European countries trade within the European Union (EU). Southeast Asian countries trade within ASEAN. Continental pacts exist for North American countries. African countries have launched the largest free-trade zone ever conceived. The Asia-Pacific has joined through RCEP, the largest economic bloc by population. The days of nations negotiating individually with one another are mostly gone. Most countries, especially mid-sized and smaller ones, understand that they negotiate, compete, and withstand external shocks better as a bloc than as individual voices.
This isn’t simply a matter of ideology; it’s mathematics. Trading blocs provide three advantages not easily obtained elsewhere. First, size: a manufacturer in a small domestic market can serve hundreds of millions of customers, justifying investment in a larger, more modern facility. Second, leverage: 30 nations acting collectively extract better conditions from a superpower than thirty nations acting individually. Third, resiliency: when war breaks out thousands of miles away or a pandemic interrupts a supply chain, nearby neighbours are more readily available than remote strangers.
Now, the Organization of Islamic Cooperation (OIC) brings together 57 nations across four continents. As a group, they sit on a massive share of the planet’s oil and natural gas, control the critical maritime chokepoints that global trade must pass through, and make up roughly a quarter of humanity. By any metric, that is an absolute economic powerhouse. So, the rational question is: why does the Muslim world trade so little among itself?
Let us examine some data. Between 2000 and 2017, intra-OIC trade increased from roughly 13 per cent to 18-20 per cent of total trade among OIC nations. While this increase is real and worthy of recognition, it pales compared to intra-EU trade, which consistently exceeds 70 per cent, and intra-ASEAN trade, which currently exceeds 25 per cent. Furthermore, in 2025, the OIC set a goal of achieving intra-OIC trade equal to 25 per cent of all trade among its member states.
Muslim-majority nations continually convene and issue statements expressing their commitment to greater unity. For over half a century, they have supported creating a common market for the Ummah—a single economic space encompassing all Muslim-majority nations. Therefore, it is neither lack of resources nor lack of solidarity, but rather the underlying infrastructure that facilitates the movement of goods, services, and capital between nations.
Three primary obstacles account for most of the gap between intra-OIC trade and intra-bloc trade for successful trading blocs.
The first obstacle is concentration. Almost all intra-OIC trade occurs along limited routes. The Gulf States trade primarily in energy products. Turkey and Iraq exchange goods, and so do Indonesia and Malaysia. Extensive areas of the Muslim world—the Sahel region, Central Asia, and significant portions of South Asia—are under-traded with other Muslim-majority nations. Thus, while the overall trend shows an increase in intra-OIC trade, vast swaths of the Muslim world remain relatively disconnected.
The second obstacle is composition. Economies in successful trading blocs generate wealth through intra-industry trade. The engine is manufactured in one nation, the transmission in another, and the automobile assembled in a third, with components crossing national boundaries multiple times. Conversely, intra-OIC trade remains primarily raw materials and basic manufactures—crude oil, palm oil, cotton, and clothing. While valuable, these products do not create interlocking economies as a joint supply chain would.
The final and most tractable obstacle relates to friction at the border. Tariffs are only one component of friction and often a minor one. More insidious barriers include non-tariff barriers (NTBs) such as slow customs processes, duplicated requirements, inadequate port and road logistics, insufficient low-cost financing options for trade activities, and conflicting certification standards. There is also a general lack of information about what products a neighbouring country produces. A halal-certified food item may be detained not due to objections to its certification but because each nation wants it retested or recertified under its own rules. This friction acts as a tax on trade collected by no one and paid by everyone.
While none of this is unique to the Muslim world and none is irreversible, we propose to show how ASEAN went from five small economies with limited trade and distrust 50-plus years ago to today’s large and cohesive economic unit. Similarly, Europe began as six nations pooling two industries, coal and steel, and nothing more. Their approach was the correct methodology: start small, start tangible, demonstrate that cooperation pays off, and allow successes to expand your circle. There is no lack of ambition to achieve meaningful economic integration among Muslim-majority nations, as there exists a concept known as an “Islamic Common Market,” a unified economic space encompassing all Muslim-majority nations. It has existed since at least the 1970s. Rather, the failure has been one of methodology: in attempting to construct a large-scale 57-member agreement among diverse member states. No group of 57 nations could reasonably expect to reach consensus on all elements simultaneously.
What should encourage rather than discourage is that several OIC resolutions propose methodologies to address these shortcomings. For example, at a foreign ministers’ conference in Kuala Lumpur in 2000, member states agreed that developing the Islamic Common Market should be step-by-step, building from sub-regional groupings rather than imposing it from the top down. The same resolution identified specific regional groups either forming or planned: those in West Africa, Central Asia, among Arab countries, and one for Muslim-majority nations in South and Southeast Asia.
Five OIC member states—Bangladesh, Brunei, Indonesia, Malaysia, and the Maldives—are geographically grouped in South and Southeast Asia, share oceans and religions, and together have over 400 million consumers. There is no economic framework specifically designed to facilitate cooperation among these five countries. In other words, no economic framework among them compares to those in the Gulf (Council) or West Africa (Community). So the group of these five countries did exist, and remains dormant, 30 years later. It includes a name: SEACO (Southeast Asian Cooperation), which is centred in Dhaka. It has a quietly supportive history extending back to an April 1992 Chamber of Commerce meeting in Chittagong. If we believe this plan is ready to emerge from dormancy, we will argue that the moment has arrived. SEACO was intentionally built on a small scale, and we believe this small scale is exactly what enables SEACO to succeed where previous attempts to construct large-scale economic frameworks have failed over the past 50 years.
The five-country case: SEACO involves five OIC member states: Bangladesh, Brunei Darussalam, Indonesia, Malaysia, and the Maldives. These five OIC member states are the only significant cluster in the world without a separate economic platform. The Gulf has its Cooperation Council. West Africa has its Community. Central Asia has the Economic Cooperation Organization. The five countries in question share the Bay of Bengal, the Andaman Sea, and the Strait of Malacca. There exists no economic platform for them collectively.
They are not a small or insignificant grouping. Together, their populations exceed 320 million. Adding the Muslim populations in southern Thailand, the southern Philippines, and Muslim traders passing through Bangladesh’s ports, and considering that the two primary markets for goods and services in this region are predominantly Muslim, the potential market grows to well over 400 million people.
According to SEACO documentation, the overall consumer market in this region is approximately 423 million people. The combined gross national product (GNP) of the five member countries is measured in trillions of dollars when calculated using purchasing power parity (PPP). Additionally, the combined workforce of the five member countries approaches 194 million people. This represents a considerable economic force.
What gives these five countries promise is not their size but their compatibility. Successful trade blocs rely on complementarity, meaning countries with different needs satisfied through trade. SEACO shows this complementarity well. Bangladesh has a large, youthful workforce and labour-intensive manufacturing. Brunei brings energy and downstream petroleum products. Indonesia offers natural resources, scale, and regional influence. Malaysia brings industrial sophistication, deep Islamic financial services, and a mature halal marketplace. The Maldives offer high-quality tourism and small-island services. These are not five competitors marketing the same products; they are five parts of a functional economic puzzle.
They occupy valuable geographic locations. SEACO spans one of the world’s busiest marine transportation routes—the sea lanes used by nearly all international oceanic trade passing between Europe, Africa, the Middle East, Asia, and Oceania via the Suez Canal or Cape Horn/Bering Strait. Investment in port development, shipping linkages, customs facilitation, or digital trade infrastructure here yields higher returns due to existing flows of goods and passengers. Thus, investment not only generates additional traffic but also leverages existing volume.
A long road to where we are today: SEACO is not a new idea. Rather, it has substantial documentation dating back over twenty-five years in its support. Following meetings held in Chittagong in August 1992 and Bandung during that same month regarding SEACO, both meetings formally recognised SEACO as a viable option for building towards an Islamic common market. At the 24th session of the OIC Council of Foreign Ministers in 2000, resolution #6/24-e officially listed SEACO as one of the possible sub-regional building blocks for the creation of an Islamic common market. Since then, the Islamic Development Bank (IsDB) has also expressed support for SEACO through letters sent by its president in 2009. Further evidence of commitment was shown when a roundtable conference convened in Kuala Lumpur in May 2012 sponsored by the government of Malaysia included senior officials, business leaders and scholars from each of the five participating countries in revisiting interest in developing an SEACO concept and subsequently recommending exactly those elements identified above that have been established to date — specifically: a dedicated foundation for SEACO; an academic network for SEACO; and a phased roadmap for establishing SEACO.
Recommendations for creating an SEACO platform were subsequently converted into actual organisations. Specifically, the SEACO Foundation is based in Dhaka. The SEACO universities network has taken formal form through a memorandum of understanding (MOU) executed between the OIC’s lead university, the Islamic University of Technology, and other universities interested in participating in SEACO. At the tenth D-8 summit, held in Dhaka in June 2021, Bangladesh’s head of government referred to the SEACO concept as a complementary sub-regional initiative. Both the OIC Secretariat and the World Islamic Economic Forum have designated the SEACO Foundation as a partner organisation. Therefore, although much remains to be done to establish an SEACO platform capable of delivering tangible results, the structural framework has been put in place to enable rapid progress.
[To be continued]
Salahuddin Kasem Khan is associated with the SEACO Foundation, Dhaka. [email protected]. M Kabir Hassan is Professor of Finance and Moffett Chair at the University of New Orleans; he serves on the AAOIFI Ethics and Governance Committee and chairs the AAOIFI Education Board, which oversees AAOIFI’s professional certifications. [email protected]
