KUALA LUMPUR // A new bank to finance clean energy projects in the Muslim world could be part of an effort by Islamic countries to forge closer economic bonds, Malaysia's prime minister says. Najib Abdul Razak said his country was prepared to lead the initiative, but did not offer any further details. He said such an institution would help speed up the development of much-needed renewable energy projects in the Muslim world.
"I would like to propose that a clean energy development bank be established to accelerate development of green energy and related industries for the benefit of developing [Muslim] countries," he said. "Malaysia is prepared to spearhead this initiative." The proposal came as the leaders of Malaysia, Indonesia, Bangladesh, Brunei, Senegal, Kosovo and the Maldives made the case for closer ties between members of the Organisation of the Islamic Conference (OIC) at the opening of the World Islamic Economic Forum, one of the Muslim world's most prestigious financial summits. The OIC comprises 57 majority-Muslim members spanning the globe from Morocco to Malaysia.
"The Middle East has their petrodollars," said Susilo Bambang Yudhoyono, the president of Indonesia. "Indonesia has its vast natural resources. All of us have resources to contribute. We can pull these together and achieve synergy and prosper together." Clean energy is widely seen as an area ripe for co-operative investment between OIC countries, most of which are emerging economies that rely heavily on oil to meet energy needs.
Co-operation on renewable energy is under way on a nation-to-nation level. Yahaya bin Abdul Jabar, the Malaysian ambassador to the UAE, said there were plenty of renewable energy projects in South East Asia looking for capital from the Gulf and other Muslim countries. Masdar, a renewable energy company owned by Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, signed in January a memorandum to collaborate on clean energy projects in Malaysia. Its agreement with 1Malaysia Development could lead to the construction of a carbon-neutral city modelled after Masdar City in Abu Dhabi, as well as clean technology venture capital investments and other carbon reduction initiatives.
"They're still working on what they want to do together," Mr Yahaya said. "So these are steps that are being taken by both UAE and Malaysia to move forward the relationship. We feel that the UAE is interested to come to Malaysia. It's just that both sides must come up with a clear, focused project, so we are in the process of making proposals and exchanging ideas, and we feel the process is moving forward in a very positive manner."
Mr Najib visited the UAE earlier this year and Abu Dhabi Government officials are expected to visit Malaysia this month to discuss investment opportunities, he said. OIC members are aiming to increase intra-member trade to 20 per cent of overall trade by 2015, officials said on Tuesday, up from 16.7 per cent last year. Clean energy cross-investment could play a role in achieving that goal, one that economists said was ambitious given historical patterns of trade.
Most OIC members are emerging countries that tend to export natural resources and import principally from China, India and developed western countries. Changing that balance and increasing exchange between Muslim nations may require significant economic diversification in resource-rich countries that would add new industries to their mix of exports. "If you look at the current trade pattern between Malaysia and the GCC, the GCC exports oil and Malaysia is a big importer from the UAE, but beyond that are there many other products the GCC produces?" said Giyas Gokkent, the chief economist at National Bank of Abu Dhabi. "Maybe aluminium or steel could be things the Malaysians could buy, but at the end of the day it's about having products that are world-class that everyone wants."
In addition to clean energy, the leaders discussed cross-investments in education and Islamic finance at yesterday's session. email@example.com