Posts
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?
Tuesday, June 29, 2010
Monday, June 28, 2010
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.
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.
Tuesday, June 22, 2010
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.
Saturday, June 12, 2010
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.
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.
Wednesday, June 9, 2010
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.
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.
Wednesday, June 2, 2010
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.
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