MCCA Welcomes New Board Members & Celebrates Significant Business Achievements

At the recent Annual General Meeting
(AGM) of the MCCA Group, Dr. Aladin Zayegh on behalf of the Chairman Dr.
Akhtar Kalam welcomed Mr. Hyder Gulam and Mr. Mohammad Helmy to the
MCCA Ltd. Board.
Dr. Zayegh also acknowledged and extended his appreciation and gratitude
to the MCCA Group’s directors, management staff and above all our
customers for their contribution and support of MCCA.
MCCA started business in 1989 as a registered cooperative in the inner
Melbourne suburb of Burwood with $20,000 and a vision to address the
financial, banking and investment needs of the Australian Muslim community
by offering Shariah-compliant housing mortgage loan products.
Regarded as the pioneer of Islamic finance in Australia, MCCA now operates
from two modern offices –
169 Sydney Road Coburg (Head Office and Victorian Branch)
125 Haldon Street, Lakemba (Sydney / New South Wales Branch)
The MCCA Ltd. Board of Directors is comprised as follows –
Dr. Akhtar Kalam – Chairman
Dr. Zuhair Segu Dr. Abdul Khair Jalaluddin Dr. Zehdi Ferkh
Dr. Aladin Zayegh Mr. Hyder Gulam Mr.Mohammad Helmy
This year MCCA celebrated its 21st birthday – a significant milestone for the
business and a testament to its steadfast commitment to the organisation’s
vision and values of Integrity, Excellence, Innovation, Faith and People.
These very important values have provided the foundation for MCCA’s business longevity, direction, financial success and product development.
Furthermore, the Directors remained committed to the MCCA’s long term
objective to be Australia’s first Islamic retail bank.
In 2009 MCCA developed and launched the ASIC regulated MCCA Income
Fund in response to a growing demand within the Australian Muslim
community for a Shariah compliant investment based on ethical investing
principles as an alternative to nontraditional / mainstream investments.
The MCCA Income Fund has been well received by the Muslim community
and last quarter the Fund targeted a distribution of 5% return (annualized).
New product development plans are well advanced and MCCA Group is on
target to release three new Shariah compliant products by the second
quarter of 2011 –
Property Trust
Superannuation Trust
Equity Trust
During his AGM address Dr. Zayegh also made mention of the Australian
Taxation Board Review that is currently underway.
Dr. Zayegh said he welcomed the Review and hoped that it will address
many of the anomalies that have adversely impacted on Islamic Finance
and future Islamic Banking products and product development / innovation.
Dr. Zayegh concluded, “We are confident that the MCCA Group will
continue to grow and develop new and innovative Shariah compliant
financial products and services demanded by Australian Muslims and in
doing so provide the benchmark for the Australian Islamic Banking & Finance
industry.”

A dedicated Islamic finance media company - in Melbourne

A revolution in Islamic finance media ...



The Islamic finance industry has long suffered from an absence of very high quality media. In some instances the media that has existed has found itself bowing to the commercial pressures of sponsors or advertisers. And the reality is that the people who suffer most are the readers of these products – as they scramble to find out what is really going on amidst the hype and misinformation.

Melbourne-based Eaglemont Media has changed all of that with the simultaneous launch of three Islamic finance media products aimed at both the professional and the investor with a keen interest in the Islamic finance sphere.

The Islamic Globe – a weekly e-newspaper that does not simply report the news but digs behind the news to help readers understand what is really going on.
While there are numerous sources of news within the industry, many of them simply reprint press releases verbatim without questioning the authenticity of some of the data contained in them. The result is a very biased view of the news – written in large part by the people who write the press releases. The Islamic Globe changes all of that by digging into the story behind the press release to find out what is really going on – as well as covering stories that everyone else has missed. The result is an indispensable weekly guide to what is really going on around the globe in the industry.


The Compass – is a monthly e-magazine that is produced as a supplement to The Islamic Globe and carries features, insights and opinion from professional journalists and industry pundits.
What readers will not find in the magazine is self-serving promotional material written by ‘industry experts’ whose only agenda is raising their own profile and getting job offers. The result is a forum that addresses the difficult questions and provides a realistic overview of the state of the industry. But just because this is a serious business does not mean that it has to be a chore to read about it. The Compass is written in a lively and engaging style and uses some of the best young designers in the world to give it an edgy and contemporary feel.


TheIslamicGlobe.com – is an Islamic finance repository of information about the industry and a social media site where participants can get involved with each other and share insights, contacts and knowledge. TheIslamicGlobe.com will rapidly establish itself as a must-visit for the professional and investor alike – with news, views, insights and thought provoking longer pieces geared at getting the industry thinking.

The stunning visual impact of all of Eaglemont Media’s products comes from a new, vibrant and thoroughly exciting creative team called MixMediaWorx. MixMediaWorx is a full service creative, design and branding agency with a strong pedigree in working on leading brands – a pedigree that belies the relative youth of the company. The MixMediaWorx team is based in Brunei.


At long last it seems as if the Islamic finance industry is about to get the kind of incisive media that it has long waited for.

Australian publisher for the world’s first book for Islamic bank marketers

Here is a copy of the press release for the book launch:

July 14th sees the launch of a new book aimed at helping those who are responsible for marketing and corporate communications within Islamic banks do their jobs better, representing a world first - and all from an Australian-based book publisher.

Brilliant Marketing for Islamic Banks is written by Paul McNamara and is published as an e-book in a variety of digital formats by Business Bookclub. With the proliferation of digital readers and applications, Business Bookclub also launches its new website www.businessbookclub.com, publishing and selling digital publications only.

Paul McNamara, a well known Islamic finance journalist and co-founder of Yasaar Media, a Dubai-based Islamic finance research and media company, has extensive experience both in marketing in the financial services sphere and in Islamic finance. He has launched Islamic finance publications in the UK, the UAE, and Australia.

Commenting on the launch of the book, Mr. McNamara said, ‘The global financial crisis has caused most financial institutions – conventional and Islamic – to reconsider how they do business and a core part of this is how they present themselves to the public through both marketing and corporate communications. Very often the people doing these jobs have to communicate in English, which is not always their first language, and the aim of this book is to give these people the right tools to do their job brilliantly rather than just well. The book is filled with linguistic tips and tricks to help this group communicate brilliantly.’

David Parker, publisher of Business Bookclub said, ‘The timing of the launch of this book could not have been better: it comes at a time when many Islamic bank marketers are trying to readjust their expectations of what works and what doesn’t after the first wave of the global financial crisis. The fact that the book is being published in multiple digital formats will tell you a lot about the projected audience for this book: young, savvy, and street-smart marketers within Islamic banks across the globe’.

Brilliant Marketing for Islamic Banks by Paul McNamara is available in a variety of digital formats from www.businessbookclub.com priced at US$35.

ENDS

Note to editors: Business Bookclub has been operating since 2002 producing state-of-the-art books and e-books for discerning niches within the global business market.
For further information contact:
www.businessbookclub.com

New leader - new leads?

Changes at the top in any government inevitably means change.

Under Kevin Rudd there were demonstrable initiatives progressing Islamic finance

What can we hope to expect under a new leader?

Meanwhile News Weekly has this to say ...

Bill Muehlenberg, a commentator on contemporary issues, and lectures on ethics and philosophy, had this to say in News Weekly, 'All over the Western world, governments are bending over backwards to accommodate sharia finance. This is an interest-free banking and finance system which Muslims want to have run as a parallel economic stream in Western nations.

The United Kingdom leads the world in this practice, and now Australia and other nations are seeking to get their share of the action.

Consider a speech made by Australian Assistant Treasurer, Senator Nick Sherry, on April 27 in Doha, Qatar. He told his Muslim audience how keen Australia was to embrace sharia finance.

He said: "On 15 January this year, the Government released the final report of this process, known as the Australia as a Financial Centre (or the Johnson Report). The report concluded that Australia has arguably the most efficient and competitive financial sector in the Asia-Pacific region, but there are further opportunities to expand our exports and imports of financial services.

"And it made a range of important recommendations, including specific steps to ensure Islamic finance is enabled in Australia. And that's exactly what I now want to address. The competitiveness of Australia's financial services sector offers great opportunities for Islamic banks and financial institutions to do business in our country, or to export their products to Asia from a strong, stable and extremely well regulated regional base.

"It, of course, also presents opportunities for Australian-based banks and financial institutions to develop Islamic or Shariah-compliant finance products for domestic and international markets. Australia is well aware of the potential for Islamic finance in developing our nation as a financial services centre. The Financial Centre report I just mentioned includes two specific recommendations on Islamic finance.

"First, the report recommends the removal of regulatory barriers to the development of Islamic finance products in Australia. Secondly, the report calls for an inquiry by the Board of Taxation into whether Australian tax law needs to be amended to ensure that Islamic financial products have parity of treatment with conventional products.

"It is with great pleasure I can confirm today, here in Qatar, that as the first major instalment in the Government's response to this landmark report, I have directed the Board of Taxation to undertake a comprehensive review of Australia's tax laws to ensure that, wherever possible, they do not inhibit the expansion of Islamic finance, banking and insurance products.

"Australia's decision means we will be among the first OECD countries to conduct this kind of system-wide review and it will mean we are among the very first to get all the tax settings right. I know the United Kingdom has acted on a few discrete areas, but the review I am announcing is thoroughly comprehensive.

"Islamic finance is a rapidly growing part of the global financial system and Australia is in an excellent position to capitalise on that growth, but we have to ensure our tax system doesn't unnecessarily prevent that from happening. Today's announcement is a major step in ensuring that we get the settings right."

Australia, like other Western nations, wants to gain financially from such moves, but it seems unaware that it is in fact cutting its own throat. Sharia-compliant finance is simply part of the wider move to set up sharia law in the West, which in turn is part of the larger goal of global Islamic domination.

Indeed, the push for sharia finance is a fairly recent development of the Islamic community, primarily promoted by radical Islamists. As former Muslim Patrick Sookhdeo says in his important book, Understanding Sharia Finance (Isaac Publishing, 2008), it was a militant Pakistani Islamist who initiated this drive.

Says Sookhdeo: "The concept of an Islamic economy was integrated into the discourse of the Islamist struggle to weaken the West in preparation for the ultimate phase of establishing Muslim political hegemony in the world."

A separate Islamic economic system in Western nations is part of the push for a separate political and legal system. Committed Muslims see sharia law as the only true law, and consider Western, non-Islamic laws to be heretical - hence the push for separate spheres of Islamic sovereignty.

Two-tiered system

Of course, no nation can survive long with a two-tiered legal system, financial system, and so on. If immigrants seeking to come to Australia refuse to integrate into the Australian way of life, including its economic and financial system, then social cohesion is doomed from the start.

However, many Muslims coming to the West have made it clear they do not intend to integrate with the host nation, but to set up separate Islamic enclaves within it. And as the number of Muslims increases, the final goal of the complete Islamisation of society can take place.

As Sookhdeo notes, "Islamic economics became an efficient weapon in the hands of Islamists planning for Islam's domination of the world-system in all fields: political, military, economic and cultural. For them, the establishment of a worldwide universal Islamic state under sharia is God's command to Muslims of all generations and the real aim of jihad."

Speaking of jihad, one should add that another major concern is how Islamic banking and finance are a major means of funding international Islamic terrorism. Islamists seek to redistribute wealth in sharia finance based on the zakat, the obligatory donation all Muslims are supposed to pay.

This 2.5 per cent tax is in effect a type of income tax, and, according to traditional Islamic teaching, the zakat is to be used in the funding of jihad. Says Sookhdeo: "According to Qur'an and sunna, God commands Muslims to devote their wealth and their lives to jihad."

He explains that sharia finance "is part of a wider agenda of jihad, in accordance with the vision of Islamist ideologists of the overthrow of non-Islamic systems and the establishment of a pan-Islamic Caliphate that will rule the earth".

He offers this sober warning: "Western governments and institutions now gladly cashing in on the Islamic market are falling into the same trap into which Western governments fell when they supported Islamist radicals in fighting the Soviet Union. They are supporting the rise of a powerful system they cannot control and that might turn against them."

In the very same way, Western governments last century were happy to prop up communist dictatorships which were dedicated to overthrowing the West. Lenin once quipped that "the capitalists will sell us the rope with which we will hang them".

That is happening again today. A new enemy of the free West has arisen, and foolish, naïve and short-sighted Western leaders are more than happy to aid and abet the Islamists as they seek the ultimate overthrow of all non-Islamic nations.'

Read the original article yourself here.

Australia and Islamic finance in the world's headlines again

It had to happen sooner or later - Australia's Islamic finance initiaitves would make the headlines in Arab News.

Respected Islamic finance writer Mushtak Parker had this to say, 'In a clear statement of intent, the Australian government has launched a series of initiatives that when completed and hopefully adopted will make the country one of the most proactive Islamic finance markets in the Asia-Pacific Region.

Australia is a relative newcomer to Islamic finance and has been left behind by the surge in interest in other Asia-Pacific countries such as Korea, China, Hong Kong, Japan, Singapore and Thailand. Muslim countries in the region, especially Malaysia, Indonesia and Brunei, are spearheading the recovery in global Islamic finance, especially through sukuk issuances and consumer finance.

Thus far Australian financial institutions have been limited in their involvement in the Islamic finance space. Lately, Australian investment bank and financial services provider, Macquarie Group, was engaging with Gulf Finance House to invest in equity for an Islamic asset management joint venture as part of a capital restructuring plan, but the plan never took off. Australian fund manager LM Investment Management Ltd. was involved in the launch of the LM Australian Alif Fund in 2009, which exclusively sought to invest in selected diversified Australian realty portfolios.

Sen. Nick Sherry, assistant treasurer of Australia, at the launch of a new book, titled "Demystifying Islamic Finance — Correcting Misconceptions, Advancing Value Propositions," in Sydney recently confirmed that the Australian Board of Taxation at his request is undertaking a comprehensive review of Australia's tax laws "to ensure that, wherever possible, they do not inhibit the expansion of Islamic finance, banking and insurance products."

The terms of reference for the review include recommendations on Commonwealth (federal) tax laws, and findings on State and Territory tax laws, that may be impediments to Islamic finance. The board will consult progress in this respect in other jurisdictions such as the UK, Luxembourg, France, Malaysia and Indonesia.

"The guiding principle for the board is that the tax treatment of Islamic financial products should be based, wherever possible, on their economic substance rather than their form. I would emphasize that this review is not about creating special treatment — which no one in this area has ever asked me for. Rather, it is about creating a level playing field for the provision of Islamic financial products into the Australian market," he said. Indeed the mandate of the Board of Taxation is to provide the government a final report by June 2011.

This review should also be seen in conjunction with a cross-government review of the regulatory environment launched by Australian Minister for Financial Services Chris Bowen with a similar goal of flattening out any inhibitors to Islamic finance operations in Australia.

The government is keen to emphasize the benefits that Islamic finance can bring to Australia and its great potential for creating jobs, wealth and contributing to financial and social stability. Australian bankers stress that there is a growing awareness - both in the community and also among policy makers - of the potential of Islamic finance in Australia. "We are taking a keen interest in ensuring there are no impediments to the development of Islamic finance in this country, to allow market forces to operate freely. This is in line with our commitment to foster an open and competitive financial system, and a socially inclusive environment for all Australians."

Australia has one of the world's largest contestable pools of investment fund assets. At the end of 2009, Australia had A$1.3 trillion of funds under management, which is equivalent in size to the domestic equity market capitalization and almost 110 percent of the country's nominal GDP. Australia's investor base is both sophisticated and outward looking, with significant exposures to global markets and alternative asset classes.

The Australian asset management industry has proven strengths in portfolio construction, risk management, wealth advisory, distribution capabilities, funds administration, and custody services - and is looking to export services to South East Asia and the Middle East region. Similarly, the sector has a strong and deep set of financial management skills and expertise, along with complementary skills in areas such as the law, that can be brought to the table in the wholesale Islamic finance sector. "We also have global leading skills in real estate and infrastructure financing — two areas with great potential in relation to wholesale Islamic finance activity as they both involve very real underlying assets, something we all know is needed in Shariah-compliant projects," stressed one Australian banker.

In the last year or so, the potential benefits, that Islamic finance could bring to Australia has been identified by several key independent reports. The Australian Financial Center Forum published a report that identified Islamic finance as a possible means of accessing offshore pools of savings from the Middle East, to provide more diversified and competitive funding for Australia's investment needs and access to such products to the country's half a million Muslims under financial inclusion policies. The report encouraged amendments to the tax law that would ensure that Islamic finance products have parity of treatment with conventional products.

Sen. Sherry said the book "Demystifying Islamic Finance" is important because it "will go a long way toward dispelling the misconceptions which have, in some quarters, built up around Islamic finance."

Australia like some other countries also have those opposed to facilitating Islamic finance on the misconceived grounds that "Islamic finance is used to spread terrorism, that it is a vehicle to promote the world domination of Islam over other faiths, or that it is designed to replace conventional financing."

Sen. Sherry dismissed these views as ridiculous but admitted that they are of concern, albeit it small. He called for continuing the community dialogue, increasing awareness of the truth and highlighting the facts that Islamic finance like its conventional counterpart is bound by strict laws and regulations, including anti-terrorism and anti-money laundering laws.

"In addition, the Shariah prohibition of betting and gambling means that Islamic banks can use fewer risk-hedging techniques and instruments than conventional banks. As the world learned to its cost, the excessive use of risk-hedging instruments led to the growth of 'toxic assets' during the global financial crisis," he explained.

During a visit to the Middle East in April, Sen. Sherry reiterated that "the Gulf region is at the heart of international Islamic finance, which has experienced very strong and very consistent growth, even in the face of the global financial crisis, growing at around 10 percent per annum for the last decade. The value of worldwide Islamic financial assets was $822 billion in 2009 and this is projected to reach $1.6 trillion by 2012. Moody's Investor Services see a global market potential of at least $5 trillion at maturity. Australia is in a great position to capitalize on this growth, particularly in the wholesale market — one of our closest neighbors is Indonesia, with the world's biggest Islamic population and we have a global leading edge in funds management. My message is that in Australia we have what the wholesale Islamic finance market is calling out for. These opportunities extend across the board - to Islamic insurance, or takaful, and to Shariah-compliant asset-backed securities, or sukuk."

The Australian initiatives in facilitating Islamic finance must also be seen in the context of the vital relations between Malaysia and Australia in this area. Last month, Governor of Bank Negara Malaysia Zeti Akhtar Aziz and Australian Treasury Secretary Ken Henry signed a memorandum of understanding (MoU) to facilitate cross border co-operation in the financial services industry, including Islamic finance and the regulation of financial products. It also follows up on the deliberations of the high-powered Malaysian business and banking delegation that visited Melbourne and Sydney in December 2009. The key areas of focus under the MoU are capacity building and human capital development in the financial services industry; information exchange and experience in the legal, regulatory and supervisory frameworks; facilitating the development of an effective and conducive financial market infrastructure; and enhancing cross-border financial activities, including research on Shariah matters in Islamic finance products and services to promote consistent application for cross-border transactions.

The original article can be found here.

A sobering insight for Australia's retail Islamic finance industry

I have just come across a fantastic summation of the 'death throes' of the retail Islamic finance market in the UK written by someone who was part of the development itself - Junaid Bhatti, formerly of Islamic Bank of Britain.

Have a read here http://www.respublica.org.uk/blog/2010/06/why-britain%E2%80%99s-islamic-finance-industry-flopped

It is the best article I have seen yet on the trials and tribulations that a nascent industry goes through when it is being born. The messages for Australia are loud and clear: there has to be proper marketing of products on proper grounds (not 'special pleading') - and the government really needs to get behind it.

Do yourself and favour and check it out.

UniNews Islamic Finance Conference 2010

Islamic banking and finance has been around for centuries yet has not been widely discussed within Australia. On the 8 and 9 of June the second annual Islamic Finance Conference was held at the Rendevous Hotel in Melbourne.

Dr Ishaq Bhatti, the Director of Islamic Banking and Finance Program at at for La Trobe University, felt the conference was a huge success. This year conference was attended largely by industry experts, bankers, financiers, law firm, ASIC, APRA and employees of the board of taxation who will actively be involved in developing Islamic Finance laws in Australia.

“We discussed various topics over the two days including alternative ethical based Microfinance and its future in Australia to the opportunities for Islamic finance in an Australian market,” he said.

Dr Bhatti and his colleague Dr Hayat Khan, a lecturer from the School of Economics and Finance spoke along side prominent figures within the financial industry including, Senator Nick Sherry the Assistant Treasurer of Commonwealth of Australia and Professor Akhtar Kalam the Chairman of the Muslim Community Co-operative Australia (MCCA).

Islamic banking and finance is one of the fastest growing areas in the international financial environment, but the market for Islamic finance has enormous potential for growth despite it still being small compared to conventional finance.

La Trobe has paved the way for Islamic finance in Australia as we provide the very first Master of Islamic Banking and Finance course (MIFB) which was launched by Senator Sherry in July 2009 at the first and the largest ever Islamic Banking and Finance Symposium in Australia.

Acting Vice-Chancellor Tim Brown said La Trobe has taken on a leadership role in the way finance is taught in his opening speech at the conference.

“Conventional and Islamic finance are merging to demonstrate a bright future for peace and love among various multi-faith and multicultural communities. This is a reflection of our first group of MIFB students who are from various parts of the world, from North and Central America to Africa and Asia, all from different faiths learning about how and what Islamic Finance can offer to humanity, so they can take this knowledge back to their countries” he said.

Sherry reckons Australian banks might benefit from Islamic finance

According to a report in The Australian, 'The development of Islamic finance in Australia could provide banks with an alternative source of wholesale funding and draw Islamic banks to set up operations in the country, Assistant Treasurer Nick Sherry said today.

As part of a push to promote Sydney as a regional financial hub, the federal government has pledged to win a greater slice of the regional Islamic finance market by amending tax laws.

The government said such changes would draw fully-fledged Islamic banks to Australia, attract investment in Australian assets from Shariah investors, offer new funding routes through Sukuk bonds and allow the establishment of Shariah-compliant investment products.

"Islamic finance could provide an alternative source of wholesale funds for Australia's financial institutions -- particularly as a result of excess liquidity generated from oil revenues in the Middle East -- and the increase in economic growth in countries with significant Muslim populations, such as Indonesia, India and Pakistan," said Mr Sherry

He noted that the value of Islamic finance assets worldwide was projected to almost double to $US1.6 trillion ($1.96 trillion) by 2012, which shows the "enormous extent of the opportunities available for both business and government".

The government last month commissioned a Board of Taxation review to ensure that, where possible, Islamic financial products have tax parity with conventional products. The review is due to report back by June 2011.

Australia, which neighbours the world's biggest Muslim nation, Indonesia, was hoping to capitalize on its geographic advantage, mr Sherry said.

"We also have global leading skills in real estate and infrastructure financing -- two areas with great potential in relation to wholesale Islamic finance activity as they both involve very real underlying assets, something we all know is needed in Shariah-compliant projects," Mr Sherry said.

Australia's major financial institutions already are moving into the Islamic finance space.

Australia, food security, Islamic finance and the Gulf ... The story So Far

Qatar, it seems, is placing renewed emphasis on home-grown agricultural production over foreign farmland buys as it seeks to increase its food security according to Reuters on June 1st.

According to Reuters farming in the GCC is a challenge due because of climatic and soil issues. In spite of all of these barriers Qatar and other GCC states are investing in technology that would help secure food supplies domestically.

"Qatar's priority right now is to put in place the resources to enhance domestic production," Mahendra Shah, director at the Qatar National Food Security Program (QNFSP), told Reuters. Food price rises as commodities ran up to record highs in 2008sent a shock through the Gulf, one of the world's biggest food importing regions, and sent governments on a quest to secure future food supplies and defend against future inflationary rises in the prices of basic foodstuffs. Only a tenth of Qatar's around 65,000 hectares of arable land is being used for agriculture due to lack of fresh water supplies, said Shah in a telephone interview to Reuters.

The Reuters report also stated that Qatar was looking at ways to produce more water for farming in a way that was less detrimental for the environment than standard desalination plants. "We are looking for ways by which we can desalinate water through the use of solar energy to minimize the water used straight from wells," he said. Even relatively high cost domestic development would be justified given the strategic importance of securing food supplies.

"The cost is all relative to what happens in the world market and in the end even if the cost is high we have to start supporting our local production because that's what gives us food security," Shah said. Once the areas with the highest yield potential were earmarked, Qatar hoped to provide itself with 80-90 percent of its vegetable and livestock needs, Shah added. The tiny Gulf Arab state, one of the richest countries in the world, currently imports around 80-90 percent of its needs.

Where Australia comes in

Investing in farmland abroad would still be key to securing water intensive crops such as rice and wheat, said Shah. Qatar imports 98 percent of the rice and wheat it consumes, Shah added. Qatar, unlike its Gulf Arab neighbors, has concentrated on buying farmland in developed rather than developing countries. Still, it may look at buying land in developing countries in the future, Shah said. Hassad Food, owned by Qatar's sovereign wealth fund, formed a Sydney-based subsidiary in December called Hassad Australia to to buy farmland for wheat and livestock production.

The simple economics of supply and demand will doubtless win out in the end - but in the interim there will be a significant amount of political see-sawing to keep entrenched interests happy.

Australia to get Islamic finance friendly

Australia is certainly raising its Islamic finance profile - as the following story from expressindia.com shows (although, in fairness, the story is based on an Agency release).

'Shariat-compliance is fast catching on Down Under too. Australia will outline laws in the second half of 2011 to equalise the tax treatment of Islamic finance and conventional banking, a government official said on Thursday.

The comments from Nick Sherry, Australia's assistant treasurer, mark the first time that the government has indicated a timeline for the change.

Australia joins a growing number of non-Muslim countries, which include Hong Kong, looking to develop their Islamic finance sector by changing regulations to attract investors who can only put their money in sharia-compliant assets.

Islamic financial transactions can be costlier than conventional deals as they often involve multiple sale and purchase transactions, which create a greater tax liability.

I think in the second half of next year we will be able to outline specific legislative change, Sherry said in an interview.

More countries have been exploring Islamic banking since the global financial crisis and Australia, which is dependent on foreign capital for its growth, is keen to become an Islamic finance centre.

Sherry said the government wanted to develop the industry as a whole, rather than specific areas such as sukuk financing or wealth management products.

I favour as comprehensive a set of changes as possible in one-go. I don't see (it) as the government's role to target particular areas, Sherry said.

HSBC and Australia's investment bank Macquarie are among those that want to offer sharia-compliant products in Australia, he said.

Islamic finance is derived from the sharia which forbids charging interest and favours profit-sharing arrangements or structures that resemble rental agreements. These transactions are underpinned by physical assets.

Sherry, who recently met bankers and investors in the Middle East, said Islamic finance investors were interested in Australian assets such as ports and railways, property, agriculture and resources.'

So who cares if it the same old story - it shows that Australia is fast entering the region of 'countries serious about Islamic finance' and that can only be a good thing, right?

Islamic finance products could form alternative to SRI products, says Nick Sherry

The following is an extract of a piece that comes from InvestorDaily (part of MorningStar Australia). Does this mean that Islamic finance is entering the mainstream in Oz?

'Islamic finance products are not just limited to a Muslim audience, but could attract the same client base as socially responsible investment (SRI) products, according to assistant treasurer Nick Sherry.

"There are an increasing amount of people in our community interested in socially responsible investments and Islamic Shariah finance is in one sense a form of socially responsible investment," Sherry said.

He said both wholesale and retail investors were likely to be interested in these products.

"There are investors, large and small scale, who do want to invest in these forms of financial instruments," Sherry said.

"There are people in the broader community that don't like to invest in alcohol or gambling and in that sense Shariah finance is another option that is available to people," he said.

Chris Bowen meets with the Malaysian PM

Chris Bowen, the Minister for Financial Services, Superannuation, and Corporate Law met with the Malaysian Prime Minister, Dato' Sri Mohd Najib bin Tun Abdul Razak in Kuala Lumpur on May 19th to discuss issues of mutual interest between Australia and Malaysia, including financial services and greater economic cross-border flows in the Asia-Pacific region. Bowen also represented the Australia Government at the 6th World Islamic Economic Forum that was held in Kuala Lumpur.

Bowen participated in a leadership panel at the Forum around the forward-looking theme of this year's program, 'Gearing for Economic Resurgence'. The WIEF is a public-private sector dialogue addressing the economic issues facing Muslims and non-Muslims; and plays an increasingly important role in enhancing understanding and goodwill among nations.

He also had a bilateral meeting with the Governor of Bank Negara Malaysia, Dr. Zeti, to discuss the collaborative partnership between Australia and Malaysia, and the further strengthening of the inter-linkages and commercial opportunities between the two countries. Islamic finance has an important part to play in the Government's efforts to grow the contribution of the financial services sector to our economy. The Islamic finance, banking and insurance market is worth almost $1 trillion and is estimated to reach as much as $5 trillion in coming years, according to Moody's Investor Services.

Terms of reference for Islamic finance tax review - update

Islamic finance man of the moment, Assistant Federal Treasurer Nick Sherry, has now announced the terms of reference for the review of the tax treatment of Islamic financial instruments in Oz. The review itself will be undertaken by the Board of Taxation.

The terms will include a review of the relevant tax laws to identify any impediments to the provision of Islamic finance, banking and Takaful products on a 'level playing field' to their conventional counterparts. The review follows a recommendation by the Australian Financial Centre Forum and will review impediments in existing state and federal tax laws to the growth of Islamic finance.

Senator Sherry acknowledged that Islamic finance was growing rapidly across the globe and was fast approaching the point where total Shari'ah compliant assets under management were around US$1,000 billion. "Attracting more of these funds and investment will develop business and boost jobs in Australia," according to the Assistant Treasurer. "My recent trip to the Middle East illustrated the vibrancy and dynamism of this sector and there is no reason why we should not address national tax laws that may be inhibiting local growth."

Watch this space.

Is Aussie beef halal?

Readers would do well to track down a short piece from the Al Huda Centre of Islamic Banking and Islamic Economics - which asks for the US$640b halal industry to align itself with the US$800 billion Islamic finance sector. This short article states that 'The halal industry believes that Islamic finance has long ignored its little `halal-half' brother, because it either does not understand the business model or its financing needs'.

The key question posed by this piece is - what would happen if major importers of Aussie food - such as Gulf countries were to insist on the food they import being halal? To quote the article, 'The GCC countries are major importers of billions of dollars in foods/products, projected to touch $53 billion in 2020. Now, what if large importers like Saudi Arabia or the UAE impose `their' halal certification criteria for exports from these countries, including G20 countries like Australia (red meat) and Brazil (chickens)?'

The article makes the point that although a Shari'ah compliant food-only index does not yet exist, S&P has 15 Shari'ah compliant food companies in the GCC and 123 global Shari'ah compliant food companies from China, Taiwan, Japan, Korea, Mexico, the US and others.

The sting in the tail is the conclusion of the article which states, 'The halal industry needs to get (1) its act together on process, auditing, and certification, and get into the face of Islamic banks and better explain the (2) inter-relatedness of the sectors, (3) better explain the business model, risk and its mitigation, (4) better explain that it establishes the foundation for diversified lending, and increased investor options for Islamic banks' customers, and (5) allow Islamic finance to talk the talk of a $2-trillion `niche' market in the making!'

Wise words - which the Australian food industry might want to spend some time thinking about.

Escape winter in Oz by visting the UK

July sees the Durham Islamic Finance Summer School happening between 5th and 9th. This is a course that is run by Durham University, UK - and is well recognised as a top course for Islamic financiers.

The full programme can be seen here.

According to the organisers, 'Durham Islamic Finance Programme (DIFP), with its international reputation in theoretical and empirical research, aims to share its experience by hosting an annual Islamic Finance Summer School (DIFSS), which has proven to be very successful in the last four years, with 56 participants from all over the world in the 2009 Summer School. We are, therefore, confident that this annual event will be equally valuable for future participants, whether they are pursuing a career in Islamic banking and finance industry, or in financial service providers are debating whether to offer Shari’ah compliant products, or pursuing academic research in Islamic finance related fields. To make the programme more appealing to individuals from professional financial and banking sector, the session presenters are invited from the Islamic finance and banking industry'

Worth checking out.

Victorian Premier John Brumby in the United Arab Emirates

Today John Brumby addressed an AusBG lunch in Abu Dhabi to talk up the important links between the UAE and Victoria – with a special focus on the investment and trade opportunities between the two states. Readers will remember that Mr Brumby has been instrumental in helping get Victoria ‘Shari’ah ready’ for business.

During a flying two day visit Premier Brumby opened the senior school of the Victorian International School in Sharjah and met with government and business leaders. According to Mr Brumby the UAE is Victoria's tenth largest export partner and second largest Middle East trading partner with goods exports worth $600 million in 2008-2009.

The UAE is also a nearly $200 million market for Victorian-made passenger cars and Victorian company Volgren, in partnership with Hafilat Industries, is building fourteen new buses for the Abu Dhabi Department of Transport.This partnership is also bidding to build up to 850 additional buses for Abu Dhabi Department of Transport which will open up a major new export opportunity for Volgren.

Mr Brumby also visited the largest Toyota dealership in the United Arab Emirates and fourth-largest in the world to inspect Victorian-made Camry's which are made at Toyota's Altona plant. 60 per cent of Toyota's Altona plant production is exported and a significant proportion of that goes to the Middle East.

Islamic Development Bank gives Australia & New Zealand a Guernsey

The Islamic Development Bank, headquartered in Jeddah, Saudi Arabia has just approved US$165 million for development projects that include Australia and New Zealand in the mix.

The new finances cover new development projects in Turkey, Bangladesh and Mali in addition to T.A. Grants for Muslim communities in Australia, Ethiopia, Montenegro, New Zealand, France and Kosovo.

The Australian grant consists of US$350,000 for the expansion of Islamic School of Brisbane in Brisbane while the Kiwi funding consists of US$290,000 for the construction of Waikato Islamic School in Hamilton, New Zealand.

Tahawwut Master Agreement

Today saw the unveiling of the ISDA/IIFM Tahawwut Master Agreement – a long awaited development for anyone looking to use hedging strategies to mitigate risk. The 43 page Master Agreement has been a labour of love for those involved – and hopefully it will be seen as the major breakthrough that it is.

Naturally there is still a lot of work to be done in order to widen the palette of Shari’ah compliant financial instruments available but this is certainly a step in the right direction. It is not yet clear how much application of the agreement will be made in Australia.

The Tahawwut Master Agreement was unveiled by Ijlal Alvi, CEO of the IIFM (International Islamic Financial Market) today during a briefing session held in the DIFC in Dubai.

Retail Islamic finance in Australia Part 2

We have come across a very useful article on the subject of Takaful in Australia from the good people at Mallesons Stephen Jaques. The report states, 'Businesses could also benefit from the availability of takaful and, given Australia’s robust prudential and regulatory regimes, takaful sourced from Australia may be attractive to overseas companies.'

An excellent primer on the subject and well worth the read - which you can do for yourself here

MFSS announce winner of the 2010 Victorian Innovation Funds Management Award

Here is a copy of a press release that should give Islamic finance followers in Melbourne a little flutter of pride:

'The Melbourne Centre for Financial Studies hosting the 2010 Melbourne Financial Services Symposium (MFSS) is pleased to announce that the 2010 Innovation in Funds Management Award has been awarded to Intrinsic Investment Management for their Intrinsic Crescent Ethical MDA.

This year three funds managers stood out; Intrinsic Investment Management, River Capital, and JM Financial. In commenting on the winner, MFSS Chair, John Gall, said that "All three finalists showed high levels of entrepreneurship and varying degrees of innovation in their business model. Above all they demonstrated a high degree of attention to risk management, corporate governance and engagement, a strong client service and communication culture and high alignment of interest with their clients".
“Intrinsic was chosen as the winner because of its CRESCENT ETHICAL MANAGED DISCRETIONEY ACCOUNT PRODUCT which provides MUSLIM people in Victoria and Australia with an opportunity to have their superannuation and non superannuation savings managed in a way consistent with their Islamic beliefs. In addition the product is considered appropriate for large overseas Muslim communities in say Malaysia, Indonesia and the Middle East to invest in Australian equities THUS meeting the strong push to make Australia and Victoria a major Financial Centre.

The product meets the need of a significant and fast growing portion of the Australian population, It is unique because there is not another investment product in Australia that looks after the investment needs of Muslim workers and investors, it is offered as a pooled fund or individually managed accounts.
Finally, the product required extensive revamping of internal investment decision making processes to meet the needs of Islamic investing. For example of the top 200 listed companies in Australia only around 72 qualify for Islamic investment. Despite this the product has managed to outperform the S & P /ASX 200 accumulation index.'

Wouldn't it be nice if there was a real Melbourne/Sydney rivalry over which city gets to be the Islamic finance capital of Australia? That way we might see some real developments real fast. Any thoughts, anyone?

Logie-Smith Lanyon employs Shari’ah adviser

According to LexisNexis publication Lawyers Weekly, Logie-Smith Lanyon, a firm of lawyers with its HQ in Melbourne has engaged a Shari’ah law advisor in the form of Sheikh Mohamadu Nawas Saleem. Sheikh Mohamadu Nawas Saleem migrated to Australia in 2000 and was educated in Sri Lanka where he completed a seven year course in Islamic Studies & Arabic at Jamiah Naleemiya Islamiya in 1983.

He worked as a Lecturer in the Matriculation Centre at the International Islamic University, Malaysia for almost 10 years before the move to Australia where he gained a Graduate Certificate of Education (Professional Development Studies) from Monash University in 2007.

Commenting on the appointment, Hyder Gulam, a senior lawyer at Logie-Smith Lanyon and board member of the Islamic Council of Victoria, told Lawyers Weekly: "Sheikh Nawas provides a unique expertise in his training under the common law system (as followed in Australia) and his expertise in the understanding of Shari’ah law." Sheikh Nawas serves on the executive committee of the Australian National Imams Council. "It was a great honour to be part of Logie-Smith Lanyon and to be one of the first consultant Shariah advisors to a law firm in Australia," he said in a statement.

Sheikh Nawas obtained a Bachelor of Law and Master in Comparative Laws at the International Islamic University in Malaysia and also works as an interpreter and translator in Tamil for a number of Federal Government agencies.

While the Gulf and Malaysia are knee-deep in lawyers with a specialisation in Islamic finance, Australia is only at the start of the curve – and we can expect to see more developments of this sort before long.

Is Australia Shari’ah-ready?

Shahriar Mofakhami, tax & revenue partner at Maddocks in Melbourne has written a splendid primer on the subject of Australia’s readiness for Islamic finance. The brief article comes with a very useful timetable that outlines the various steps taken in Australia to achieve ‘Shari’ah readiness’. The timetable begins in February 2008 when Chris Bowen announced that the Board of Taxation would undertake a review of the tax arrangements applying to managed funds and ends with the most recent announcements in March of this year.

While not alone in pioneering Islamic finance in Australia, Maddocks certainly make a valuable contribution to the development of thought in the area of Islamic finance in Australia.

You can download the primer itself from here.

Where is the real opportunity for Islamic finance in Australia?

How real is the retail opportunity in Australia for Islamic finance and banking products? While no one knows for sure, we might reasonably assume that we could draw interesting parallels between the UK and Australia.

As some blog followers may know the UK started to come to grips with Islamic finance back in 2002 when the Islamic House of Britain (as it was then known) applied for a banking license. While most of the discussions on securing the license were held behind closed doors, the whole process did seem to take an inordinately long time and the reason for this was that nobody seemed quite sure how to go about regulating an Islamic bank in the UK at the time. In the event, the authorities had to go back to regulators in the Gulf and ask them for assistance.

Bear in mind that the UK has an estimated Muslim population of around 2.4 million and the Islamic Bank of Britain, which was eventually licensed in September 2004, now has eight branches across the country and a small but growing range of products. There are no other standalone Islamic retail banks in the UK and the biggest retail player is still estimated to be HSBC Amanah. (European Finance House, European Islamic Investment Bank, and Gatehouse et al do not operate in the retail arena). Combined, the value of savings in the UK in retail type products (deposit accounts, savings schemes, Takaful policies) coupled with the total value Islamic home financing products still does not amount to much.

So how big is the opportunity for retail Islamic finance in Australia? With a Muslim population of less than 400,000 it seems that the industry may have to be happy with fairly modest scale – at least in the early days. In comparable markets the early demand tends to be for straightforward home finance products (aka Islamic mortgages) and there is already a small market for this in Australia. Whether there is any real demand for anything beyond this basic level of products at present is moot: supply will only ever come to the market in response to demand and so far this is not growing fast enough to make any discernable impact on the high street.

As Australia’s population grows, then so too might the demand for Islamic retail finance products – and rest assured we will be following this closely.

Islamic finance in Australia 2010

This is the name of the new report being put together by Yasaar Media in Dubai. Rather than duplicating the work already done in the Austrade report – the Yasaar Media report will be aimed at a global audience to highlight the opportunities within Islamic finance in Australia.

While acknowledging that there might be a minor retail Islamic finance opportunity in Australia the main bulk of the report will look at the players within the industry in some depth – as well as the wholesale opportunities in the market. The report will be similar in tone and theme to the Islamic finance on North America report produced last year by the same publishers (download a copy here)

The groundwork for the report started over a month ago – and the final report is scheduled to be released towards the middle of the year.

That Austrade thing

In the interests of completeness for this particular blog, we should make some mention of the Austrade funded Islamic Finance in Australia report. The report is altogether rather neat (you can judge for yourself and download a copy from here) and covers a fair amount of ground over its 40 pages. This was the report that launched by Senator Simon Crean in Melbourne back in February.

The interesting part of the report is the eight pages in the middle in a section called ‘Opportunities in Australia’. As the report says, ‘Islamic finance is still a nascent industry in Australia but has great potential for development given Australia’s abundant resources and its strategic location in, and strong trade links with, the fastest growing region in the world. It has the potential to facilitate further innovation and competition in the wholesale and retail banking sectors and to support the Australian Government’s commitment towards credit market diversification’.

The real cherry in the pie, of course, is in the wholesale Islamic investment banking business – and the retail market is not likely to see much growth because it may never have sufficient scale in Australia – and this is reflected in the content of the report. The report was written in large part by John Masters formerly of PricewaterhouseCoopers.

It’s that man again

Senator Nick Sherry’s latest announcement on changing the Australian tax system to accommodate Islamic finance is still reverberating around the market. The Senator’s interview with Radio Australia can be heard here and the transcript of the interview can be read here. Well worth a listen.

The same story also made it all the way to Kazakhstan via Kazakhstan News.Net – and that story can be read here together with some rather less flattering (but anonymous comments). These are the kind of comments that make a lot of people in the industry cringe...

Update on the recent announcement from Senator Nick Sherry

Nick Sherry was on SBS Radio in Australia giving a telephone interview direct from the Gulf yesterday (Tuesday 27th April) discussing what he was doing with the tax man in Australa and focusing on Islamic finance as part of the capital funding mix – Australia being a net importer of funds.

He went on to say that Australia had a lot of work to do to be able to secure Islamic funds. He pointed out that it was not just a matter of tax reform and that we needed to review our systems to be amenable to Islamic finance and ensure we have a level playing field.

It looks as if the ball has really started rolling on this – which can only be good news for the Islamic finance industry – and Australia too, of course.

The conference circuit hits Australia

The Islamic finance industry is well and truly over-conferenced – but not so much in Australia, so it’s good to see that there will be a dedicated Islamic finance event in Melbourne in early June.

Speakers include Senators Nick Sherry and Chris Bowen as well as various others from Austrade and the Australian Financial Centre Forum. Steve Lambert, Global Head of Debt Markets at National Australia Bank will be presenting a case study of ‘Islamic Finance in Australian Commercial Banks’ which should be worth hearing.

The two-day conference is followed by the now-traditional workshop day. The event is called ISLAMIC FINANCE 2010: Practical Insights into how to integrate Islamic finance into the existing banking and finance system.

Fingers crossed that it lives up to its name. We also hope that it attracts significant numbers of delegates – there was an event in Canada recently where (reportedly) fewer than 30 delegates turned up. The Australian event deserves to do better...

The Johnson Report and more ...

It struck me that perhaps not everyone knew what the Johnson Report was – or how to get hold of it.

You can download a copy here. The full name of the report is Australia as a Financial Centre – Building on Our Strengths and it is principally a document aimed at identifying how Australia can best leverage its position as a global centre for finance.

Islamic finance is only the subject of a small portion of the report – but it is well worth reading for anyone who wants to understand where the government (and Treasury) are headed with this.

The initiative announced by Nick Sherry yesterday was a start to the implementation phase of the recommendations outlined in the Report. (The nickname for the report comes from the principal author of the report – Mark Johnson, chair of the Australian Financial Centre Forum).

Nick Sherry’s announcement seems to have received something of a muted response in Australia – with little coverage given to the story by the main news outlets (Fairfax and News). Thankfully Bloomberg gave the story an airing – and included a useful quote from Senator Sherry: ‘“My message is that in Australia we have what the wholesale Islamic finance market is calling out for. I will be focused very heavily on high-level talks on Australia’s tax treatment, regulation, promotion and export of Islamic finance, banking and insurance.”

The only contender covering the story in Australia seems to be my former boss’ (Bob Gottliebsen’s) new stomping ground www.businessspectator.com.au. The others just ignored it.

Thankfully there is someone who is willing and able to report on Islamic finance in Australia (look, I’m blushing).

Nick Sherry makes major announcement concerning Islamic finance in Australia

Monday 26th April will enter the annals for Islamic finance in Australia – since it was the day that the Assistant Treasurer of Australia, Senator the Honorable Nicholas Sherry announced that he had instructed the Board of Taxation to review Australia’s tax laws to make sure that Islamic finance transactions and institutions are not disadvantaged when compared to conventional financial structures.

The Senator chose Abu Dhabi as the venue for the announcement – in front of the great and the good from the Australian and local business community from Abu Dhabi, Dubai and the other emirates.

The instruction from the Senator comes soon after the recommendations in the Johnson Report that Australia ensure that Islamic finance is offered a ‘level playing field’. Doubtless the tax changes will be followed in due course by a thorough review of the legal and regulatory systems in Australia for the same purpose: allowing Islamic finance to compete on equal terms with the world of conventional finance.

Australia is naturally keen to attract foreign direct investment (FDI) from a wide range of countries – and the petrodollar rich countries of the Gulf appear to offer the promise of significant FDI in Australia in areas such and infrastructure development and agriculture.

The Senator is to be heartily congratulated on such a significant move which we hope will be followed by many other such changes. Full text of the press release that accompanied the statement by the minister can be read here (http://assistant.treasurer.gov.au/DisplayDocs.aspx?doc=pressreleases/2010/076.htm&pageID=003&min=njsa&Year=&DocType=)

The Senator was also accompanied by members of a trade mission from Australia which is undertaking a whistle-stop tour of the Gulf that takes in Abu Dhabi, Qatar and Bahrain.

Nick Sherry in Abu Dhabi

The Assistant Treasurer of Australia, Senator the Honorable Nicholas Sherry, is in Abu Dhabi on 25 and 26 April. He is giving a presentation to AusBig in Abu Dhabi today - and a full report will follow on this blog later today.

Australia gets serious about Islamic finance

As a long term Australian resident - and medium-term Islamic finance specialist - I thought that it was time that there was a blog devoted exclusively to the subject of Islamic finance in Australia (OK - and New Zealand too).

I have been active in the Islamic finance sphere since 2002 when I conceived, launched, and published Islamic Finance Weekly for Euromoney in London.

I then conceived, launched and published Islamic Business & Finance as well as Sukuk Insider in the UAE.

More recently I started a dedicated Islamic finance research and media entity in the UAE called Yasaar Media (www.yasaarmedia.com).