HONG KONG’S FERVOUR FOR SHARI’AH

Hong Kong Chief Executive Donald Tsang and his financial secretary John Tsang will visit India, the Middle East and other parts of Asia to convince borrowers and investors that the Chinese territory is the best place to issue Islamic bonds. The trip is part of Hong Kong’s bid to establish the 1,100sq km enclave as another centre for Shari’ah-compliant debt. Hong Kong has the advantages of a transparent legal system, a simple tax code, a concentration of international banks and a business-savvy legislature that can quickly implement necessary regulation. Moreover, its proximity to China and its position as a traditional financial gateway to the mainland also make the territory attractive as a place to do Shari’ah business. Islamic bonds (known as sukuk) – structured in accordance with Shari’ah, or Islamic law – differ primarily from their conventional counterparts in that they don’t pay interest, which Muslims consider to be usury. Instead, lenders receive a regular payment linked to the performance of underlying tangible assets.