To add to my friend's scenario which is quite important..he is a Muslim...Now those of you who know people that are islamic, under Shariah laws they cannot leave money in the bank to earn interest..Typically they are ok to invest in Shares and predominantly the property market..
Certain religious groups in this country do contribute more so than others to particular investment classes simply because of their beliefs.M
BTW my friend's loan was approved by MCCA.
please read below about Islamic finance
Islamic finance: a thing of the future
By Alex Holevas | 7/11/2011 8:00:00 AM | 0 comments
inShare
Australia must wake up to the growing popularity of Islamic financial products as an alternative to mainstream banking, or risk being ostracized from the $4 trillion dollar global industry, a muslim financial services chairman has said.
"Australia is the safest country in the world, with a very solid economy and a stable government...if we don't realise it [the potential of shariah law financial products], there must be something wrong with us," said Dr Akhtar Kalam, chairman of the Muslim Community Co-operative Australia (MCCA).
The trend has exploded overseas, mostly in non-muslim countries, and Kalam told Wealth Professional the economy needed an alternative to conventional finance, for projects such as infrastructure, with continuing global concerns over funding.
"The UK is not a muslim country, and they have amended their taxation laws so that they can attract a lot of Islamic finance. Most of their infrastructure projects are being run by 'sukuk', which are Islamic bonds," he said.
Kalam said Australia has over 100 infrastructure projects at an advanced stage, but can't proceed because of funding delays, to the tune of around $700 billion.
"We are coming to a stage where our existing infrastructure is going to collapse, unless we get more funding...so we need something that can impact our economy and our productivity should improve, and the only way we can do that is by shariah law implementation in Australia.
But is there a genuine market for it in Australia?
"Absolutely, not only here but all over the world. We are part of the global village, and countries like USA, UK, China and Russia...all of them are going for Islamic finance, so there must been some reason for it.....and we have to keep pace with what the others are doing," Kalam said.
The fundamentals of Islamic finance are about avoiding interest and uncertainty, with every transaction backed by an asset.
"In the 22 years of offering financial products, we've never been in the red, and this year we issued a dividend of 5.3%. The effects of the GFC were minimal, if anything at all, which is a testament to our products" Kalam said.
A small number of financial planners were already offering Islamic finance, but Kalam suggests the complex nature of the products, with its many rules and laws, might prevent it from growing at a faster rate.
"Planners are helping customers to understand Islamic finance, and giving them an alternative. There are customers who are looking at investing very, very large sums of money, but there is a long way to go, and until the proper education is given, it might be difficult for a novice planner to begin offering Islamic finance," he said.
MCCA have plans to launch a retail superannuation fund once the FOFA reforms are confirmed, with a property trust investment to follow in 2013.
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