Islamic Investment in Australia
[This article was published in the 10th issue of Nida'ul Islam magazine, November-December 1995]With the aim to present a practical model of Islamic banking to the Muslim community and to the Australian society at large, and to provide Muslims in Australia with an alternative to the existing interest-based financial products and services, Muslim Community Co-operative Australia was established in February 1989 with ten members and a starting capital of $22,300. Operating from its head office in Burwood, Victoria, MCCA's activities involve financial dealings and transactions based on Islamic finance principles. Transactions that involve interest are completely excluded from MCCA's activities. Its activities also include the provision of an institutional framework for converting the charitable funds into a socially beneficial and economically productive tool.
MCCA manages five types of funds: Murabaha, Musharaka, Mudaraba, Qard-el-Hassan and Zakat funds. It has enjoyed phenomenal growth since its inception and it currently contains more than 560 members with an asset base of $2,320,000 compared to only $105,700 in 1991. The rate of return on investment has jumped from 5.4% in 1991 to around 9.75% in 1995, a return which is much higher than fixed rate of return offered by interest-based banks.
In an interview conducted in October 1994, Peter Moody of the Australian Taxation Office summed up the activities and purposes of MCCA as follows:
1- A place for the advancement of the principles of the Muslim faith, and the evolution of a "community" that overlooks its members and shareholders. MCCA funds can be, and are used to help those in need within the community. Donations are received and applied for this purpose. A separate fund has been created for this end, and is known as the Qard Hassan Fund.
2- To operate as a housing co-operative that assists with the purchase of mainly residential properties for and on behalf of its shareholders. The purchase of other asset classes is undertaken in a similar fashion, mostly the purchase of motor vehicles, computers, and some limited business finance. The purpose of the provision of this facility is solely centred around the Muslim doctrine that forbids the payment of interest. MCCA charges an upfront "administrative" charge for their involvement, but thereafter, the loan is interest free. This conforms to all the requirements of their religion, and such transactions are held to be Halal, which means that they are "allowable" under Muslim doctrine. Repayments under these types of transactions are known as repayments of Murabaha.
3- To accept funds and issue shares in the co-operative from time to time, and to distribute the trading surplus of the co-operative back to the members in the form of dividends.
MCCA's objectives is to build up funds available for investment to $45 million; to educate and train on the concept and operations of Islamic Finance aiming to qualify at least 10 Muslims in managing and operating an Islamic Financial Institution: 5 in Victoria, 3 in NSW and 2 in WA; to open 3 branches for MCCA : 1 in Victoria, 1 in NSW and 1 in WA; and to establish and develop an institutional framework aiming for the best possible utilisation of charitable funds into economically productive and socially beneficial structure.
MCCA's contact numbers & address: Tel: (03) 889 6644, Fax: (03) 889 1211 Head Office: 1342 Toorak Rd. Burwood, Victoria, 3125
