Australia’s Muslim population exceeds 365,000, so there are some potential for Islamic banking at the retail level, especially in neighborhoods such as Western Sydney. There is an Islamic Co-operative Finance Association, but it is relatively small, and Kuwait Finance House has an office in Melbourne. The Arab Bank has a significant presence in Australia, mainly serving clients of Palestinian and Lebanese origin, but its financing is conventional. The national taxation board aims to ensure there is a level playing field for Islamic banking, and if necessary legislation will be introduced next year. Unless however, there is greater awareness of Islamic finance among Australia’s Muslims, retail penetration will remain very limited. There is potential for Sukuk issuances by mineral companies, which could prove attractive to investors from the Gulf. The strength of the Australian dollar and potential for further upward movement could also be attractive as Gulf investors seek currency diversification, which at present is limited for Sukuk.
PROFESSOR RODNEY WILSON
The notion of having a level playing field, with the world of conventional finance in Australia, is a noble one. However, I think before we start looking at what those changes should be, we should focus on educating and changing perceptions regarding Islam and Islamic finance in that market place. In that way more informed decisions can be made which lead to economic improvements for all. This model should be adapted for all new markets that are expressing an interest in Islamic finance. DAUD VICARY ABDULLAH Global Islamic finance leader, Deloitte
The Muslim population of Australia is estimated to be around 400,000 which equates to 2% of the Australian population. Given the dispersion of the population over the country, this is likely to be an insufficient number to make the offering of retail Islamic financial services attractive to a bank. However, Australia also has a number of assets that are of interest to Shariah compliant investors in Asia and perhaps the GCC such as mineral companies. In addition, the proximity of Australia to Asia can make it an attractive partner to financial institutions in the wider region. DR NATALIE SCHOON Head of product research, Bank of London and the Middle East
Australia is not a capital market driven by Shariah sensitive investors. Less than 2% of the total population of some 22 million (smaller than Saudi Arabia) claims Islam as their religion, with large proportion of these Muslims having ties to Lebanon or Turkey. Yet Australia has made dramatic steps in diversifying its ethnicity over recent decades. The country has a fast evolving cross cultural literacy, reflected in policymakers’ interest in advocating Islamic finance. We see Australia as primarily a target for global institutional investors using Shariah compliant instruments. The economy is awash with opportunity, given its growth trajectory now registering 3% to 4% annually. While much of the developed world seems to be on a slow track to recovery, Australia is benefitting from its ties to the Asian growth story. It has aggressive export exposure, for instance, to India and China. Economic gains are benefiting many sectors of the economy. Witness the ratcheting up of official policy rates by the Reserve Bank. Australia is more than just a commodity or even currency play. Islamic investors may find affinity with the potential for real estate projects, as well as other asset related targets. Of course Shariah sensitive investors may serve their interests best by assessing diversification stories that are not readily available elsewhere, including pockets of opportunity in water rights, agribusiness, and educational services, among others.
DOUGLAS CLARK JOHNSON CEO, Codexa Capital
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