Jun 23 2009
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Dubai's Islamic Financial Institutions Meet the Australian Regulator
Dubai Export Development Corporation, headed by its Chief Executive Officer, Engineer Saed Al Awadi, is currently leading the first Islamic Financial Services Mission to Australia accompanied by senior industry representatives from Dubai.
The Trade Mission seeks to explore opportunities for Islamic Financial Services in Australia and to play a pivotal role in the current changes that are taking place within the Australian regulatory framework. These changes when completed will allow for the provision of Shariah-compliant products and services.
The Australian financial services sector is well established with a vast array of firms in all areas of the sector such as banking, insurance, investment, fund management among others. The importance of this sector is evident by the fact that it contributes to over 8% of the country's GDP (i.e. A$82billion). However, the sector is deficient in the provision of Islamic products and financial services, where only one of the 56 banks in the country, of which 44 are foreign, offers any kind of Islamic products, to the country's 450,000 or so affluent Muslim residents. This market segment is growing at 20% per annum largely due to the migration and the demands for Islamic products and services are becoming more apparent.
Shariah compliant finance has experienced considerable growth and is now valued in excess of US$700 billion. Today Islamic products have moved beyond lending, insurance and investment funds to include sukuks, exchange traded funds, currency and gold trading and hedge funds. Equally important is the fact that the appeal of Shariah compliant products is not limited purely to the Muslim population. A recent survey carried out by a UAE Islamic financial institution showed that its customers were driven by the Shariah products indicating the widespread popularity of said products. Moreover, a number of governments worldwide are seeking to incorporate Islamic financial products into the mainstream of their financial services sector.
"The principles based prudential approach used by the banking and insurance regulator created no real regulatory obstacles in establishing an Islamic bank in the country provided some adjustments are made to accommodate Islamic banking products," said Ebrahim Fayez Al Shamsi, Chief Executive Officer of Emirates Islamic Bank and representing the banking stream in the Trade Mission.
The delegation also discussed the issues relating to Islamic finance with senior officials from the Australian Financial Markets Association (AFMA), the body representing wholesale banking and financial markets on regulatory issues. The delegation was encouraged to learn that AFMA has formed the Islamic Finance Committee and has regular dialogue with the Treasury regarding taxation matters which are important to Islamic finance due to the nature of its contracts. AFMA is also part of the Financial Centre Forum which advises the government on the financial services sector including Islamic finance.
The delegation also met with the Investment and Financial Services Association (IFSA), representing the retail and wholesale superannuation, funds management, life assurance and financial advisory network industries. Officials from IFSA stated that a number of their members were keen to develop Shariah compliant products. In order to facilitate this, the Dubai's Islamic financial institutions could assist the process through knowledge sharing forums.
"The Islamic financial institutions in the mission have offered to share their experience as well as carry out an educational programme with regulators and industry associations in Australia," Al Awadi concluded.
About Dubai Export Development Corporation:
Having commenced operation in 2007, the Dubai Export Development Corporation (EDC) is an organization established under the umbrella of the Government of Dubai and as a part of Dubai Department of Economic Development. Its vision is to be a world-class model in assisting and facilitating exporters, by creating an enabling environment for exports, with the aim of enhancing the competitiveness of Dubai as a preferred trading partner.
The EDC has developed its vision and mission to identify and effectively deliver value-added trade support services to Dubai based firms for accelerated and profitable expansion of their business in foreign markets.
For more information, please contact: Rose Manaog; Action UAE; firstname.lastname@example.org; +971 4 3902960.
© Press Release 2009
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