Exploring co-operation among Muslim countries

This Article was published in
Business Recorder (October 11, 2009)

By: Sahibzada Hussain Mohi ud Din Qadri

The existing international relations and realities make it desirable to have integration among the Muslim countries. Trade commands a special place in regional co-operation. The OIC member countries face a formidable set of impediments and setbacks in expanding trade amongst themselves, as well as with the outside world.

One of the major features of their economy is that the member countries are exporters of primary commodities and importers of manufactured goods. This common profile of exports and imports of the OIC member countries inevitably narrows the trade potential that these countries can exploit.

Such potentials are further undermined by the lack of an appropriate level of basic infrastructure necessary for trade, such as the information infrastructure, communication and transport networks, permanent commercial and marketing ties, financing arrangements, preferential trade arrangements, standardisation, packaging, supply availability, competitiveness and so forth.

Lack of complementarity among some of the Muslim countries could be another factor for low trade. Therefore, if the Customs Union is to be established, some degree of complementarities among the members of the Union should exist even before such an arrangement is put in place.

One of the problems with the Muslims countries is that they have done nothing to promote the potential trade complementarities among them. Variety in their resource endowments, apparently, should result in strong intra-trade relations. But in reality this has not happened. Most members of OIC import food from non-members in spite of the fact that a number of them have exportable food surplus (eg rice in Pakistan, edible oils in Malaysia, pulses in Turkey and Syria, etc).

Another dilemma is that some of these countries import food and agricultural raw materials from non-OIC member countries despite having large agricultural economies. Once again, the main reason for this is that these countries have not properly exploited the potential trade complementarities at the OIC level. Any regional effort to reduce tariff and non-tariff barriers would allow them to benefit from such complementarities.

There is also a general potential in the Industrial sector. There are countries like Pakistan, Iran, Malaysia and Turkey, which are industrialising at a faster rate. Co-operation among these countries can result in the development of basic industries like iron and steel and other metallurgical products. This provides a natural reason for having close trade relations among these countries.

In an Islamic economy, the competitive spirit will be accompanied by an over-riding sense of co-operation, which is more than just an act. It is at once a mood and a motive, a principle and a psychology. The element of struggle will not be altogether absent from an Islamic society. Only, it will be oriented differently.

A purposive relationship, based on good will and co-operation, is found in the individual-society-state relationship. It is the State, which enforces the Islamic law and makes individuals fulfill their obligations towards society, but it is the individuals who select their rules to enforce the Shariah.

In the moral sphere, Islamic faith is essentially a unity. It is, at once, worship and faith; the secular product of life is not divorced from the religious beliefs of Muslims. In the social sphere, its distinguishing feature lies in its complete human equality, just and coherent unity of existence and mutual responsibility of individuals and societies in the Islamic scheme of things, nobody would be allowed to exploit the other; everybody should be given an equal opportunity to go up on the social ladder.

The free-market mechanism is based on effective demand, making resources available to those who need them. As such, in an Islamic economy, the price offered by the market cannot be accepted as a matter of rule. Competition, as implicit in the market, needs to be supplemented by conscious control, supervision and co-operation. This is where Islam enters.

The key lies in mutual good will and co-operation, while the market price emerges from the wholly unsurpassed interaction of competing buyers and sellers. An Islamic equitable price needs to emerge from supervised competition, conscious control and co-operation between buyers and sellers. Such a system is to be established in all the Muslim countries and a Customs Union will help in this direction.

With a positive attitude to economic enterprise and socially-oriented purposive rights of ownership, individuals and groups in the brotherhood of man are enjoined to cooperate with one another in patterning life on earth in accordance with the will of Allah. Economic relations, especially those in production and exchange of wealth, should be co-operative in nature.

-- Rivalry and cut-throat competition makes no sense in this context.

-- Co-operation is seen as the basic value in Islam's economic philosophy.

Unlike earning pecuniary profits, which is an individualistic aim, social service calls for mutual consultation, co-operation and joint action. The individual entrepreneur will, therefore, be drawn towards other fellow entrepreneurs in order to devise a course of action, which ensures simultaneous and harmonious attainment of both the ends, individuals and social.

Co-operation among the producers may take such forms as dissemination of knowledge regarding the needs of the society, in general or specific industries through machinery voluntarily set up for this purpose by the producers themselves, or through the agency of the state.

Dissemination of such knowledge may go a long way to assisting the individual producers in taking correct policy decisions, especially in the formative stage of the firm. Later on, it may take the form of joint research projects, labour welfare schemes and mutual consultations on such policy matters as equality and price of the product and advertisement etc.

As this co-operation is motivated by social service and satisfactory profits, it will be different from monopolistic combinations or collusions detrimental to public interest. Such joint ventures are going to occur among the producers of Muslim countries also in the fields of food production, industrial output, skilled manpower, scientific research and modern technology.

(The writer is a PhD candidate at an Australian university)