Government aims to create finance hub for nearly one billion Muslims in Asia-Pacific region
The Australian government plans to attract Islamic banks after publishing its first report on this booming area of finance. The government wants Australia to become a finance hub for almost one billion Muslims in the Asia-Pacific region.
Banking systems that comply with Islamic beliefs are a multibillion-dollar worldwide industry. While such banks are common in Indonesia and Malaysia, they remain on the fringe of Australia's finance sector.
That could be about to change. The government has released a report that details how Australia's well-regulated economic system could cater to the Islamic market.
Trade Minister Simon Crean says expanding Islamic banking would help Australia become a dominant player in regional financing.
"The thing that struck me when we had our discussions in Malaysia 18 months ago, was how they were positioning themselves to become a financial services hub, particularly for Islamic finance. Where the U.K. has done it, given active support to it, if Australia wants to position itself as a financial services hub for the Asia-Pacific region, it has to, in my view, embrace Islamic financing too," Crean said.
Under Islamic, or Sharia, law, charging interest is forbidden. In addition, Islamic finance differs from conventional Western methods by focusing on profit-sharing, with wealth generated through trade and investment in assets, such as property or commodities. It also bars investment in businesses that are forbidden in Islam, such as liquor or gambling.
One of Australia's biggest banks, Westpac, is preparing to boost its Islamic banking services by offering a commodity-trading facility for overseas investors.
Islamic finance cooperatives have also been steadily growing in Australia. A government survey found that many of Australia's 365,000 Muslims would use Islamic banking services if they were more accessible.
Major international banks have also been exploring the opportunities that the Sharia model offers.