Hong KONG is calling upon the local Islamic finance community to take advantage of a recently signed mutual cooperation arrangement between the regulatory bodies of both countries to venture into the special administrative region to tap into potential opportunities there and in China.
The Securities Commission (SC) and the Hong Kong Securities and Futures Commission (HKSFC) memorandum of understanding (MOU) would allow for the fast-tracking of local Islamic finance products into the Hong Kong market and viceversa.
In his remarks at the signing of the arrangement in Kuala Lumpur yesterday, HKSFC chairman Dr Eddy C Fong said Islamic finance was one of the initiatives that had been recognised by the Hong Kong government, which was looking to develop the special administrative region into an Islamic finance hub.
"The HKSFC would like to take this opportunity to encourage the Malaysian Islamic finance community to come to us and discuss with us any of their plans to market their Islamic collective investment schemes (CIS) in Hong Kong or use Hong Kong as the spring board to explore investment opportunities in the mainland," he added.
Fong said Hong Kong had already made considerable in-roads into Islamic finance with the authorisation of the first Islamic fund in November 2007 and the introduction of its first sukuk in March 2008 as well as, going forward, it has great potential to be a prominent platform for Islamic finance. "As an international financial centre, it has a deep pool of financial talents.
For the record, 175 international financial firms have chosen Hong Kong as their regional headquarters. (It's also) the gateway for overseas capital to invest in the region.
"Being part of China, Hong Kong plays an important role in the country's development. We're already capturing a steady stream of liquidity from the mainland whose investors are now able to invest overseas (and) we expect the inflow of mainland China's capital to show phenomenal growth in the coming years as mainland investors seek diversification in their investments and use Hong Kong as the platform.
"At the same time, Hong Kong also serves as the conduit for investment capital, including Islamic funds, to make investments within mainland China," he added.
In a separate opening remark, Hong Kong government Financial Services and Treasury Permanent Secretary Au King Chi said Hong Kong's uniqueness lies with its China proxy. She said the special administrative region was the preferred platform for mainland firms listing outside of China and was the only place to have a renminbi bond market.
"Hong Kong is well positioned to bridge the investment needs involving liquidity of the Middle East with the investment opportunities within China. Indeed, the potential requirement for capital in the mainland, especially infrastructure development projects, lend themselves well to shariah-compliant financial structures. This is the market niche that we're eyeing," she added. — by Alfean Hardy
(This story appeared in The Malaysian Reserve on Nov 10, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)
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