Sunday’s Zaman met with D-8 Secretary-General Widi Pratikto to discuss current developments in global markets and the organization’s future prospects along with such issues as Islamic financing and halal food markets.
The D-8 is an arrangement for development cooperation among the following countries: Bangladesh, Egypt, Indonesia, Iran, Malaysia, Nigeria, Pakistan and Turkey. Recalling that the D-8 is still a young organization with a history of 14 years, Pratikto says the organization needs time to increase public awareness and influence in the global arena. According to the secretary-general, the coming five years will witness remarkable achievements for the D-8.
This achievement will happen with the organization reaching its ultimate goal of improving member states and their position in the global economy, thus increasing their welfare.
* Considering that it is worth an estimated $2 trillion in trade, the global halal food sector is an important field for Muslim entrepreneurs worldwide. Have any studies been done in this regard, bearing in mind that establishing a global umbrella institution that would supervise all halal certifiers has become a major priority for many?
The work on preparation of a Halal Food Standard between Muslim countries is conducted under the OIC. Currently, the OIC Standardization Experts Group (SEG) is finalizing three documents: OIC General Guidelines on Halal Food, Guidelines for Bodies Providing Halal Certification and Guidelines for the Authorized Body Accrediting Halal Certification Bodies.
Yes, it is a big market and should be well controlled. Malaysia offered to establish D-8 halal food standards two years ago, and it is still being discussed. We need a standard before boosting the trade of halal commodities, but this is not as easy as predicted. Standardization requires a serious amount of money. On one side all D-8 members are members of the OIC, and we should determine if it is feasible to establish a new institute.
* Could you tell us about the D-8’s contribution to maintaining sustainable growth in the international Islamic finance industry?
Along with the rising Islamic finance industry and business, the D-8 has initiated meetings on the expert level within member countries since 1999. The major themes that have been discussed were Islamic finance regulations, finance banking-privatization, Islamic insurance (takaful) and training and capacity building in the field of Islamic finance. Recently, the D-8 held a working group on the development of Islamic financial markets (capital and money markets), a legal and regulatory framework governing the Islamic financial industry and an education and training framework for Islamic talent. We know that the UK successfully implemented Islamic financing. There will be a meeting for Islamic financing in July in Jakarta. All the members will present their suggestions on how to accelerate Islamic finance.
* Among the many objectives the D-8 talks about, what do you think is the number one goal the organization should concentrate on?
When we look at the goals set up in our organization, one can see that it all goes down to one big theme of how to promote and increase the level of intra-trade among our member countries. This is the core target that we seek to achieve, since strong trade cooperation will have a trickle-down effect to the rest of the targets, which in the end we believe will give us a louder voice in the international arena. Nowadays we need to focus on economic activities rather than politics. To create a more favorable economic environment and increase the welfare of members is the D-8’s raison d’être.
Among our five priorities — including agriculture and food security, transportation, energy along with industry and small and medium-sized enterprises (SMEs) — trade has the utmost importance. We can reach common goals by means of increased trade between the members. We have earlier set targets to realize a preferential trade agreement (PTA) and a customs and visa agreement. Six out of eight members agreed on easing visa procedures while four members have reached agreement on customs and PTA agreements. Turkey is among the D-8 members that have not approved the PTA. We expect the Turkish Parliament to ratify the PTA shortly after the June general elections. Indonesia will also ratify the PTA soon.
It is the duty of the D-8 secretariat to convince members to accept such agreements, and we encourage governments to this end. Our target is to increase the share of bilateral trade among members to 15 percent from the current 6 percent by 2015.
* How do you interpret Turkey’s role in the D-8 and its work to become both economically and politically stronger? Turkey had earlier suggested establishing a consultation mechanism within the D-8 that would help in the preparation of international platforms.
Turkey is a real player in several activities of the D-8; the country contributes a lot to the organization. But we would like to see other members show the same performance as well. Each member should be motivated to contribute to the organization using their potential as much as they can. Being the largest contributor to the organization, the Turkish government is very supportive in making this organization mature. We plan to introduce a charter for the organization this year. Turkey has been playing a very active role since the very beginning of the establishment of the organization. Since the founding of the D-8, Turkey has greatly emphasized an economically strong D-8, realizing that this approach will eventually lead to a politically strong community, too.
As you can see, the D-8 countries are spread out across the globe, rather than being in an exclusive regional area. We have members representing the Mediterranean, South Asia and West and North Africa. This embodies Turkey’s multidimensional foreign policy aiming for stronger ties with not only countries from its own region but also from around the globe. It is important to note also that Turkey, as the seat of the D-8, has constantly supported all organization activities through sponsoring different working group meetings and hosting major events as well as contributing to the substantive outcomes of these meetings.
* Do you think member states are using their full capacity to increase the influence of the D-8 in the global economic and political arena? If not, how can they be encouraged to do so? In relation to this, there are criticisms that the D-8 has not been the primary concern of Turkish governments until very recently. How do you read that?
I believe that our member states are utilizing a great deal of their energy and capacities to promote D-8 in the world and benefit from it. The way to encourage them to be more proactive in the D-8 environment is to convince them of the results of such activities. The criticism that you mention about Turkey, I have not noticed at all. We find all the host authorities very cooperative and supportive of our activities. We should not ignore the fact the D-8 is still a young organization with a history of 14 years. It needs time to have a strong voice in the global arena. There are tangible projects that would serve to make the D-8 a strong player, such as the D-8 Preferential Trade Agreement, Customs Agreement and Visa Agreement. The D-8’s capacity will develop with these projects; thus, member countries will bear the fruit of substantial results in areas of cooperation. Turkish governments have always shown much concern about the D-8. However, Turkey’s historical, close and intense relations with other organizations, particularly the EU, may have shadowed her relations with other organizations, which have quite a short history, like the D-8.
We would like to help each member use their potential at the highest level possible. Having trade facilities, we try to make members closer through partnership and trade. In the next five years we will play a significant role, coming out of our shell. It is our challenge. Each year members voice commitment to foster trade and also political cooperation and set new targets. We have to encourage members; it is a matter of time and energy that you spend for a greater D-8.
* Do you find the current communication between the D-8 and such other major Islamic organizations as the Organization of the Islamic Conference (OIC) healthy enough to bring further cooperation on international issues?
Indeed, I do. After all, the OIC is our sister organization, and we have many things in common. We can pull our resources together for the benefit of both our constituencies. We have just signed a memorandum of understanding for cooperation with the OIC secretary-general and are hopeful of its results and implementation. We have high-level communication with the OIC. Energy and food are two serious issues we are going to face in the next decade.
* Has the D-8 been successful in helping members keep the negative impacts of crises at bay?
Most D-8 members survived the 2009 global financial crisis. Our principle is to support each other. Bangladesh, for instance, is still a member of the UN Least Developed Countries (LDCs); we need to help them graduate. Focus is on increasing intra-trade. Turkey in many ways tries to help others, at least in the surrounding region, to alleviate 2009-like crises. Iran has recently proposed to have a “trust fund” worth 20 million euros. Indonesia and Turkey had the most problems since they have relatively bigger economies. We hope the LDC-IV creates sound results in the long run. We need more efforts focused on implementation. Bangladesh is rapidly developing, and in the near future they will hopefully get out of the LDC. The ministerial meeting took place May 16-18 in Iran.
* The combined population of the eight countries is about 60 percent of the global Muslim community and close to 14 percent of the world’s population, a huge market. Does the D-8 management have plans to add new members, and thereby extend the organization’s sphere of influence, in the near future?
We have just started to have endorsements from all member countries for our main legal documents such as charter and statutory documents. Once these documents are all endorsed, then we might start considering the membership of new countries in our organization. Make our organization mature enough first, and then we can add new members. As mentioned, the D-8 is a young organization. Over time and with its achievements, it will draw the attention it deserves. We have to make it strong and reach targets. I think we should not dream about a new thing before we achieve current goals. In five years the D-8 will be much stronger and more mature than it is currently.
* D-8 members suffered serious stagnation following the 1997 Asian financial crisis, which erupted with the collapse of the Thai baht. The 2009 global credit crunch was yet another heavy blow to these emerging markets, and they have had troubles recovering ever since. How do you read the current situation?
The world economy fell into a deep recession in 1997/98 as well as in the 2009 global crisis. After more than a decade of robust economic expansion that has contributed to improving the living conditions of millions of people, the current crisis threatens to reverse this progress. Nowadays, the world economic recovery continues, more or less as predicted. It is expected that the world economy will grow about 4.5 percent a year in both 2011 and 2012; however, advanced economies sill grow at only 2.5 percent, while emerging markets will grow at a much higher 6.5 percent. Congruent with the response of developed countries to the financial crisis, developing countries, as voiced by the D-8, successfully declared the endorsement of expansionary macroeconomic policies adopted by the member countries during 2009/10 to stimulate domestic demand, including fiscal stimulus, monetary easing, access to credit through trade financing and measures to support the private sector, particularly SMEs. As shown by an International Monetary Fund (IMF) calculation regarding D-8 economic development in 2010, real GDP growth slowly reached 4.5 percent on average, an increase from 2.3 percent in 2009.
*Observers argue that the emerging economies — including D-8 members – will be taking a greater share of the global economy to the detriment of developed nations in the coming decades. How do you evaluate the latest arguments that the 2009 global financial crisis changed the axis of the global economy from West to emerging markets in the East?
Yes, there is an axis change, but we need to wait for at least two years before making a certain statement. But one thing for sure is that D-8 members are part of the swift economic rise.
The pressures stemming from the global financial crisis have directly challenged developing nations. In response, they announced their stimulus package in order to strengthen the real domestic economy. As we may know, domestic demand in developing markets is more solid than in developed countries. For instance, two D-8 countries — as well as G-20 members — Indonesia and Turkey have proved that real economic growth can be slowly increased through stimulus packages and robust expansion in private sector activity. In addition, the D-8 needs to prepare a mechanism for long-term economic sustainability by taking into account the current circumstances that have revealed important weaknesses, including the need for much greater international policy coordination that recognizes the collective character of the crisis. Considering the current situation, implementation of D-8 agreements (PTA, visa and customs) is one of the significant ways to accelerate economic growth, especially to boost trade performance among D-8 countries.