Islamic finance gets the nod: The Australian

The Rudd government is pressing ahead with plans to develop Islamic finance in Australia to help position the nation as a leading global financial services hub, reports The Australian (March 27, 2010)
Assistant Treasurer Nick Sherry told funds managers yesterday he would travel to the United Arab Emirates, Qatar and Bahrain at the end of next month for talks on the regulation, promotion and export of Islamic finance, banking and insurance. Estimated at $US729 billion at the end of 2007, the Islamic financial services sector has been growing rapidly, and the government sees it as an alternative source of capital for Australian business and consumers, the report added.
"Australia sits as one of the closest neighbours to Indonesia, a rapidly growing developing economy and the largest Muslim nation in the world," Mr Sherry said at a function hosted by the Investment and Financial Services Association and Deloitte.
"We have close and growing business ties to the Gulf region and beyond. We must do more."
Charging interest is prohibited in Islamic financial services, as is speculation, and financial transactions must be underpinned by a tangible asset and require both parties to share the risk.
The government-appointed Australian Financial Centre Forum has recommended equal access for such products be introduce by removing regulatory and tax barriers.
Mr Sherry said the government was also considering ways to improve the tax treatment of managed investment trusts to attract foreign investment.
"In 2008, we asked the Board of Taxation to review these tax arrangements, and now we are considering the board's final report," he said.
He said the government strongly supported foreign investment in Australia.