Islamic finance loopholes big enough for a herd of camels

Islamic religious law, or sharia, bans interest income but allows profit sharing. Many Islamic investments, such as bonds, are structured so gains are considered profit rather than interest income. The problem is that in Hong Kong interest is not taxed but profits are.

SCMP, June 10

Hmmm ... a bit of a problem there indeed, and it's not only profits tax to which these Islamic bonds could fall victim but stamp duties too because of their structure.

You would think that the bright fellows in our government who came up with the idea of Islamic finance as the next big thing for Hong Kong might have thought of these difficulties before pushing it as a way of saving our economy from the terrifying and deadly double-S threat.

You ask? You didn't know? Double S stands for Shanghai and Singapore, of course, because they are going to knock Hong Kong out of the running in Asia. They say so and we are thus compelled to believe them, which is why our bureaucrats have been so keen to find a refuge from this invincible competition.

Unfortunately, all of the other big refuge ideas they have come up with in financial affairs have also gone phhhuuuut! Most recently, there was the proposal for a professional board (let's dive to the world's regulatory bottom) and a Hong Kong depositary receipt (let's list the Russian criminal world).