Islamic finance currently plays a very small role in the Australian financial sector. With Muslims accounting for more than 476,000, or just 2.2 percent, of the population, its retail presence is likely to remain quite small. The potential lies instead with the growth of foreign investment. Australia has the fourth largest fund management industry in the world but it has only recently started to offer Islamic products. This business could easily be expanded to appeal to overseas investors as well as locals.
Similarly, on the funding side, Australia's substantial infrastructure funding requirements, as well as those of its massive resource development industry, could be filled at least in part through sukuk issues directed at offshore investors. More flexible regulatory and taxation measures would greatly facilitate these developments. The Australian government has at least made positive statements toward this end, but so far it has done nothing to loosen the existing restraints.
This chapter discusses Australia's Islamic finance industry and its possibilities, focusing specifically on asset management, tax and accounting, retail finance, microfinance, takaful and re-takaful, issuances and sukuk, the debt capital market, the equity capital market, regulatory issues, cross-border financing, and the future.
Australia has an ...