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SAMI + 3 — Islamic world’s BRICS

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By Rushdi Siddiqui


“We must remember that one determined person can make a significant difference, and that a small group of determined people can change the course of history.” -- Sonia Johnson


The recent BRICS summit in New Delhi, India, should be a wake-up call for the Muslim world’s own proposed BRICS, called SAMI: Saudi, Ankara, Malaysia and Indonesia.


The BRIC story, Brazil Russia, India and China, started in 2001 by a Goldman Sachs’ Jim O’Neill, “Building Better Global Economics BRICs”. In late 2010, an “S” was added for South Africa. These are growth markets with increasing political clout, and combining for nearly 50 per cent of the world’s population, US$14 trillion (RM42 trillion) GDP, and excess of US$4 trillion (RM12 trillion) foreign reserves (source: Wikipedia).


Today, politics is increasingly subordinated to economic capitalism, as ideology can no longer address the concerns associated with the “Misery” Index: unemployment, inflation, etc. The author initially raised the “Muslim BRIC”, SAMI, concept last year, as existing Muslim country clusters like OIC, GCC, MENA, CIS, etc., have not captured the imagination of investors.


However, after meeting with various institutions and individuals, like Dr Nasser Saidi, chief economist of DIFC, from the Muslim countries, one of the most commonly heard feedback was the four country clustering, SAMI, was too small and not representative sample of the 57 Muslim countries (OIC).


Another feedback was there are political sensitivities with OIC sub-clustering, hence, it seems the politics (cart) are placed before economics and finance (horse). Finally, sporadic comments included, “why include Malaysia?” Answer is below.


SAMI + 3


The collective market place is more intelligent than an individual, hence, proposed Muslim majority countries to add to SAMI could include: Nigeria, Pakistan and Egypt. If we look at metrics for present and growth concerning population, GDP, regional influence (politically and economically), Islamic finance, halal industry, nuclear capability (Pakistan), inclusion in other grouping (Egypt as part of CIVETS, and NIGERIA as part of Next-11), etc., these three countries are ahead of their brethren Muslim countries.


If we look at projections from the 2007 Goldman Sachs study, BRIC and N11 Nations, we see that Nigeria (percentage growth from 2006 to 2050 is 1416 per cent), Egypt (1600 per cent) and Pakistan (908 per cent) are mentioned in the top 22 countries for GDP by 2050.


The challenge now becomes what to call the new grouping (not political club)? The world is about sound-bites and catch-phrases, as goes to retention and recall, hence, the appropriate naming will goes to reach/traction, assuming the combined substance of the countries conveys a strong message of growth and opportunity.


Thus, do we call the proposed grouping as SAMI + 3, SAMI and Beyond (sounds more like a cartoon outer-space movie), SAMI-PNE (pronounced as symphony) or something else.


The ideal situation may just be SAMI + 3. Why? As other Muslim countries grow and develop, they can be added easily without having to reconfigure the name. The only issue with plus (+) Muslim country scenario is the additions to not get the branding in the marquee name. Well, there are trade-offs and difficult to satisfy everyone.


(It should be noted that metrics on political freedom, human rights, corruption, illiteracy, healthcare, infrastructure, per capita income, brain drain, capital flight, etc., were not factored into the equation in suggesting Nigeria, Pakistan and Egypt.)


SAMI + 3 Bank


The naming of the Muslim country cluster is only a beginning. The lubricant for any country that wants to become high income economy is finance, Islamic, conventional or combination.
For example, does the Muslim world need a development bank? We already have the Triple A rated Islamic Development Bank, and, it has done a remarkable job since its inception under HE Dr Ahmad Mohamed Ali Al-Madani. However, one cannot have enough capital, especially, when some of the least developed countries with the fastest growing population happen to be Muslim countries.


(Some “experts” have equated the volatile mix of “poverty, population and pulpit pronouncements” as breeding ground for opposition, coups and extremism.)


If the recent BRICS summit can raise the prospect of a development bank, “BRICS Bank”, to fund infrastructure and development projects in the emerging markets, which happen to be all Muslim countries, then SAMI + 3 needs to consider merits of comparable bank.


Thus, as an alternative to the multi-lateral World Bank, Asia development Bank, Africa Development Bank, etc., is being considered for not only infrastructure but also facilitating trade, the Muslim world also needs to have some parallel thinking/development to capture the sloshing liquidity.


However, it should not be another dedicated Islamic financial institution or proposed Islamic Mega bank, as many Muslim and non-Muslim countries (read India) neither have a regulatory infrastructure in place nor have made Islamic finance a priority.


The lack of interest in Islamic finance may be due to the now disproven argument (in North Africa) about catering to Islamists. The more important point is not to wait for the “‘i’ to be dotted and ‘t’ to be crossed” for arrival of Islamic finance in these jurisdictions, as the law necessity can be invoked as interim suggestion for finance to fund growth, development and trade.


Malaysia Leads SAMI + 3


Malaysia has never been equated to be a surplus capital provider vis-à-vis the petro-liquid GCC region, however, increasing number of entities in the Gulf are raising money in Malaysia via sukuk and bond.


Thus, Malaysia may actually be perched in a unique (window closing) position to lead not only the Muslim world, but also the emerging markets to establish what the BRICS summit suggested: lead, house and host a (SAMI + 3) development Bank.


Thus, for once, a Muslim country leads by providing a model for BRICS with a “go to market concept” model development bank.


Malaysia has history of “vision, will and means”, in achieving the imaginable, be it overcoming the Asian financial crisis without IMF medicine, becoming a globally recognised Islamic finance hub from a modest start in 1983 or spear-heading and housing a multi-jurisdictional entity, IILM, to address short term liquidity for the US$1 trillion (RM3 trillion) industry.


Answer: Malaysia should be included in SAMI + 3!


For example, five of the IILM supporting countries, Malaysia, Saudi, Turkey, Indonesia, and Nigeria, overlap with SAMI + 3, and the new Egypt and Pakistan should be amenable to a development bank that could assist in job creating trade and investment.


Reality v Rhetoric


The real work commences after the photo-op sessions are over, and one finds there are real world challenges, from subtle to real and in-between. For example, some of the BRICS challenges that may have application with the proposed SAMI + 3 clustering:


Border challenges: India and China


• Indonesia and Malaysia or yesterday’s news?


Governing Ideology: Communism (China), Democracy (India/Brazil/South Africa), Democratic Authoritarianism (Russia)


• Outside of Saudi Arabia, six of the seven SAMI + 3 are democratically elected governments.
• Military influence (budget as percentage of GDP) can be seen within Turkey, Egypt, Pakistan, Nigeria and possibly Indonesia.


Regional influence (financial, military, etc): Russia and China


• Saudi Arabia and (the new) Egypt?
• Interesting possibility of India (BRICS) and Pakistan (SAMI + 3) for regional influence.


Obviously, there are other areas were “intent concerns” may lie amongst BRICS countries, but it would appear there are fewer areas of mutual suspicion within the SAMI + 3 for, say, a development bank.


First Summit


Malaysia, unlike many Muslim countries, typically puts on good international shows, be it conferences or summits. The time may be right and ripe to put on the First SAMI + 3 Summit in Malaysia, like the first BRIC Summit in 2009, and, like BRIC, led initially by finance ministers to issue a declaration for a just, financially inclusive, impact investing multi-polar world order.


This could possibly be bigger than or complimentary to the Asean story. The political impact, within Malaysia and outside, is a needed “feel good” story today within the Muslim world.


Thus, the alliance, SAMI + 3, may be just counter-balance to BRICS and G-7 on geo-political affairs.


The faces and places of a New World Order: Control our destiny or be defined by others? Egypt?


[Rushdi Siddiqui is Global Head of Islamic Finance and OIC Countries at Thomson Reuters. He can be contacted at rushdi.siddiqui@thosonreuters.com]


(Courtesy: Business Times, Malaysia)
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