The UAE has proposed to the Islamic Development Bank the setting up of a US$5bn Islamic institution to boost inter-Islamic trade and bolster the capabilities of muslim nations to export their products to the industrialised world.

Offering to host the proposed Islamic Institute for Trade Financing in the UAE, the government has promised to provide all facilities and support to fulfil its objectives, says Mohammad Khalfan Bin Kharbash, minister of state for financial and industrial affairs.

The proposal was formally tabled for discussion at the 29th meeting of the board of governors of the Islamic Development Bank (IsDB) which ended in Tehran recently.

The initiative proposes the merger of the existing internal financing programme with the long-term exports financing programme, to form an Islamic institution under the name “Islamic Institute for Trade Financing ‘.

The fund will have a capital of US$5bn, with about US$1bn of this to be shared by muslim states, IsDB, Islamic banks and Islamic finance groups, according to the proposal.

“Setting up such an organisation will help expand trade among muslim countries and bolster their economies. It will also facilitate attempts by member states to join the world economy and raise their share in international trade,” a member of the UAE delegation comments.

“The institute will support member nations to export to members in the Organisation of Economic Cooperation and Development and other countries to create a bigger market for Muslim nations and attract direct foreign investments,” he adds.

The Islamic Development Bank is an international financial institution established in pursuance of the declaration of intent issued by the conference of finance ministers of muslim countries.

The purpose of the bank is to foster the economic development and social progress of member countries and muslim communities individually as well as jointly in accordance with shariah law.

Some 55 countries are members of the bank.