Delivered at Finsia in March 2010

1. Chaaban Omran
Director-MCCA Asset Management Limited
1
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Co-operative (Australia) Ltd. All rights
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2. Towering Strength
The Sky is the Limit
Solid
Inspirational
Open to All
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Co-operative (Australia) Ltd. All rights
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2

3.  Introduction
 Who is MCCA?
 Timetable?
 What is “Shariah Compliance”?
 Demystifying Islamic Finance
 Opening Up Markets
 Creating Jobs
 Way forward for Australia
 Conclusion

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
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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.  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
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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
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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
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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
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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.
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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
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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
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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.  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
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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
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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.
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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
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Co-operative (Australia) Ltd. All rights
reserved.