MANAMA: Trade cooperation between Malaysia and Bahrain is expected to increase further through inter-country Islamic banking transactions if industry standardisation can be achieved.
Data provided by the Economic Development Board of Bahrain (EDB) shows that as at end-2011, non-crude oil trade between the nations stood at US$221 million (RM711.6 million), an increase from 2008’s US$191 million.
“The potential for future Bahrain-Malaysia trade is great, especially since we signed the Avoidance of Double Taxation Agreement,” Bahrain transport minister and EDB chief executive Kamal Ahmed Mohamed told reporters at the World Islamic Banking Conference here last week.
The Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on income signed between the two countries came into force in 1999.
“Bahrain is currently expanding its airport.On top of that, we are improving our public transport system. So the opportunity for Malaysia to tap these, especially through Islamic finance, is there,” he said.
Malaysia’s import breakdown to Bahrain as of December 2011, according to the EDB, is machinery and mechanical appliances (68 per cent), electrical machinery and equipment (13 per cent), base metals and other base metals (both at eight per cent) and others (three per cent).
“Malaysia and Bahrain have been habitual issuers of short-term sovereign sukuk, and we are also the leader of Islamic finance in our respective regions,” he said.
He added that although the desire (to increase Islamic banking transations) is there, the lack of standardisation in the industry is hindering this.
“I believe more work can be done if we have uniformity in the industry. And this call for uniformity cannot come from just one country but from many countries and bodies.”
Although standardisation bodies like Accounting and Auditing Organisation for Islamic Financial Institutions and Islamic Financial Services Board have helped, there is still more work to be done, he added.
Bahrain’s central bank governor Rasheed M Al-Maraj, in his opening address, said the industry is in need of a transformation.
“This can be done through globally accepted and agreed upon international standards of practice as stakeholders’ confidence is built upon demonstrably effective framework.
“Initiatives for standardisation are vital if we are to compete internationally, attract better skilled resources and participate as equals with existing regional financial institutions,” he said.
*This article by Lidiana Rosli was published on 9 December 2013 by Business Times. Read the original article here.