The Islamic Finance Handbook: A Practitioner's Guide to the Global Markets

Chapter 8Hong KongPromoting Islamic Finance in a Developing Market

Anthony Chan

Chief Executive Officer, New Line Capital Investment, Ltd.

Jess Lee

Legal and Project Development Manager, New Line Capital Investment, Ltd.

Hong Kong, which has an excellent financial infrastructure and serves as a gateway to mainland China, has the potential to be a prime destination for the development of Islamic banking products. However, to date, Islamic banking has not taken off in any substantially meaningful fashion, and neither has project financing and funding through Islamic principles, despite Hong Kong's position as one of the world's leading financial centers and mainland China's insatiable need for investment.

In the past, several Islamic financing concepts and products were introduced in Hong Kong to promote Islamic banking. For instance, Hong Kong's Hang Seng Islamic Index was developed in part to attract Islamic investors to Hong Kong's bustling capital markets and to mainland China's potentially vast but still developing capital markets. Hong Kong's Islamic index is intended to represent the performance of Shari'ah-compliant companies from both the Hong Kong and the mainland China markets.

Despite the slowness of development of Islamic finance in Hong Kong, prospects for Islamic finance remain positive. Promoters of Islamic finance, many of whom come from abroad, need to become more familiar with the Chinese compliance and regulatory regime and learn the ways and means of doing ...