The Islamic Development Bank will launch a trade financing body with capital of US$3 billion when its board of governors, representing 55 member nations, meets here next week, an official said today.

The International Islamic Trade Financing Corporation, which will have its own governing structure, will promote trade and development among member countries, said Ahmed Hariri, director of the regional office in Kuala Lumpur.

"The aim is to increase the volume of trade and to have a full-fledged institution rather than small departments within the IDB," Hariri told AFP .

Trade financing is currently administered through two major import and export schemes, as well as several programmes run by a number of departments within the IDB.

Hariri said total trade amongst member countries only amounts to about 11 percent of global trade.

"We hope to increase that percentage to 15 percent," he said.

The new import-export entity will have initial funding of US$500 million and is to be located in Jeddah, where the IDB is based, along with a regional office in Dubai.

Hariri said it will be formally announced at the 30th annual meeting of the IDB's board of governors which is to be held in Putrajaya on June 23-34.

The IDB, which was established in 1974, is seen as the investment arm of the Organisation of the Islamic Conference (OIC), which comprises 57 countries.

Persistence of poverty

Hosted by current OIC chair Malaysia, the meeting of the board of governors - made up of finance ministers from member nations - will be held in conjunction with an OIC trade fair and a series of Islamic finance sector meetings.

Issues to be discussed include the persistence of poverty and the impact of the World Trade Organisation rulings on member countries.

In addition, three memoranda of understanding will be signed, one on scholarships with Malaysia, and two with member countries related to capacity building, Hariri told a press briefing.

IDB officials are eager to put the spotlight on the bank's activities, which include project financing and managing special funds and trust funds.

In addition to the new trade financing body, the IDB has made successful forays into Islamic bonds, or sukuk, last month launching a US$1 billion Trust Certificates Programme.

Economists say there has been a boom in Islamic banking in the aftermath of the Sept 11 terror attacks in the United States which saw investors pull funds out of the West.

The General Council for Islamic Banks and Financial Institutions estimates that the global Islamic banking market, which is growing at 10 to 15 percent annually, to be worth US$270 billion in 2004.