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THE GOLD DINAR RESEARCH GROUP

Gold dinar can enhance economic ties among Muslim nations

UTUSAN EXPRESS 22/10/2002

KUALA LUMPUR Oct 22 - Muslim countries can further enhance economic co-operation among themselves through the use of the gold dinar as a trade settlement mechanism, the chairman of the Institute of Islamic Understanding Malaysia (IKIM), Tan Sri Ahmad Sarji Abdul Hamid, said today.

They could also increase intra-trade through the use of the gold dinar, he said.

At present, intra-trade among Muslim countries accounted for less than 12 percent of Malaysia's total trade, he told an international conference on the Gold Dinar in Multilateral Trade at IKIM here.

In this regard, he said Muslim countries would have to identify and remove existing impediments to intra-trade and create a more favourable environment through proper investment and commercial policies.

As such, Ahmad Sarji said the IKIM-sponsored seminar would focus on practical issues on the implementation of gold dinar as a settlement mode in bilateral and multilateral trade.

He said the seminar would also examine the role of the appropriate banks in promoting the usage of gold dinar in international trade and survey the legal infrastructure for the implementation of gold dinar.

To spearhead the use of gold dinar, the seminar would also evaluate how this settlement mechanism could be promoted between Asian and West Asian countries.

Prime Minister Datuk Seri Dr Mahathir Mohamad is expected to close the seminar tomorrow and have a dialogue with participants on Malaysia's commitment in implementing the use of the gold dinar as a settlement mechanism in bilateral and multilateral trade.

Meanwhile, the parliamentary secreary to the finance ministry, Hashim Ismail, said the proposed use of the gold dinar would not have a negative effect on the ringgit.

"The proposal to use the gold dinar in the initial stages would be limited as a settlement currency for bilateral trade and would not be used to replace the role played by the local currency," he said.

In reply to a joint questions from M. Shukrimun Shamsuddin (Pas-Kuala Nerus), Datuk Mohd Sarit Yusoh (BN-Temerloh) and Datuk Railey Jeffrey (BN-Silam) on the use of the gold dinar at the Dewan Rakyat here today, Hashim said the use of the gold dinar would be able to promote two-way trade among Islamic countries through the Bilateral Payments Agreement.

Under the BPA scheme, exporters and importers will receive or pay for their transactions in the local currency while the central banks of the participating countries would pay each other in gold dinar.

Hashim said the government was in the midst of identifying the countries which were interested in using the gold dinar for trade.

"To make this proposal succeed, Malaysia needed co-operation from countries which possess the appropriate legal infrastructure to facilitate the BPA mechanism effectively."

He said the launch of the gold dinar needed detailed and extensive discussions among experts from participating countries so that they could identify its implications on the existing foreign exchange system.