Sunday, October 19, 2008

Aussie Maddock: Malaysia as bridge between Gulf, Australia

By Habhajan Singh
As an Islamic financial hub, Malaysia is best placed to act as a bridge between the capital in the Gulf and the financing opportunities in Australia, said Shahriar Mofakhami, a partner with Australian legal firm Maddocks. Shahriar, who was appointed a partner with the Maddocks Tax & Revenue team in July, was one of the members during a recent Australian trade delegation to Malaysia.
Australian minister for trade Simon Crean and his Malaysian counterpart, along with representatives of large domestic Australian banks and Malaysia's investment banks, Bank Negara Malaysia (BNM) and Malaysian Securities Commission (SC), met in Kuala Lumpur on Oct 7, to explore opportunities to expand Australia's financial services trade, the legal firm said in a statement.
It added that Shahriar and Tina Savona from Maddocks Tax & Revenue group were invited to attend the 14th Australia-Malaysia joint trade committee meeting as part of the Australian delegation. At the request of the Australian government, Shahriar presented on Shariah compliant investment and financing structures for investment in Australia alongside representatives of the Kuwait Finance House (Australia) and the Muslim Community Cooperative (Australia) Ltd, it said.
In a recent article, The Australian Financial Review reported that the combination of the crisis in credit markets and the vast oil-fuelled wealth being accumulated in the Middle East has Maddocks sensing an opportunity — creating investment structures compliant with rules of Islamic finance. In its statement, Maddocks said with a strong background in structuring crossborder (inbound and outbound) transactions, Shahriar has established a dedicated Islamic finance practice at the legal firm.
"In essence, Islamic finance is a trade-based mode of financing. In the course of advising on particular transactions, our views were sought in relation to structuring Shariah compliant investment platforms within the existing 'conventional' Australian financing and tax framework.
"This provided us with an opportunity for in depth consideration as to how Shariahcompliant financing structures can fit within the existing legal framework in Australia," said Shahriar.
Although still relatively uncommon in Australia, the firm said the global Islamic finance industry has recently shown significant growth and maturity in Europe, Asia and the Middle East.
In March 2008, it was reported that pure Islamic banks, along with Islamic subsidiaries and "windows"' of conventional banks, controlled close to US$400 billion (RM1.41 trillion) in assets globally compared with US$100 billion in assets in 2000.
With an estimated global worth in the hundreds of billions of dollars and an anticipated growth rate of 15%-25% per annum over the next five years, global assets managed according to Islamic (Shariah) principles are tipped to exceed US$1 trillion, according to Boston Consulting Group, April 2008 data.
A major factor in the Islamic financing boom has been the high price of oil leading to increased wealth in the Gulf Cooperation Council states and Iran, among others. This has in turn resulted in an increase in the number of Islamic institutions seeking specialist financial products.
Maddocks Islamic Finance advises both onshore and offshore Islamic financial institutions in relation to structured finance, institutional transactions as well as retail Shariah compliant financial products, it said.
(By Habhajan Singh, The Malaysian Reserve, Oct 20, 2008, Page 32)

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