HK to tap Brunei's help in Islamic finance drive

HONG KONG wants to seek Brunei's help to develop its Islamic finance sector given the Sultanate's syariah expertise, Hong Kong Financial Secretary John Tsang yesterday said.

"Hong Kong has a very well-established financial infrastructure and that has everything to do with the conventional financial structure, whereas in terms of Islamic finance, there needs to be certain accommodations in Islamic finance," he said.

Tsang added that at the moment, Hong Kong is amending its tax laws so that it will be able to put Islamic Finance on par with conventional banking.

"For example, sukuks, and bonds, will be on par, and this is done so that Islamic finance will not be disadvantaged as a result of that so that we can work together," he said.

He said there is a lot of expertise in Brunei regarding Islamic finance and Hong Kong has a lot of conventional arrangements which have worked well in the past.

"Working together I see quite a great potential for both sides, especially for the professionals on both sides, as this will be worked towards our mutual benefit," he said.

Tsang added that there is an understanding of syariah compliance in Brunei and from Hong Kong, the region has a lot of resources that would be able to help with pushing Islamic finance forward.

"There are a lot of international banks in Hong Kong, as well, so it depends on how the funds would be raised," he said.

He cited as an example the sukuk funds raised from Brunei, which generated a lot of interest from Hong Kong.

"There has been a lot of interest in that, and from the different firms in Hong Kong, especially in pension funds, so the firms in Hong Kong are interested in that sort of instrument, and there is definitely potential there," he said.

Tsang was in Brunei to sign a double taxation deal with Bruneian authorities.

"Basically we are here to further promote the relationship between Brunei and Hong Kong, and we see big complements between the economic structure between Hong Kong and Brunei, where we can work together in different areas," he said.

He said that there was particular interest in developing financial services, including setting up a "payment versus payment" foreign exchange settlement system.

"We discussed that with the Second Finance Minister of Brunei, and they were quite interested and said that they would be sending people over to see how we could further develop that and minimise the currency exchange risks in both places, especially now since there is an increase in business done with mainland China," he said.

The Brunei Times