As part of its role as an international financial center and a gateway to China, Hong Kong is preparing tax changes to level the playing field for Islamic bonds with conventional bonds.
Speaking at the Islamic Finance Symposium 2009 in Tokyo, the Secretary for Financial Services & the Treasury, KC Chan, disclosed that Hong Kong is “best positioned to serve as a gateway to China to capitalize on China's growth. Hong Kong is a major asset management center in Asia. Our combined fund management business amounted to HKD5.8 trillion (USD750bn) in 2008, about 70% of which was sourced overseas.”
“Hong Kong is striving to develop into a global capital formation center, asset management center and offshore RMB business center, with regard to China,” he said. “Hong Kong is best placed to serve as an effective channel for orderly capital outflows from the Mainland, and Mainland financial institutions can manage their overseas investments through Hong Kong.”
"Indeed, Hong Kong serves as a unique portal for overseas funds and fund managers seeking business opportunities from the burgeoning Mainland economy,” Chan continued. “Overseas fund houses in Hong Kong also have the edge of gaining first hand information regarding Mainland assets and investments.”
Furthermore, he added: “Hong Kong is best placed to serve as a testing ground for the development of RMB business outside the Mainland. We have been working with the relevant Mainland authorities, our financial regulators and the trade to attract more RMB liquidity and to build a market offering a broad range of RMB products and services.”
It is against that overall background, he said, that the government will implement a platform in Hong Kong for the development of Islamic finance, the huge market potential of which has driven Islamic financers to look beyond historical boundaries to explore new territories, both within and outside the Muslim world.
"We believe Hong Kong is well placed to become a center for Islamic finance in Asia,” Chan stated. “Our sound financial services infrastructure and well-established legal system make Hong Kong an attractive location for such investments."
The city's unique advantage, he concluded, is its above-mentioned role in bridging the Mainland of China to the international market. By bridging the investment needs of the Middle East with the capital needs of the Mainland, Chan believes Hong Kong can be the trusted platform to link the two.
A comprehensive report in our Intelligence Report series giving a country-by-country analysis of offshore investment funds, stock exchanges and trusts, with an analysis of the US QI regime, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report9.asp
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