(Australian Associated Press)
Australia could be a regional leader in Islamic finance but tax issues are holding the sector back domestically, advocates say.
The worldwide Islamic finance industry is estimated to be worth $US3.5 trillion ($A5.2 trillion) by 2024, according to a report launched on Thursday in Australia on the state of the global Islamic economy.
Because the Koran forbids charging interest, financial transactions in the Muslim world have to be structured differently, with assets typically transferred to the financier so they can receive profit instead.
That’s more difficult in Australia because stamp duty means such transactions are effectively double-taxed, said Andrew Johnston, the head of Islamic finance at law firm Sparke Helmore.
“That’s the biggest issue, having the same treatment under law, because otherwise it becomes unprofitable – if you’re someone pay stamp duty twice, Australians won’t pay that, and understandably, because it’s a lot of money,” Mr Johnston said.
“It makes the cost prohibitive.”
Mr Johnston credited National Australia Bank as being the only major bank to have a specific Islamic-focused financing team.
Talal Yassine, the managing director of the Australian superannuation and Islamic investment services firm Crescent Wealth, said that Australia needed to seize the opportunity of being so close to the world’s leading Islamic economy, Malaysia.
“Sydney should be the gateway to the Asia Pacific for Islamic finance. We are a Western country that can be a partner to Malaysia, be an entry point for the Americans and British and everybody else,” he said.
“We have a massive opportunity waiting to happen.”
He said Australia’s financial industry should follow the lead of the agricultural industry, which he said decades ago made the decision to dominate halal exports.
“Every farmer that runs sheep, meat, they are experts on Islamic halal, they know more about it than most people in the Middle East who eats it, because their businesses relies on it,” Mr Yassine said.
The report said that Australia exported $US5.3 billion ($A7.8 billion) worth of food and beverages to Islamic economy in 2018, with meat and live animals accounting for $US2.1 billion ($A3.1 billion) of that.
It said with 500,000 domestic Muslims and around 565,000 Muslim tourists, Australia ranks 17th in the US$2.2 trillion ($A3.3 billion) global Islamic economy.
Australian Muslims spent $US5.3 billion ($A7.8 billion) on the lifestyle sector in 2018, including $US1.94 billion ($A2.9 billion) on media and recreation and $US1.74 billion ($A2.6 billion) on food, the report said.
“You have a growing Muslim middle class whose needs need to be addressed by institutions like Crescent Wealth and (Islamic mortgage firm) MCCCA,” said Ibn Arabi El Goni, head of product with Dubai-based DinarStandard, which produced the report.