islamic Economics and Finance opened yesterday at the Bahrain Ritz-Carlton Hotel. Thousands of presenters and delegates from around the world packed Noor Hall to share ideas on the conference theme, “Sustainable Development and Islamic Finance in Muslim Countries.”
There was enthusiastic response to the comments of the speakers at the opening session including Abdullah ibn Hassan Saif, Bahrain’s minister of finance and national economy, Sheikh Ahmed ibn Mohammed Al-Khalifa, governor, Bahrain Monetary Agency, Dr. Maryam bint Hasan Al-Khalifa, president, University of Bahrain, Dr. Ahmed Mohammed Ali, president, Islamic Development Bank (IDB), Dr. Mohammed Najatullah Siddiqi, president, International Association for Islamic Economics, Saleh Kamil, president, Dallah Al-Baraka Group and Mohammed Saleh ibn Harun, deputy governor, Bank Negara.
Opening the conference, Bahrain’s minister of finance and national economy pointed out that Bahrain is proud to be home to 183 Islamic and non-Islamic, national and international banks and banking related institutions. The financial sector accounts for 17 percent of Bahrain’s GDP and greater growth is expected as expansion in the financial sector is being encouraged.
“The theme of the conference,”said Saif, “is of particular importance to the government of Bahrain as well as to governments of other Islamic countries. It addresses practical challenges facing these governments in their attempt to conduct economic development in accordance with Islamic principles.”
The true extent of the hard work ahead for Muslim countries in regards to economic development were clearly laid out in remarks from the IDB president.
“The most important development challenge during the next decade is how productive employment ensuring a good quality of life can be provided for the 2.5-3 billion people now living on less than two dollars a day, and nearly the same number of people that are likely to be added to the developing countries in the next 50 years,” said Ali. “For us the challenge is more serious than the rest of the world because the majority of the world’s poor live in OIC member countries.”
Ali went on to explain that the majority of nations where poverty is increasing are members of the OIC. Even worse, the gap between rich and poor nations is increasing. The average income in the richest 20 countries is now 37 times that of the poorest 20. The nature of development assistance is also changing with Official Development Assistance (ODA) declining and Foreign Direct Investment (FDI) playing a much stronger role. In 2001, FDI to developing countries was $576 billion but OIC member countries received only 1.5 percent of total FDI.
“Sustainable development in the next decade would crucially depend on attracting foreign direct investment into member countries,” Ali asserted. “There is a need to devise modes and instruments for doing that in ways that do not lead to burdens on the receiving countries that they cannot sustain. Islamic finance has something to offer here.”
Saleh Kamil quite agreed with this reasoning and he berated Islamic financial institutions for the limited role that they have thus far played in national development. He said: “Islamic banks have remained restricted to fighting usury, and hence ignored other aspects of the Islamic economy and Shariah objectives with regard to financial activity, such as cultivation of land, and achievement of economic development through new innovative, diversified and multi-activity tools having different terms and periods.”
Kamil continued, “Islamic Banks have not shown us clearly the difference between the application of Islamic banking and usury based banking. This is due to the limited success achieved by Islamic banks in the use of resources, by treating money as a means of transaction and not an instrument of transaction. In competing with conventional banks nationally and internationally they have neglected the problems of nations, such as alleviation of poverty, countering unemployment and providing job opportunities.”
