Tag Archives: australian
Increased Farm Buyer Scrutiny Likely
22 Oct, 2013 JOHN KERIN THE Abbott government’s plan to increase scrutiny of foreign farm purchases looks set to pass the Senate despite a simmering internal Coalition row over Chinese investment. The Greens and Democratic Labour Party senator John Madigan have backed the Coalition’s plan to lower the threshold which triggers scrutiny of foreign farmland purchases by the Foreign Investment Review Board (FIRB). This gives the Coalition the numbers it needs to pass the legislation through the Senate. The Greens and Senator Madigan both want a lower threshold than the $15 million outlined by Prime Minister Tony Abbott in his pre-election foreign investment policy. Labor has so far indicated it does not support lowering the threshold. Liberals and Nationals are divided over increasing the threshold to $1 billion for China in an effort to clinch a free trade agreement. Mr Abbott says he wants to sign a free-trade deal with all three North Asian powers, China, Japan and South Korea, within 12 months. Government sources suggest the government would be better off passing the legislation before a new Senate, where views on foreign investment are much more uncertain, is sworn in on July 1 next year. Mr Abbott released a foreign investment policy ahead of the election which said the threshold of $248 million which triggers a review by the Foreign Investment Review Board would be reduced to $15 million. The policy included plans to establish a national register to keep track of foreign-owned land holdings. The policy was reaffirmed by Mr Abbott and Agriculture Minister Barnaby Joyce during the election campaign. The policy has largely been driven as part of a response to growing community anxiety over perceived high levels of foreign land ownership in Australia. Treasurer Joe Hockey indicated the Abbott government could increase the investment threshold to $1 billion if China was prepared to enter in to a free-trade deal with Australia. Key Nationals, including Mr Joyce, and New South Wales Senator John Williams, are staunchly opposed to doing a special deal for China. They argue profits will be lost to Beijing, rather than supporting local Australian communities. Senator Madigan said on Monday that “any investment in Australian farmland should be vetted”. “You can buy a pretty big plot of highly productive rich arable land in parts of Australia for $15 million,” he said.Alarm bells He said given at least 11.3 per cent of farmland was foreign-owned, “it should be ringing alarm bells for those in government and in opposition”. “We should not be selling out the farm to suit vested interests,” he said. Greens Leader Christine Milne said her party favoured lowering the FIRB trigger to $5 million and a tough national interest test. “We shouldn’t sell any land and water to a wholly owned government subsidiary at all and in relation to corporate purchases there should be a threshold of no more than $5 million,” she said. Senator Milne said countries were buying up productive land around the world to ensure they had a source of food when climate change-induced food shortages inevitably occurred. “It is no longer about trade, but survival,” she said. Senator Milne said the Greens would propose their own foreign investment bill when parliament resumed in November. Continue reading
Global Interest In Gunns Sales
21 Oct, 2013 CAROLYN CUMMINS GLOBAL interest is being fielded for former parts of the greater Gunn’s estate – the AFPT and AFPT 2 timberland portfolios, which have been put on the market. Prospective buyers range from Australian pension funds to high net worth individual investors and overseas pension funds. A price tag of about $50 million was suggested for the 94 forestry products in the portfolio. The Tasmanian assets are being sold by CBRE Agribusiness on behalf of Peter Anderson and Shaun Fraser of McGrathNicol as “Joint and Several” receivers and managers of the Australian Forestry Plantations Trust (AFPT) and the Australian Forestry Plantations Trust No. 2 (AFPT 2). Gunns, based in Tasmania, was placed into voluntary administration in September last year after the ANZ-backed syndicate withdrew support for the forestry group’s recapitalisation. This also included the group’s long-running attempt to obtain approvals to develop a timber pulp mill at Bell Bay, estimated to cost $2.3 billion. The agent, David Smith, CBRE’s head of timberland transactions, said the sale campaign had already generated wide-ranging preliminary interest. Mr Smith said two portfolios were being offered for sale in one line or separately. They comprise 94 properties with a total of about 11,757 hectares of hardwood plantation across a total land title area of 21,777 hectares. In addition to the timberland assets, the portfolios include 17 residential houses as well as significant existing infrastructure in the form of an extensive network of internal and external roads. “We have already fielded inquiries from domestic pension funds and institutions, local farmers, high net worth investors, offshore institutions and even an international pulp mill owner interested in future fibre security,” Mr Smith said. “The portfolio has generated interest from a biomass perspective, from parties looking at the potential future supply for production of biofuels, as well as from prospective purchasers considering the managed conversion of the land back to various forms of agriculture.” Continue reading
Sustainable Investing: Opportunity Awaits Islamic Finance Industry
New opportunities in sustainable and responsible investing By Usman HayatSpecial to Gulf News Published: 13:06 September 8, 2013 Islamic finance and the forms of finance generally referred to as sustainable and responsible investing (SRI) are yet to actively collaborate with each other. One would think that to strengthen their position in a market dominated by conventional finance, Islamic finance and SRI would be sharing their successes and failures, coming together for joint ventures, and supporting each other on issues where they have similar views. But such collaboration has not occurred. Building bridges between the two remains an opportunity that is waiting to be seized upon by the industry leaders from the two sides. Islamic finance and SRI share some obvious similarities in their objectives (do good; avoid harm), methods (e.g. exclusionary screening) and claims (such as emphasis on ethics). Both seem to trigger similar expectations among their proponents of being ethically different from conventional finance. They also face similar criticism of not being able to live to up to these expectations as shown by the ‘form versus substance’ debate in Islamic finance and ‘green washing’ debate in SRI. Although SRI is older and larger than Islamic finance, which is estimated between $1 to $2 trillion in terms of global assets, both are relatively small and growing segments. Why are then Islamic finance and SRI not actively collaborating? Some apparent reasons are different countries of concentration, differences in target markets, pre-occupation with their own growth, perception and reputational concerns, cultural barriers, lack of initiative by industry leaders, and simply insufficient understanding of each other. But in the absence of survey data, it is difficult to get to the bottom of this lack of collaboration. Islamic finance is practised by international financial institutions offering conventional finance, such as HSBC. It has also drawn increasing interest from other international organisations, such as the World Bank, which organises an annual conference with the Islamic standard setter, Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). Similarly, many conventional financial institutions are active in SRI. For instance, Goldman Sachs has participated in the first social impact bond in the US, it has 10,000 women initiative and its asset management arm is a signatory to UN Principles for Responsible Investment. If both Islamic finance and SRI can work with the leading and sometimes controversial faces of conventional finance, why can’t they work with each other? At times, we do observe financial products that meet some traditional Islamic and modern environmental, social, and governance (ESG) criteria. For instance, the Sustainable Resources Fund launched in 2012, that invests in a mix of agro-forestry, land and sustainable agricultural sectors is supposed to appeal to both Islamic and ‘green’ investors. Similarly, amid increasing news reports about ‘green’ sukuk, Australian solar companies secured funding through ‘green’ sukuk for projects in Indonesia in 2012. Other earlier examples include Dow Jones Islamic Sustainability Index introduced in 2006. Nonetheless, such examples remain exceptions. Their general lack of interaction can also be observed in professional education. For instance, the curricula for Sustainable Investment Professional Certificate (offered by John Molson School of Business, Canada) and Islamic Finance Qualification (offered by Chartered Institute of Securities & Investment, UK) have limited, if any, content about each other. The same trend is observed in industry reports even in a country like the United Kingdom which is home to both SRI and Islamic finance. For instance, the Islamic finance report 2012 by the City UK does not talk about other forms of ethical finance and UK Sustainable Investment and Finance Association’s annual review 2011-12 does not talk about Islamic finance. Unsurprisingly, one sees the same trend of lack of interaction in industry conferences in Islamic finance and SRI. There are of course differences between Islamic finance and SRI. One significant difference is that the concerns of Islamic finance go beyond the purpose of financing and also cover its structure. This is because of Islamic prohibitions of riba and excessive gharar, which are generally interpreted to include lending money on interest and the trading of risk. Also, the exclusionary screening applied in Islamic finance goes beyond the usual suspects (such as alcohol, tobacco and gambling) and covers conventional financial services because of prohibition of riba. However, the current form-oriented and legalistic compliance in Islamic finance that often has little effect on economic substance of transactions suggests that these prohibitions cannot explain the lack of collaboration with SRI. Recently, we had two experts, one on Islamic finance and one on impact investing, at CFA Institute Middle East Investment Conference in Dubai on March 20-21, 2013. Speaking on Islamic finance in the global economy, Ebrahim Warde, professor at Tufts University, was clear that offering social value ought to be a part of Islamic finance. Talking about Impact Investing, Harry Hummels, professor at Maastricht University and a European liaison for Global Impact Investing Network (GIIN), was of the view that it is intending and measuring a positive difference to society that turns an investment into impact investment and by implication Islamic finance could be structured as impact investing. Listening to Warde and Hummels reinforced the idea that there is room for collaboration between Islamic finance and SRI and at the core of expectations from them is the desire to see finance making a positive difference to the society. Interestingly, in London, in October 2013, there are two significant events planned, one from impact investing and the other from Islamic finance. First is the GIIN Investor Forum, October 10-11, a global fathering for impact investors, to be held in partnership by the Global Impact Investing Network and the City of London Corporation (which also has an Islamic finance secretariat). Second is the World Islamic Economics Forum, October 29-31, a mega Islamic finance event that will be hosted in a country without a Muslim majority for the first time. At this stage, the most likely scenario is that the two events will take place independently of each other with no planned interaction. Had Islamic finance and SRI actively been collaborating, these two events in London in the same month could have been a golden opportunity to further collaboration and grow both fields. With so much in common between Islamic finance and SRI and so much to gain from active collaboration with each other, bringing the two sides together is an opportunity waiting to be taken up by the leaders from the two sides. Let’s see if this opportunity will indeed be realised, who those leaders will be and most importantly what gains will be brought about by active collaboration between Islamic finance and SRI. — Usman Hayat is Director of Islamic Finance and ESG investing at CFA Institute Continue reading
