With the developed economies of the West struggling to put their economic houses in order, greater focus is now being paid to the emerging world. Growth in many of these countries remains buoyant and their share of global economic activity is rising.
Much of the Muslim world falls within this category as many of their economies are benefitting from high consumer spending and commodity prices. It thus makes sense, as noted by Vice President Boediono, for Indonesia to strengthen its trade and financial links with other Muslim-majority countries.
Indonesia’s economy alone accounts for 13 percent of the total output of the Organization of Islamic Cooperation, which combines the economies of 57 member states. It’s the largest contribution from a single country to the bloc’s output.
Combining Indonesia’s economy with that of Malaysia, Thailand and Brunei Darussalam, Southeast Asian nations account for around 28 percent of the bloc’s $8 trillion economy. This is a large and growing market for Indonesia’s commodities as well as manufactured goods.
Still, Boediono noted that challenges remain, including the fact that many Muslim-majority countries are underdeveloped. The bloc counts for wealthy nations such as United Arab Emirates and Qatar among its members, as well as poor ones such as Somalia.
If it makes a concerted effort to improve trade and economic linkages with other OIC countries, Indonesia will benefit immensely. If it develops its Islamic finance institutions and market, it could attract billions of dollars in new investments. This will not happen on its own and will require a mixture of enlightened policies and providing the right incentives, both of which are currently lacking.