Being a non-Muslim city, the Hong Kong Special Administrative Region of the People’s Republic of China (Hong Kong) continues to make the best use of its international financial center status and proven track record of successful sovereign Sukuk issuances so far totaling US$3 billion with a Muslim population of 300,000 in building up the Islamic economy and Halal market in recent years with the full support of investors, practitioners, academicians, religious organizations, government and other relevant stakeholders.
Review of 2021
Although the local development of Islamic finance in Hong Kong slowed down amid the COVID-19 pandemic, Hong Kong made some excellent progress by enhancing economic ties with China and the Islamic world. The unique super-connector has entered into trade agreements and comprehensive double tax agreements with Muslim nations in the Middle East. Sukuk applications in local infrastructure projects were explored and Islamic finance courses were held for professionals interested in pursuing a career in Islamic banking.
Allalah Consulting has been liaising with the Financial Secretary Office of the Hong Kong government on the potential opportunity of issuing Sukuk or green Sukuk for the entire or partial funding requirements of HK$600 billion (US$77.09 billion) for the Lantau Tomorrow Vision infrastructure project which will ease the housing issues faced by Hong Kong’s 7.8 million people. The firm is also in discussions with the Hong Kong Federation of Trade Unions Spare Time Study Centre (HKFTUSTSC) to provide foundation courses in Islamic finance for professionals in the industry.
The Incorporated Trustees of the Islamic Community Fund of Hong Kong has granted more Halal certifications to local restaurants providing Halal food as well as to other imported or locally produced daily necessities and food produce. This helps to boost the Halal sector in Hong Kong for both Muslim and non-Muslim consumers with Halal assurance.
Preview of 2022
It is expected that Hong Kong’s Islamic finance and Halal sectors will further flourish in the coming years, particularly making use of the high interdependence and integration of the two sectors effectively.
With the recovery of Hong Kong’s economy, closer economic ties shall be realized by the resumption of cross-border traveling in and out of Hong Kong, which essentially can also help boost Halal tourism in the long run, given Hong Kong’s abundant tourism resources in terms of hotel, restaurants, mosques, Halal product marketplaces and landmarks.
Sukuk issuances, including the fourth sovereign issuance and the inaugural corporate issuance, are expected to materialize in the ‘Pearl of the Orient’ in the forthcoming years. Green Sukuk are also under serious consideration.
Sukuk funding is highly supported by the trends and is evidence of Hong Kong placing great emphasis on environmental, social and governance in its economic recovery plan, where a number of project objectives and investment criteria are highly correlated with Islamic finance.
With this in mind, Islamic finance professionals are needed to make this happen. More educational institutions like HKFTUSTSC are working together with worldwide recognized Islamic finance academic institutions which are anticipated to offer relevant certificate courses, diplomas or degrees.
Conclusion
Hong Kong, being a highly ranked free economy and the main gateway to China, is regarded as the ideal regional hub of Islamic finance and the Halal industry.
Apart from Sukuk issuances, Halal products and Islamic finance education, there are high hopes for Hong Kong to establish a fully-fledged Islamic bank, regulated Islamic funds as well as Takaful in the coming years.
Among the catalysts for boosting these areas, governmental support is of utmost importance. Market players, both local and global, are hoping for further action from the Hong Kong government in enforcing more relevant policies and regulations, especially in terms of tax incentives, stock exchange listings and Islamic finance professional qualifications.
These are to strengthen Hong Kong’s market efficiency, certainty and sustainability to cater to the actual implementation of Islamic finance and Halal businesses.
Wafee Yeung is the managing director of Allalah Consulting and the director of the Hong Kong Centre for Islamic Finance. He can be contacted at [email protected]