Hong Kong wants a major role in the $1 trillion global Islamic finance market and is taking steps to develop a local Islamic bond market. Financial Secretary John Tsang, speaking to investors, said that Hong Kong is targeting wealthy individuals in the Middle East and in other parts of south east Asia.
Mr Tsang's team have conducted analyses of the major Islamic finance centres, especially Malaysia which is the single largest jurisdiction for the products.
"Islamic finance is an important element of the global financial system. For Hong Kong to be a major international financial centre, not just in the region, but globally, then Islamic finance must be among our portfolio of products and services," he said.
Mr Tsang added: "We believe Islamic finance will become another engine of growth in the coming years. Globally, the Islamic financial market is expected to grow by 15 per cent annually."
The Hong Kong government has set out to attract investors in the Middle East who seek opportunities in the Chinese market. China's economy expanded at an annual rate of 11.9 per cent in the second quarter, the fastest pace in 12 years. The Asian Development Bank predicts the Chinese economy will grow 11.2 per cent this year and 10.8 per cent in 2008.
"To take the matter forward, our financial regulators will look at ways to develop a local Islamic bond market under our existing financial, legal and regulatory regimes," Mr Tsang said. "Reconciling our system of modern finance with Islamic finance will be a key objective.'
During the first seven months of the year, foreign direct investment in China rose 12.2 per cent to $36.9 billion. Wealthy Middle East states such as Dubai, United Arab Emirates and Saudi Arabia are not yet among China's top 10 foreign investors, the government said.