www.abc.net.au - ELEANOR HALL: The Federal Government has been told the answer to overcoming the lack of infrastructure investment in Australia could be Islamic finance.
It's a system of banking which uses joint ventures, profit sharing and leasing to get around the Islamic prohibition on charging interest.
The head of Australia's first Islamic finance company says a potential investment boom is being stymied by barriers to Islamic finance in Australia. (source)
He's been meeting government ministers in Canberra this week.
Talal Yassine, the managing director of Crescent Wealth, says the Federal Government has been sitting on a Board of Taxation report into Islamic finance for 18 months and should act now to get a slice of the trillion dollar global Islamic finance market:
TALAL YASSINE: Islamic investment avoids debt. It does not use the concept of interest and money making money. It is more of a joint venture kind of approach and it avoids moral hazard investments - tobacco, alcohol, the gambling, armaments. And basically it is a really conservative way of investing for value without using any sexy financial engineering that we've seen so much of and which has caused so much damage in the current world economic environment.
ELEANOR HALL: Can you understand why there might be some community hesitance about Islamic finance in this country?
TALAL YASSINE: We are not bringing Sharia law in any way to Australia. Islamic investment principles are all about value and conservatism and about investing in worthwhile things that are ultra-ethical - and I think I should be extraordinarily clear about that, there is nothing to fear here.
ELEANOR HALL: So how radically would Australian regulations have to change to accommodate the needs of Muslim investors who want to invest in ways that are compliant with Sharia law? You say it is not about bring Sharia law in but what would have to change?
TALAL YASSINE: Um, very simple things like let me give you just an example. In Australia we have a very strong consumer credit code, as it should be. On a Federal and State level any time you borrow money the effective interest rate has to be very clearly declared.
In come Islamic banking and finance and it says 'Basically we don't use interest. We can't quote an interest rate' so a law that is designed to protect the consumer prohibits Islamic investment. So very little has to change. There may be a carve out or an exemption - and let me just point out in other countries, Western countries like the US and the UK, this issue has been dealt with quite comprehensively.
ELEANOR HALL: So what are the barriers to Islamic finance in Australia that you are calling on the Government to act on?
TALAL YASSINE: Well, I'm calling on the Government to respond to a report they asked for from the Board of Taxation. The Board of Taxation approximately 18 months ago delivered a report about the kind of things that can be done to help the growth of Islamic finance in this country.
Effectively, the current laws in Australia do not prohibit Islamic finance but they were drafted not in contemplation of the kind of structures that Islamic investment requires.
ELEANOR HALL: So what is the size of this potential market for Australia?
TALAL YASSINE: The Islamic finance industry is worth at least one trillion dollars and growing at a very significant rate per annum. And if we had a tiny slice of that, a 1 per cent, we are talking about multi billions of dollars.
Let me just add, one of the big issues we have in this country is infrastructure and governments have run out of money and they want to put up taxes. Islamic finance is a way to potentially fund this approximately $780 billion of infrastructure required without going into debt and without raising taxes and that is a very significant point as to why we should encourage Islamic finance in this country.
ELEANOR HALL: And how urgently does Australia need to act to take advantage of this opportunity?
TALAL YASSINE: I think the time is now. Islamic finance has grown exponentially from a couple of hundred million to a trillion in a very short period of time - over 20 years. Given what is happening around the world, Australia would be a fantastic gateway and a gap that they need to fill within their portfolio.
And I've had many discussions with people from Saudi Arabia and the Middle East generally and indeed Asia, and that is why I am calling for the Government federally to act today.
ELEANOR HALL: That's Talal Yassine, the managing director of Crescent Wealth, who has been meeting ministers in Canberra this week. The assistant Treasurer's office says the Minister has yet to consider that Board of Taxation report.
Listen to Eleanor Hall's extended interview with Talal Yassine on our website.
Source: (source) - April 19, 2012
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