The Islamic Development Bank Institute (IsDBI) is exploring the feasibility of developing a smart countertrade system for OIC member states.
“By utilizing the institute’s existing patents such as Smart Vouchers, the digital system will aim to facilitate countertrade transactions between OIC member states, operating under the guidelines of the United Nations Commission on International Trade Law Legal Guide on International Countertrade Transactions,” IsDBI explained.
Countertrade refers to a transaction involving exports and imports between countries that are settled through non-financial means. It is a modality to maintain trade flows by nations experiencing balance of payment difficulties and consequential foreign exchange shortage. The mechanism could enable the creation of new export/import markets while improving trade ratios between OIC/IsDB member countries.
This feasibility projects comes in the backdrop of deteriorating intra-IsDB integration over the last decade, mainly driven by declining trade and investment.
“As technological advancements today enable big data processing and execution of e-contracts/legal documents in a seamless and secure manner, the Smart Countertrade platform can greatly enhance trade linkages between IsDB member countries,” the IsDBI noted.
A feasibility report will be produced by the institute. It will cover four areas: market feasibility, legal and regulatory considerations, technological prototype proposal, and Shariah governance as well Islamic economics/finance perspectives. The IsDBI will conduct a series of workshops with key stakeholders to identify challenges, opportunities and interest in participation in establishing the digital system.