PRIME Minister Datuk Seri Dr Mahathir Mohamad said that in addition to Iran, many countries, especially those in West Asia, are interested in conducting trade with Malaysia using the gold dinar for settlement.
“Arab countries, in particular, have expressed interest but the decision-making process and bureaucratic procedures take time,” he said after opening the International Convention on Gold Dinar as an Alternative International Currency in Kuala Lumpur yesterday.
Dr Mahathir said efforts to use the gold dinar in bilateral trade with Iran had just started and, if successful, the same mechanism could be applied and expanded to Malaysia's other trading partners, particularly the 30-plus countries with which the country had concluded bilateral payment arrangements (BPA).
On whether the adoption of the gold dinar for trade could be achieved this year, the prime minister said: “Maybe ... we'll see if we can do it with Iran.”
Dr Mahathir said Malaysia was ready to use the gold dinar but other countries either did not really understand the concept or found it difficult to make a decision.
He said Malaysia would continue to promote the use of the gold dinar not only among Islamic countries but also non-Islamic nations.
“We have to be patient. When we introduced Islamic banking, it took time for people to accept it but now non-Muslims and non-Islamic banks are using Islamic banking and they can issue Islamic bonds,” he said.
Dr Mahathir said he did not foresee any objections to the use of the gold dinar as it was the same as the gold standard used in the Bretton Woods Agreement.
The Bretton-Woods Agreement is about fixing the exchange rate of major trading countries' currencies against gold. The value of the currencies was fixed against the US dollar which in turn was fixed at 1/35 ounce of gold or US$35 per ounce.
On whether the US had made known its stance on the gold dinar, Dr Mahathir said he had not heard of any objection from Washington on the matter.
Meanwhile, Bank Negara assistant governor Datuk Latifah Merican Cheong said the challenge in the adoption of the gold dinar now lay mainly in developing the mechanism to make it a credible system that was practical to traders.
“The gold dinar will be in demand once it is proven to be credible,” she said in presenting her paper on the Gold Dinar as an Alternative International Currency.
Latifah said Malaysia was working rapidly towards addressing the technical issues of using the gold dinar.
“On the part of Bank Negara there have been ongoing discussions with countries interested to use the gold dinar,’’ she said. “Most important is the need to come up with a system acceptable to the central banks of all the participating countries.''
Among the key issues that needed to be addressed quickly were the establishment of legal frameworks in countries using the gold dinar, matters pertaining to trade surpluses and trade deficits, and interest charges and penalties for late payment and net settlement, she said.