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).