Shariah-compliant wealth management company Crescent Investments Australasia has applauded the Australian Government for seeking to break down barriers to Islamic finance.
Chief executive Chaaban Omran recently formed part of an Australian delegation to the Middle East, which included Assistant Treasurer Nick Sherry, who was promoting Australia as a financial services hub.
Omran said the Australian Government had taken note of the apparent strength of Shariah-based economies through the global financial crisis, including the success story in Malaysia. Australia recently signed a Memorandum of Understanding (MOU) with Malaysia, and Omran believes this is paving the path for a better understanding of the principles of Islamic finance in Australia.
Omran said the Government is also considering two recommendations of the Johnson report, submitted by Muslim Community Co-Operative Australia, which included reviewing the barriers and impediments to Islamic finance.
“From a legislative point of view, a lot has been happening and I think the Government is coming a long way,” he said.
Omran said the main driver is to attract investment money from the Middle East, where investors are highly cashed up.
“One of the worst things you can do in the Middle East is to hoard cash,” he said, adding that Shariah principles prohibit sitting on money and earning interest. Hence resources-rich Australia is keen to attract that money.
There are, however, certain impediments that the Government is currently considering to encourage foreign investment in Australia. One of these impediments is the tax treatment of Islamic financial products.
“There are also no banking services at the moment, and that is part of the reason why we are working with the Government and also why the Government has signed a MOU with the Malaysian Government,” Omran said.
He said Shariah-compliant products were very similar to conventional products, except that they were packaged differently.
“In Malaysia, the take-up for such products is about 70 to 75 per cent by non-Muslims,” Omran noted, adding that the Dow Jones Islamic Index and a number of Malaysian equities funds are on a par, if not better than their conventional rivals.
“Many people in Malaysia know nothing about Islam, but they like the products. The challenge is to demystify it, and we’re confident the Australian Government will let the financial services industry do that. Eventually, people will look at it as a ‘product’ and not a faith.”
