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

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.

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.

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.

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).