The Federal Government plans to harness the potential of Islamic finance and insurance to help establish Australia as a leading regional financial services centre.

Speaking last week at the Islamic Finance Conference in Melbourne, Assistant Treasurer Nick Sherry said there is growing awareness among the community and policymakers of the economic potential of Islamic finance.

Following significant growth in the past decade, the finance and insurance sectors are now the largest contributors to the Australian economy and in 2008/09 generated about 10.8% of GDP.

Currently, Senator Sherry says Islamic finance and insurance represents significant untapped potential domestically and internationally, especially considering the stability of the Australian economy and our proximity to Indonesia, the largest Muslim nation in the world.

“Over the past 10 years Islamic finance has experienced rapid growth, with the value of worldwide Islamic finance assets projected to reach $US1.6 trillion ($1.9 trillion) by 2012 – almost double the amount of today’s assets,” he said.

“We also recognise there are Moslems in Australia who would use Islamic financial services if they were more accessible… enabling [them] to access products that may be more consistent with their principles and beliefs.”

A Federal Government report in January recommended the removal of regulatory barriers to the development of Islamic finance products in Australia. It also encouraged a review of Australia’s tax laws to ensure that, where possible, they do not inhibit the provision of Islamic finance, banking and insurance products.