Australia makes Islamic Finance debut with solar sukuk launch in Labuan

solar 2(Bloomberg) — Australia is set to become the newest entrant to the Islamic debt market this year as a solar-power joint venture seeks to sell a debut sukuk in Malaysia’s offshore tax haven of Labuan. 

SGI-Mitabu, run by The Solar Guys International and Mitabu Australia Pty, has revived a plan to offer A$150 million ($117 million) of the securities in the third quarter to finance the building of a plant in Indonesia, M. Rusydi, Mitabu’s director, said by phone from Brisbane on Feb. 10. The company is coming to Malaysia because Australia still hasn’t approved laws allowing for the sale of sukuk since first proposing a plan in 2010.

The offering may serve as a model for Australian companies to tap the $1.7 trillion Islamic banking industry, according to Kuala Lumpur-based consultancy Amanah Capital Group Ltd. Malaysia, the world’s biggest Shariah-compliant debt market, has attracted sukuk issuers from Japan, which also lacks legislation that avoids double taxation on capital gains and income streams. Labuan, an island off the coast of Borneo, was established as a financial hub in 1990.

“Such financial transactions benefit the Australian economy by opening up more sources of funding,” Suhaimi Zainul-Abidin, treasurer of the Gulf Asia Shari’ah Compliant Investments Association, said in a Feb. 10 e-mail from Singapore.

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