Forex speculation calls for concerted action
Forex speculation calls for concerted action
JAKARTA (JP): Minister of Finance Mar'ie Muhammad called on
members of the Jeddah-based Islamic Development Bank (IDB)
yesterday to cooperate in dealing with volatile foreign exchange
markets.
Speaking at the bank's 20th annual meeting here, Mar'ie said
that the impact of the appreciation of major currencies, such as
the U.S. dollar, will continue to undermine the economies of
developing countries if no countermeasures are taken.
"It is, therefore, imperative to stabilize foreign exchange
through international negotiations," he told about 350 delegates
of the bank's 48 member-countries.
The two-day meeting was opened yesterday by President
Soeharto.
Bank Indonesia and central banks of other Asian countries
recently signed a bilateral agreement on dealing with currency
speculations. The deal allows the central banks to exchange their
treasury notes for cash in times of crisis.
At yesterday's meeting, Mar'ie also called on the IDB to find
a breakthrough in the mobilization of funds from its member-
countries.
Fund mobilization within IDB member-countries is pivotal in
supporting their development programs, given a continued decline
in the inflow of funds from developed nations, he said.
The IDB's annual meeting, the first ever held in Indonesia,
will elect a new chairman and review the applications of
Mozambique and Kazakhstan to join the bank.
The meeting's main agenda also includes the approval of the
bank's working programs and financial reports.
Established in 1975, the IDB has a paid-up capital of about
US$8.4 billion and provides services which include lending, trade
financing facilities and technical assistance.
The financing facilities are provided under Islamic legal
principles, which allow for profit-sharing rather than the
charging of interest.
The bank mainly directs its lending facilities to governments'
development programs, particularly those related to
infrastructure, education and health projects.
In supporting the private sector, the bank has established a
number of financial arms.
Concern
Leading Indonesian entrepreneur Fadel Muhammad expressed
concern yesterday that the bank's activities have not yet touched
the private sector's operations in Indonesia.
"I don't know why. I think Indonesian businessmen are not
well-informed about the bank's services," he told reporters. "I
have been involved in business activities for more than 25 years.
But I have never benefited from the bank's facilities," he added.
He said that local businesses' failure to deal with the IDB
might be related to the bank' complicated financing procedures.
The profit-sharing arrangement is still confusing, especially
for those who are accustomed to the conventional banking system,
said Fadel, who chairs the Bukaka business group.
Fadel, an executive of the Association of Indonesian Moslem
Intellectuals, is one of the businessmen who pioneered the
establishment of Bank Muamalat, the only interest-free commercial
bank in Indonesia.
Bank Muamalat, which also bases its services on a profit-
sharing arrangement, has established a number of branches and
several interest-free secondary banks.
He said that the IDB meeting should have been used to build
momentum for the promotion of the Islamic banking system in
Indonesia.
"But as you see, only a few businessmen are attending the
meeting. Most of the participants are government officials," he
said.(hen)