Chaaban Omran
Director-MCCA Asset Management Limited
1
Copyright (C) by Muslim Community
Co-operative (Australia) Ltd. All...
Towering Strength
The Sky is the Limit
Solid
Inspirational
Open to All
Copyright (C) by Muslim Community
Co-operative (Aus...
 Introduction
 Who is MCCA?
 Timetable?
 What is “Shariah Compliance”?
 Demystifying Islamic Finance
 Opening Up Mar...
◦ The Future of Islamic Finance in Australia will
create wealth and jobs opportunities through its
innovation available to...
 Muslim Community Co-operative Australia was established in
Feb 1989 where the founders aquired a car for a customer
 7,...
 Horizon
◦ 1 Year – Greater awareness, understanding and
acceptance: Demystifying Islamic Finance
◦ 2 years – Basic Islam...
 Set of principles that adhere to Islamic Law
which is sourced from the Quran and the
sayings of Prophet Mohammed
 Shari...
 Proven; it’s not smoke and mirrors: the
credible history of Islamic Banking & Finance
in practice (globally) for over 1,...
 The underlying tradable commodity must be
an asset; substitution of real resources for
money
 There are many types of c...
 Islamic finance introduces such change:
◦ It replaces the lone classical lending
contract with numerous finance contract...
Islamic Partnership Finance
 Islamic banks hold equity to finance
business enterprises.
 Taking equity as partners in bu...
 Self-Mitigated Risk
◦ When the bank maintains ownership until
repayment is complete
◦ When a real assets involved: use a...
0.8316281
41
0.9952339
8
1.1270388
5
0.1995170
73
0.4821761
79 0.3824048
64
0.5564312
43
0.5244808
51
0.3257449
38
0.30039...
 Banking
◦ Accounts (Dividends versus Interest)
◦ Deposits (Mudarabah Deposits)
 Wealth Management
◦ Islamic Superannuat...
 Islamic Finance Training and Education
◦ Products and courses (La Trobe & Monash)
◦ Islamic Finance for newcomers (broad...
 Islamic finance critical requirements
◦ Ability to trade in goods and services
◦ Ability to take equity within a wider
l...
Education critical
Opening new markets and industry
Creating Jobs, an alternative avenue for Wealth
Creation. Not a matter...
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Finsia Seminar Islamic Finance Challenges And Opportunities March 2010

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Delivered at Finsia in March 2010

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Finsia Seminar Islamic Finance Challenges And Opportunities March 2010

  1. 1. Chaaban Omran Director-MCCA Asset Management Limited 1 Copyright (C) by Muslim Community Co-operative (Australia) Ltd. All rights reserved.
  2. 2. Towering Strength The Sky is the Limit Solid Inspirational Open to All Copyright (C) by Muslim Community Co-operative (Australia) Ltd. All rights reserved. 2
  3. 3.  Introduction  Who is MCCA?  Timetable?  What is “Shariah Compliance”?  Demystifying Islamic Finance  Opening Up Markets  Creating Jobs  Way forward for Australia  Conclusion
  4. 4. ◦ The Future of Islamic Finance in Australia will create wealth and jobs opportunities through its innovation available to all Australians using methods tried and tested for centuries ◦ Regulatory Approach – requires a level playing field between Islamic and non-Islamic Finance as well as maintain religious neutrality ◦ Growth via attracting Foreign Investment and players Copyright (C) by Muslim Community Co-operative (Australia) Ltd. All rights reserved. 4
  5. 5.  Muslim Community Co-operative Australia was established in Feb 1989 where the founders aquired a car for a customer  7,500 members with $30m of assets on Balance Sheet  Today has financed over 100 properties in various Shariah Compliant style contracts  Removal of stamp duty by Victorian State Government: Insertion of S57A to S57F of the State Taxation Acts (Amendment) Act 2004.  Currently undergoing demutualisation  Holder of first Australian Retail Mortgage Investment Fund that is Shariah Compliant  Made submissions to Hon. Minister Chris Bowen and Trade Minister Hon. Simon Crean as well as Australian Financial Centre Forum (The Johnson Report)
  6. 6.  Horizon ◦ 1 Year – Greater awareness, understanding and acceptance: Demystifying Islamic Finance ◦ 2 years – Basic Islamic Finance Regulatory Changes ◦ 3 years – First Islamic Banking License in Australia  Basic Banking Services – Accounts and Deposits ◦ 4 years – Investment Banking and Capital Markets Copyright (C) by Muslim Community Co-operative (Australia) Ltd. All rights reserved. 6
  7. 7.  Set of principles that adhere to Islamic Law which is sourced from the Quran and the sayings of Prophet Mohammed  Shariah Compliant Finance & Investments– next wave of ethical investing – including Islamic Superannuation  Needs to be seen as “Innovation” and not as a threat to financial services or religious overtones  Proven; it’s not smoke and mirrors Copyright (C) by Muslim Community Co-operative (Australia) Ltd. All rights reserved. 7
  8. 8.  Proven; it’s not smoke and mirrors: the credible history of Islamic Banking & Finance in practice (globally) for over 1,000 years under the Islamic State  Premise: ◦ Riba or Interest is prohibited ◦ Asset based as opposed to cash based; money cannot make money;  Judaism  Christianity  Other religions Copyright (C) by Muslim Community Co-operative (Australia) Ltd. All rights reserved. 8
  9. 9.  The underlying tradable commodity must be an asset; substitution of real resources for money  There are many types of contracts ◦ Murabaha: Investor charges cost plus markup ◦ Mudaraba: Client shares the profits ◦ Musharaka: Partnership of the asset ◦ Ijara: Rent/Lease to own ◦ Sukuk: Securitisation of an asset ◦ Takaful: Insurance based on mutual aid concept ◦ Wakala: Charging of fees to hold an asset Copyright (C) by Muslim Community Co-operative (Australia) Ltd. All rights reserved. 9
  10. 10.  Islamic finance introduces such change: ◦ It replaces the lone classical lending contract with numerous finance contracts, ◦ Interest is replaced by:  Profit rate on partnership finance,  Markups on sale finance  Rental rates on leasing finance  In Islamic finance based on partnership, focus would be on profitability and the rate of return of the concerned investment. Copyright (C) by Muslim Community Co-operative (Australia) Ltd. All rights reserved. 10
  11. 11. Islamic Partnership Finance  Islamic banks hold equity to finance business enterprises.  Taking equity as partners in business provides more information and free monitoring, removing information asymmetry and associated risks. Islamic Sale & Lease Finance  In sale and lease finance Islamic banks provide goods and services, not cash,  Both banks and the customers are equally informed Copyright (C) by Muslim Community Co-operative (Australia) Ltd. All rights reserved. 11
  12. 12.  Self-Mitigated Risk ◦ When the bank maintains ownership until repayment is complete ◦ When a real assets involved: use as collateral, and pledge receivables.  Motivational aspects to the customer ◦ Musharaka or Mudaraba, with a profit ceiling (they know what they are in for during product life Copyright (C) by Muslim Community Co-operative (Australia) Ltd. All rights reserved. 12
  13. 13. 0.8316281 41 0.9952339 8 1.1270388 5 0.1995170 73 0.4821761 79 0.3824048 64 0.5564312 43 0.5244808 51 0.3257449 38 0.3003929 7 0.2717836 15 0.3076135 73 0 0.2 0.4 0.6 0.8 1 ASSETS DEPOSITS PROFIT EQUITY AVERAGE ANNUAL GROWTH 2000-2008 EIB Source: Emirates Islamic Bank 2009
  14. 14.  Banking ◦ Accounts (Dividends versus Interest) ◦ Deposits (Mudarabah Deposits)  Wealth Management ◦ Islamic Superannuation; treatment of Cash Portfolios and minimum balance free from interest ◦ Islamic Insurance – “Takaful”  Finance ◦ Property Acquisitions; Residential and Commercial ◦ Hire Purchase & Asset Facilitation  Information Technology ◦ Systems, Software and Data; Global Linking, B2B, SOA Copyright (C) by Muslim Community Co-operative (Australia) Ltd. All rights reserved. 14
  15. 15.  Islamic Finance Training and Education ◦ Products and courses (La Trobe & Monash) ◦ Islamic Finance for newcomers (broad)  Legal Advice; lawyers and legislators  Regulatory and Corporate Advisory Services  Council of Islamic Finance – Australia  Sales Force – Banks and Mortgage Managers  Information Technology Research and Development Investment  Government Supervision  Audit, Accounting & Taxation – ATO and Tax Practices  Management and Operational processes  Leadership and Strategy  Islamic Finance and Banking Associations Copyright (C) by Muslim Community Co-operative (Australia) Ltd. All rights reserved. 15
  16. 16.  Islamic finance critical requirements ◦ Ability to trade in goods and services ◦ Ability to take equity within a wider latitude ◦ Islamic finance activities must be treated as financial activities for tax purposes ◦ Recognition of Islamic finance contracts by civil, commercial and financial-market laws. Copyright (C) by Muslim Community Co-operative (Australia) Ltd. All rights reserved. 16
  17. 17. Education critical Opening new markets and industry Creating Jobs, an alternative avenue for Wealth Creation. Not a matter if but when Thank you… 17 Copyright (C) by Muslim Community Co-operative (Australia) Ltd. All rights reserved.
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