Four years after trumpeting a dream to turn Hong Kong into an Islamic financial centre, Financial Secretary John Tsang Chun-wah concedes only modest progress has been made.
No company has issued any sukuk bonds, and only Hang Seng Bank has launched an Islamic fund.
But Tsang is refusing to give up on his ambitions. He told fund managers at a Hong Kong Investment Funds Association conference yesterday the government would hold a second round of consultation on changing tax laws in a bid to encourage more companies to issue sukuk bonds, which are designed according to Islamic religious rules.
'Since we started to promote Islamic finance in Hong Kong in 2007, there has been modest progress,' Tsang said. He blamed the global financial crisis in 2008 and 2009.
Islamic finance refers to bonds or other financial products that conform to Islamic religious law, or sharia, which in general does not allow Muslims to accept interest, gamble or speculate on the stock market or engage in short selling. They are also banned from investing in industries related to pork, tobacco, casinos or firearms.
In September 2007, Tsang said the government wanted to help Hong Kong lenders tap into the US$1 trillion Islamic bond market, which he expected to grow 15 per cent annually. This was followed by numerous seminars and roadshows by the Hong Kong Monetary Authority, the Hong Kong Securities Institute and assorted banks all eager to jump on the bandwagon.
