BANKING - Islamic gold dinar gains ground in Malaysia

KUALA LUMPUR: Malaysians are embracing gold dinars which were introduced last month by the northern state of Kelantan to promote usage of Islamic currency as an alternative to paper money, an official said yesterday.

The gold coins and silver dirhams were introduced in early August by the Islamic opposition party PAS which rules Kelantan state to coincide with the start of the Muslim holy fasting month of Ramadan.

Umar Ibrahim Vadillo, chief executive officer with Kelantan Golden Trade, said the first batch of gold and silver coins worth two million ringgit ($625,000) had been sold out in less than a month.

“There is enormous response in Malaysia. Their reaction is unbelievable,” he told reporters.

“In Kelantan, businesses including garage owners and taxi drivers are using the gold and silver coins.” Civil servants in Kelantan are paid up to 25 percent of their salary in dinars and dirhams if they wish.

Umar said three more Malaysian states controlled by the opposition—Selangor, Kedah and Penang—had indicated interest in minting similar coins.

“By the end of the year, we anticipate sales of the dinars and dirhams to hit 60 to 70m ringgit,” he said.

According to Islamic law, the dinar coin is 4.25 grams of gold, while the dirham is 3.0 grams of pure silver.

Source : http://www.thepeninsulaqatar.com/business-news/125436-islamic-gold-dinar-gains-ground-in-malaysia.html - Sept 5, 2010