Hatim El Tahir, the director of the Islamic finance group at Deloitte, a consulting firm, in Bahrain, says, “Australia has a rich real economy,” he adds, citing its agriculture, livestock and minerals and metals as “good assets for Islamic finance”.
Ref: https://muslimvillage.com/2013/10/29/45445/australia-has-golden-opportunity-with-islamic-finance/ This statement is not just to lure people to invest in businesses. In this article, we will try to clarify all the hesitations people feel when thinking about business along with the teaching of Islam. It is hard for Muslims to find a business where they can invest without thinking much about the investment being halal. We will cover every question you might have regarding Halal business investments in Australia.
We believe by the end of this article you will be well informed and confident to know where to invest your hard-earned money!
Let’s start with the most basic question; what is Halal investment? The term HALAL dictates different aspects e.g. which food is considered halal but for investments, halal means some severe restrictions. There can be no fixed-income investment that produces any interest. Also, no investments are allowed in businesses involved in alcohol, gambling, tobacco, firearms, pork products or adult entertainment. To give you a very simple way to identify HALAL is anything that,
Supports the community (local and global) – Encourage locally based business – Focus on education – Advance health and prosperity – Work to overcome poverty Supports innovation and advancement – Life sciences research and development – Green or renewable technologies – Efficient and sustainable technologies Supports the environment – Contribute to preserving eco-system – Minimise pollution and waste – Energy-efficient and building practices – Recycling
And many other broad areas such as Healthcare, Innovative Technology, Renewable Energy, Life science, Sustainable Development and Education.
Let’s dive deeper to understand the prospects even more. We will start off with the most common ones.
Halal Investments areas in Australia
Halal cash investment might sound too similar to what you do in conventional banking. However, that is not the case when you invest in Islamic mode of banking. Islamic banking makes sure that every term and condition of genuine Islamic guidelines are maintained. Unlike conventional banking Banks and financial institutes with Islamic banking options operate following the Islamic shari’ah. But you must know the HALAL banking methods so that you are not disappointed or doubtful about the process and return of your investment.
A few points to note: When you deal in the Islamic Halal Cash option you wouldn’t be having a fixed rate of return. Your money will be processed by the financial institutions according to Islamic principles and your return will vary accordingly. You will get the share of the profit based on the contract you sign with the institution. There is also a possibility when you might have to share loss as well (which is highly unlikely to happen). This particular term actually makes your investment HALAL since you are ready to share the profit or loss that will come forward instead of a fixed profit that is ensured by the conventional banking investment regime.
Halal Investment in Property and Infrastructure
Investment in property business is without a doubt the most reliable of all. Records show that through time it gained popularity as the best investment sector. In terms of Halal investment opportunities in Australia, investing in the property and infrastructure market can serve you ideally.
The property industry did experience some market fluctuations in the past, but the market has now stabilized and rose by 11% in 2017. Not only the investment option supports Islamic principles, but also the property and infrastructure industry has plenty of monetary benefits to offer to an investor. So, there’s a win-win situation for you.
As an underpinning for economic growth, infrastructure development is a priority for Australian governments. Infrastructure planning and innovative financing play a prominent role in public policy. The Australian Government has committed more than A$50 billion for current and future investments in public infrastructure, between 2013–14 and 2019–20 onwards (ref. 2 below). This is in addition to significant investments by state and territory governments and the private sector. Australia’s strong economic credentials, transparent business environment and substantial pipeline of projects provide the ideal conditions for companies to finance, construct, own and operate major infrastructure assets.
Also, if you aren’t sure of how the relevant market works, you shouldn’t be too worried about it. There are a lot of options that you can avail in terms of enriching yourself with all the information you need to invest in the property market. Go through the housing market analysis by the Reserve Bank of Australia. It will give you a good idea. And if you made up your mind to invest in property then you can check here to get an idea about what sort of land you should invest in. Learn more about Australian property market history here.
Ref. 2: Austrade; Investment-Opportunities-in-Australian-Infrastructure-brochure
Halal Investment in Technology
Technology in Australia is moving astoundingly quickly. The pace of change in the fields of artificial intelligence, renewable energy and the “internet of things” makes it a reasonably secure bet. From investment in raw materials to finished products, you can choose from all the options you want. The technology industry in Australia is extremely wide, and you have plenty of options to look forward to. Between 2014 and 2020, the contribution of digital technologies to Australia’s economy is forecast to grow 75 per cent to A$139 billion according to the Australian Trade and Investment Commission (ATIC).
Take FinTech, Australia for example. With assets of more than A$7 trillion- over four times the country’s nominal GDP – Australia’s financial sector (FinTech) offers access to one of the Asia-Pacific region’s largest pools of bank assets, as well as the world’s third-largest pension asset pool. Find out more here.
In a broad sense, this category includes stocks involved with the research, creation, and distribution of technology-based goods or services. That can be everything from computers to software, televisions to websites. Hardware is the physical device — a computer, a television, a smartphone, etc. Software is the computer code and platforms that make those devices work. However, as is the case in other financial markets, the rate of return and the risk associated with each category in the technology sector might differ. Hence, these are also some of the important things you need to consider before investing in the technology sector in Australia. This investment stream can easily offer you the best Halal investment opportunity in Australia.
Check here for an informative article on Investment in Technogym published by Business Insider, Australia.
If you’re looking to make halal investments in Australia, and haven’t yet finalized the move, then the manufacturing industry is another avenue you can rely on. Services and manufacturing industries are considered significant for the economy, and if you invest in industries that are integral to the national economy, then you are more than likely to make it big in terms of your investment decision.
The manufacturing industry regime is huge in Australia. It consists of food, beverages, textile, motor and chemical manufacturing etc. Any of these can be a great choice for investment. It should be noted that few sectors such as alcohol or cigarette manufacturing is prohibited in Islam.
Apart from these, Food processing and manufacturing is a great place to invest your money in. As an island continent with strong biosecurity regulations, Australia’s agribusiness and food sector are renowned for clean, green and safe production. Leveraging established connections with Asia, Australia provides investors with unparalleled opportunities to capitalise on the demand from fast-growing consumer markets for healthy, premium and convenient food products. Moreover, it’s always good to invest in the food industry where you can keep the balance personally to ensure whether it is Halal.
Telecommunications is another HALAL investment stream you can look forward to in Australia. There’s no denying the fact that the world of telecommunications is on the rise worldwide, and the same is the case in Australia, too. By investing in telecommunications, you are sure to invest not only in a halal area, but also you get to invest your hard-earned money in the highly-rewarding telecom sector. If you’d like for a perfect balance between halal investment and a substantial rate of return, then investing in the telecommunications sector is likely to serve you in the long run. For instance, Telstra dominates Australia’s telecom industry with 49% of the subscriber market in domestic landline, mobile and broadband services. But it has drawbacks. Telstra may be the leading company in providing convenient service but TPG telecom holds the market on price segment providing low call rate and service charge. See the image below. Find out more here.
With all of the investment streams, you need to take some calculated risks, which can only be possible if you know how the market works. So, before you finally make the move, it is imperative that you understand the dynamics of halal investment opportunities in the Australian telecommunication sector.
Healthcare business investment makes it halal and at the same time gives a pure joy of helping humanity. The healthcare sector is made up of many different industries – from pharmaceuticals and devices to health insurers and hospitals – and each has different dynamics. Investments in this sector are affected by many variables, including positive trends related to demographics and negative trends related to reimbursement. Investing in healthcare stocks can provide generous returns, but it is also tedious due to the many factors affecting stock prices. The healthcare sector is vast, and there are many large and small companies to choose from in various industries.
The health-related digital technologies market for Australian consumers is vigorous. Many vendors provide analytics-as-a-service using vital signs data collected from various apps and devices and offer guidance on wellness, health management, fitness and diet. Australia is a pioneer in developing sensor-based health technologies, including sensors for home healthcare, such as those used in Swinburne University of Technology’s Holly Project, which has attracted investment from Korean tech giant Samsung. Australia’s telehealth market is moving toward service-based business models, with video telemedicine services and the mobile health app sub-segments expected to have the fastest growth (CAGR at 12.9 per cent and 11.7 per cent respectively) from 2015 to 2020 (Ref. 3 below). Look at the subsectors and growth areas for the best Halal Investment Opportunity in Australia.
Subsectors: aged care, telehealth, eHealth (information management and health informatics), mobile health, genomics and imaging.
Growth areas: analytics, IoT, sensors, wearables, decision support and predictive maintenance. There are also investment vehicles and healthcare mutual funds in which you can invest; they can reduce the volatility of investing in individual stocks by diversifying holdings. Read more about diversification and investing in Risk and Diversification here.
Ref. 3: Austrade, The business of distance education, accessed 22 August 2016.
To save you the hassle of looking for the best Halal investment opportunity in Australia, have a go at these products; check here.
Australia is a goldmine for investors and opportunists. You will not struggle much in finding the best sector to invest which is supported by Islamic Principles. At the first glance, halal investment options in Australia might appear few and far between, but if you dig down deeper, you’ll come across many interesting and immensely rewarding options for you to consider. In addition, you can always keep this blog as a reference, and consult this every time you’re confused about halal investment options in Australia.