Landmark Islamic finance publication
Simon Crean
posted Friday, 12 February 2010
Trade Minister Simon Crean today launched the Australian Government’s first-ever comprehensive publication on Islamic finance.
The booklet Islamic Finance provides a detailed explanation of the opportunities that booming Shariah-compliant investment and banking offers Australia’s financial services sector.
Australia is well positioned to service almost 1 billion Muslims who live in the Asia-Pacific region and to tap into petrodollar liquidity.
“Islamic financing is a crucial plank in the Government’s strategy to make Australia a financial hub in the Asia Pacific region,” Mr Crean said.
“There is huge potential in Islamic financing which is estimated to be worth more than A$1 trillion (US$822 billion) and has grown at 10 per cent per annum for the past decade.”
“Islamic financing is a booming sector and Australia should be part of the action.”
Islamic finance is based on the principles of Islamic law - or the Shariah - which prohibits the earning of interest. Instead, there is a focus on profit sharing based on the buying and selling of tangible assets such as property.
Coinciding with today’s launch of Austrade’s Islamic Financepublication is the launch of Westpac’s Special Interbank Placement for Islamic institutions, which is a welcome development.
Westpac will offer a short term wholesale investment structure for Islamic institutions based on the buying and selling of commodities.
Mr Crean said there were many opportunities for Islamic financing in Asia, which is the fastest growing region in the world.
“The continued growth in major Asian economies will create a need for resources-related services and infrastructure, which are ideal assets for forms of Islamic financing,” he said.
Key opportunities for the Islamic finance industry include:
- attracting Islamic banks to establish operations in Australia;
- Australian-based banks providing Shariah-compliant investment and financing products across the Asia Pacific and Gulf regions;
- Shariah-compliant managed funds; and
- attracting investment in Australian assets and business from overseas Shariah investors
In 2008, Mr Crean visited Malaysia where he discussed Islamic finance and later ensured Islamic finance was considered in the industry-led review, Australia as a Financial Centre. Also known as the Johnson Review, this study made important recommendations on Islamic financial services for the removal of regulatory barriers and parity of tax treatment. The review is currently being considered by the Government.
Some 365,000 Muslims live in Australia and would use Islamic financial services if they were more accessible.
The report is available at www.austrade.gov.au
Tags: Financial services, Investment, Trade