Organization of Islamic Cooperation (OIC) is the second largest Inter-government Organization with the membership of 57 states and globally covering four continents. This organization is the collective voice of the Muslim world to ensure and safeguard their interest on socio-economic, economic and political areas. The Secretariat of OIC is situated in Jeddah, Kingdom of Saudi Arabia.
OIC was found in 1969 in Robat, Morocco in Islamic Conference. OIC bloc is the largest bloc in the world in term of number of countries; represented one fourth of total land with 23.5 percent of the world population. The collective population of OIC is 1.9 billion with GDP US$ 6.5 trillion and average per capita income US$ 7,189. OIC region comprises from low income countries to high income economies and geographically divided into North & East Africa, Central & West Africa, Middle East, South East Asia, West Asia, Central Asia and Europe.
The region grew averagely in between 3 to 4 percent and combined export stood US$ 2.07 trillion and imports US$ 1.85 trillion. The intra regional trade among the OIC Countries is 17.5 percent of total trade of OIC Countries while the intra-region FDI stood 2-3% of GDP. As like the other developing countries, the service sector contributes 49 percent in the GDP of the OIC countries followed by industrial sector 41 percent and agriculture sector 10 percent. The share of OIC member states in global GDP is only 8 to 9 percent and they constitute nearly 2 percent of world trade approximately.
Muslim countries have enormous resources and potentials to succeed, but the task is to translate these potential into real asset. Promotion of economic linkage within the Muslim communities by creating opportunities could help generate greater flow of capital from within and beyond the Islamic world. There is great need to promote integration amongst the Islamic Countries in the era of globalization and absence of unity among the OIC Countries is the biggest challenge in the present uncertain political and economic situation in Islamic countries. The rising of consumption of Halal products has created a big market for Muslim in the world because of safety, hygiene, and ethical quality. This is a big opportunity for Muslim nations to explore this market particularly from non-Muslim nations through competitiveness, innovation and inventions. Moreover, the removal of tariff and non-tariff bearers like visa restriction, compliance, removal of language barriers, strong connectivity and opening of banking channels can create economic integration among countries.
Relations between Pakistan and OIC:
Pakistan is an important member of OIC due to its market size particularly population of 210 million and has emerged as the first Atomic Power in the Muslim world. Being a founding member of OIC, Pakistan has played a crucial role in strengthen the economic and trade relations among Muslim countries. Pakistan has strong and significant relations with all Muslim relations at political level but these relations are not reflects in terms of trade volume despite the fact that there is huge potential of trade due to geographical proximity, religion and cultural ties, similarities and availability of natural resources.
At present, the trade between Pakistan and OIC countries is meager as compared to potential available and stood at US$ 28 billion, export to OIC countries US$ 5.6 billion and imports from OIC countries US$ 22.7 billion. Cereal, cotton, Mineral fuel, sugar, edible vegetable & fruit, meat, textile etc are the main item which Pakistan's export to OIC countries while Petroleum products, Animal fat, plastic, organic chemical, iron & steel, inorganic chemical, machinery, electrical equipment are the main items that Pakistan's imports from OIC countries.
The reason behind the low level of trade is lack of information sharing and low level of interaction among the private sector of Pakistan and OIC countries. Among OIC member states, Pakistan has signed FTA with Malaysia and PTAs with Indonesia and Iran. Negotiations for FTAs with Turkey and members of Gulf Cooperation Council are in progress. The direction of trade is influenced by many factors, including costs, market access, connectivity, quality, standards and competition, but if business communities and policy makers work together in identifying the market opportunities and addressing trade barriers, it would be possible to create more opportunities for trade among OIC countries.
There are huge potentials of trade with OIC members' countries in rice, mangoes, dairy products, fresh vegetable and fruits sports goods, surgical instruments, pharmaceutical products, carpet, leather products and textile items, if tariff barriers remove and trade facilitate with incentives.
Among OIC countries, Afghanistan, UAE, Bangladesh, Saudi Arabia, Indonesia, Turkey are the main export partner of Pakistan whose share is more than one percent in exports of Pakistan. UAE, Saudi Arabia, Indonesia, Qatar, Kuwait, Malaysia and Oman are major imports partner of OIC contributes more than one percent in imports of Pakistan.
Below are some trade impediments which hinders Pakistan trade with OIC countries.
There is very low level of commercial activities like holding of trade fairs and exhibitions and exchange of trade delegations. Absence of ATA Carnet facility is another issue which creates problem in holding of exhibitions in OIC countries as we all knows that trade fairs and exhibition play a pivotal role in helping businesses; meet with other players of the industry and networking with other industry members and grow the customer base exponentially.
Business Visa is one of the main problems faced by the business community of Pakistan. Most of the OIC members' countries often take more than a month in providing visa to businessmen of Pakistan and also creates unnecessary hurdles in issuance of Visa. In the recent era of rapid communication, the delay in obtaining visa seems to be outmoded resulting low level of business contacts. Not to speak of common citizens and students, even the renowned businessmen which are recommended by FPCCI, are facing problems in obtaining Visa. In order to improve the business relations with OIC countries, we have requested to trade mission of OIC countries to consider FPCCI's recommendation letter for providing visa to genuine businessmen.
Lack of Banking Channels with many members OIC countries also create hurdle in payment mechanism and increases the trade cost when Pakistan use third countries banking channels in trade. At present, Pakistan does not have banking channels with Central Asian States, Iran, African countries etc. Moreover, Pakistani businessmen also faces complexity of administrative procedures related to foreign trade at customs level and ports of OIC countries.
Compliance and Standardization requirements are different in different OIC countries, which affect the exports of Pakistan to OIC members countries. Moreover, the complexity of establishment of rules of origin; difficulties for enterprises in complying with international standards and lack of mutual recognition of standards; the lack of approval for national and regional procedures and red tape for cross-border positions especially during customs clearance operations are others impediments which affects our trade with OIC countries.
Moreover, many products need certification from the government of different countries particularly for exports of Chemicals and Pharmaceutical Products. The procedure of certification and registration of pharmaceutical products at ministry of health particularly in Arab countries is very complicated and different for Pakistan exporters, but huge potential are available. In this respect, we would like to request the members' countries to provide us the same facilities as available to other countries in exporting of pharmaceutical goods.
There is weak air connectivity of Pakistan with Central Asian countries, African countries and some Middle East Countries. The businessmen generally travel through third country which increases the cost of trade.
Moreover, many OIC countries allow exports of Pakistani fruits and vegetable after surpassing of season. As we all knows that the fruits and vegetables are perishable commodities and Pakistan has lack of storage facilities so it should be allowed in season. Pakistan produces a wide range of exotic fruits and vegetables which is highly demanded in international market.
Language barrier is another barrier in the trade of Pakistan with OIC countries. Most of the Muslim nations speak Arabic while the official language in Pakistan is English. In the past, Pakistan exported huge quantity of human resources to Islamic Countries particularly to Middle East Countries.
A part from non tariff measures or barriers, there are tariff barriers due to protection to domestic countries. As Turkey is imposing countervailing duties on Pakistani textile commodities and Indonesia is charging 15 percent of rebate on exporting crude palm oil to Pakistan.
The mismatch of working days and working hours in business dealing and at border crossings also creates hurdles in trade with OIC countries. Moreover, there is no formal regional trade and economic cooperation agreements of OIC countries which can provide trade concessions or some preferential and free arrangement of trade to Pakistan with all Muslim countries simultaneously. Moreover, support services to international trade i.e. trade portal and matchmaking are also weak or unsuitable for trade.
Beside trade, there are also investment potentials for Pakistan in OIC countries, but some members' countries do not allow investment without partner. Pakistan has signed investment treaties with many OIC members' countries; but most of them are not in force of implementation like investment treaty with Egypt, Bangladesh, Kyrgyzstan, Morocco, Qatar, Turkey, Turkmenistan, Yemen etc.
Islamic Chamber of Commerce, Industry and Agriculture
The Islamic Chamber of Commerce, Industry and Agriculture (ICCIA) is an affiliated organ of the Organization of Islamic Cooperation (OIC) and represents the private sector of 57 member countries. The idea of setting up an ICCIA was mooted in the Seventh Islamic Conference of Foreign Ministers held in 1976 in Istanbul-Turkey, which was approved by the First Conference of the Chambers of Commerce and Industry held in October 1977 in Istanbul, Turkey. Its constitution was adopted by the Second Conference of Chambers of Commerce and Industry held in 1978 in Karachi, Pakistan.
The aim of ICCIA is to strengthening closer collaboration in the field of trade, commerce, information technology, insurance/reinsurance, shipping, banking, promotion of investment opportunities and joint ventures in the Member countries. The Headquarter of ICCIA is situated at Karachi (Pakistan) and Regional Office is in Jeddah (Saudi Arabia).
This year, Pakistan has honor to host the Board of Director meeting of ICCIA which is being held in Karachi, Pakistan from 15 November, 2019 to 16 November 2019 after a lapse of 25 years and it is our conviction that this meeting will open new era of opportunities amongst the Islamic Countries. On the sideline, Investment Bridge and Exhibition will also organize which will be attended by all countries.
Economic Indicators 2014 2015 2016 2017 2018
GDP (current US$ Trillion) 7.1 6.5 6.4 6.7 6.5
Average Annual GDP Growth 3.8 2.8 3.4 3.9 3.6
Average Unemployment Rate 7.0 7.1 7.1 7.0 7.0
Average Inflation, Consumer Prices (%) 3.6 3.1 3.7 4.6 4.5
Total Exports (US$ Billion) 2,246.9 1,670.5 1,481.0 1,720.9 2,076.9
Total Imports (US$ Billion) 1,840.9 1,691.5 1,537.2 1,679.1 1,859.7
Average per capita income 8,266.6 6,785.9 6,350.8 6,670.9 7,188.6