Islamic financiers debate rebuilding Iraq Economy

Investors, bankers, scholars, legislators and regulators from more than 25 countries will open a dialogue aimed at helping re-establish financial and commercial vibrancy in Iraq at the International Islamic Finance Forum, which opens in Istanbul, Turkey, on 29 September.

Organised by the Dubai, United Arab Emirates, offices of the Institute for International Research (IIR), the forum is the leading business-to-business event for the world's fastest-growing financial sector. The forum - attended by around 300 - is in association with Dow Jones Indexes and the leading Turkish no-interest finance house Kuveyt Turk.

With a 90% Muslim population, a potential $59 billion economy, vast oilfields and a population in which 41% are under the age of 14, Islamic finance institutions and banks are expected to play a major role with their conventional counterparts in rebuilding the Iraqi economy.

The Coalition Provisional Authority in Iraq has announced a consortium of more than a dozen international banks will operate a newly-created Trade Bank of Iraq, expected to begin operations this month.

"A leading member of the consortium, and chief executive officer of a bank aiming to establish itself in Iraq, will be among the high level speakers at the Istanbul conference," said forum director Chris Mullinger. "He will be giving a first hand account of the challenge and tasks faced in restoring the Iraqi economy."

The Trade Bank will allow Iraqi ministries to begin making big-ticket purchases abroad. It is expected to handle annual purchases of hundreds of millions of dollars. The Trade Bank will open with authorised capital of $100 million from the UN Iraq development fund. As a result, it will be able to offer payment guarantees on purchases lined up by the Iraqi government.

Without these guarantees, Iraq effectively will be unable to import the food, electrical equipment and oil refining machinery it needs to rebuild.

The Trade Bank has an initial lifetime of 12 months, with the option to extend its contract for another three years. It is hoped that during that time, Iraqi banks will be able to provide similar assistance, allowing the Trade Bank to scale back.

Senior executives from the global Islamic finance industry will gather at the forum in Istanbul to debate the important challenges facing the world's fastest-growing financial sector.

The twice-a-year forum has been dubbed "the Islamic finance event equivalent to the Davos World Economic Forum." Debates centre on the challenges faced by a financial sector that is predicted to maintain double-digit annual growth rates for the next 15 to 20 years.

"The world of Islamic finance is one of increasing sophistication and reach but with a growing convergence of global standards for financial service regulation," said IIR's Mullinger.

"In only 10 years or so, Islamic finance has grown from virtually nothing to a business worth well in excess of US$250 billion. Islamic finance now has customers in 75 countries and in some of those countries has already captured more than 30 per cent of market share."