Spotlight on Islamic Finance Q and A with Dr Imran Lum

NAB has recently launched a specialist Islamic financing product for the Australian market, focused initially on Muslim business owners looking at property development and construction opportunities.  Ashurst are proud to have supported NAB on the legal elements of this innovative financial services product, which is an Australian-first offering in a growing market. NAB's director of Islamic finance, Dr Imran Lum, led the creation of the product, working with community members, Sharia scholars, NAB business owners and legal and professional advisors. 

In this interview Ashurst's Global Head of Consulting and Global Head of Finance, Funds and Restructuring, Jamie Ng, speaks to Dr Imran Lum about this innovation.

Q: What was the inspiration behind NAB's involvement in the Islamic Financing space?

Islamic finance is one of those growing areas that was identified by various reports such as the Ken Henry Review and the Johnson Report. At NAB we took that on board and invested a lot of time and resources in really understanding the industry and we’re excited about launching a specialised financing product for Islamic business customers looking to invest and grow.

Q: Are we seeing an increase in appetite for Islamic Financing products in Australia?

Definitely, we’ve done transactions for a whole range of different Business, Corporate and Institutional clients from large CBD buildings, to property developments, private hospitals, aged care facilities and even some large trading businesses. Until now there has been considerable external costs because there is often a need to obtain tax and legal opinions and in some cases an ATO ruling because of the participatory nature of the Islamic contracts. Unlike the UK, Hong Kong, Singapore, Luxemburg and even South Africa, at the federal level Australia has not made any amendments to tax legislation to facilitate Islamic finance transactions. So we’ve invested the time in working with global Shariah advisors Amanie Advisors and the various regulatory bodies to make an Islamic ‘Off-the shelf’ construction financing offering and make it more seamless for the end client.

Q: Where does NAB see the future of Islamic Financing for its business? 

I think there is a huge opportunity in this space. If you think globally where we’re positioned in the Indo-Pacific next to some of the world’s most populous Muslim countries and with increasing trade relationships with the GCC, Australia is an attractive destination for Islamic investors. We’re seeing these investors partnering with Australian firms, both Muslim and non-Muslim, and having an interest in property. Locally we have a young, growing and very entrepreneurial Muslim community and we’re really proud to be able to offer such a valuable service to support businesses in the Australian Muslim community.

Q: How important is it for Australia’s banking offerings to reflect the different communities in Australia?

Australia is a very diverse place and different communities have different approaches to financing and doing business. I think personally it’s important to listen to these communities, include them in the conversation and develop products that work for them.

Q: What is NAB’s Islamic Finance offering and who will have access to these products?

The offering is designed to cater for transactions over $5 million for commercial property development and construction purposes.

Q: Switching gears – tell us a bit about your personal motivations and what it is like leading teams in the pursuit of innovative new products at NAB? You are also a leader in the community, keen to hear more about how you are harnessing your personal passions to make a positive difference.

Muslims have a history of trade and building trade relationships all over the world. My own ancestry is from the Bugis people and they along with the people of Makassar are known to have traded with the Aboriginal people of Arnhem land centuries ago, so I’ve always been intrigued with how Muslim traders and Muslims in general navigate aspects of Islamic law in new jurisdictions. It’s actually the topic of my book that’s coming out later in the year, so to be able to put a bit of that theoretical work into practice is something quite special. What we’re trying to do in some small way, is provide businesses that might otherwise be excluded from finance due to their beliefs, an avenue through which they can grow and expand their business.

To learn more, please refer to related article - NAB launches Sharia loan product into Australian Islamic finance market tipped to be worth $250b. Please also refer to Dr Imran Lum's profile here.

Author: Jamie Ng, Global Head of Consulting and Global Head of Finance, Funds and Restructuring