HONG KONG (AFP) – Hong Kong’s chief executive said Wednesday the city would look to emulate Malaysia and Singapore as a centre for Islamic finance, in an effort to grab a slice of the thriving market.
In his annual policy address, Donald Tsang said providing financial products that comply with Islamic law “offers huge potential for development.”
“To further consolidate Hong Kong’s position as a global financial centre, we should actively leverage on this new trend by developing an Islamic financial platform in Hong Kong,” Tsang told legislators.
“Apart from stepping up our efforts to promote Hong Kong’s financial services to major Islamic countries and regions, we will focus on developing an Islamic bond market.”
Tsang said the city’s Monetary Authority was now working with the financial sector to develop products that complied with Islamic finance’s strict rules, where interest payments and profits earned from alcohol, pornography, pork or gambling are all banned.
Since Muslim-dominated Malaysia’s first issuance of sovereign global Islamic bonds in 2002, there has been a series of other issuances by countries such as a United Arab Emirates, Qatar, Bahrain and Pakistan.
Malaysia retains the world’s largest Islamic bond market, accounting for about 47 billion US dollars or two-thirds of total Islamic bonds outstanding worldwide.
Singapore has also pushed to establish itself as an Islamic banking centre.
Hong Kong could also face competition from former colonial power Britain, where Lloyds TSB became the country’s first high-street bank to provide services compatible with Islamic Sharia law, following the establishment of the Islamic Bank of Britain (IBB).