Hong Kong Seeks a firm foothold in Islamic banking

Bandar Seri Begawan – Hong Kong is looking to enhance financial and economic ties with Brunei Darussalam and is also keen to venture into Islamic banking.

Trade between Hong Kong, ranked No 1 in economic freedom in the world, and Brunei Darussalam in 2008 stood at US$26 million or HK$200 million.

Most of the imports from Hong Kong to Brunei Darussalam are limited to jewellery, printed materials like magazines and telecommunication equipment.

However, this is about to change with two high profile figures from the Government of the Hong Kong Special Administrative Region scheduled to visit the Sultanate this year to discuss further ties in education and finance.

Miss Subrina Chow, Director of Hong Kong Economic and Trade Office based in Singapore, who was in Brunei Darussalam this week, said, “There is still a lot of potential cooperation that both countries can explore and grow. Mr John Tsang Chun Wah, the Financial Secretary of the Government of the Hong Kong Special Administrative Region will be visiting Brunei in March to discuss financial and economies ties.

“Mr John Tsang is expected to hold discussions on financial cooperation. The Hong Kong Monetary Authority (HKMA) and Bank Indonesia jointly announced the launch of the new cross-border payment-versus-payment (PvP) link between Hong Kong’s US dollar realtime gross settlement (RTGS) system and Indonesia’s Rupiah RTGS system.

“The link will eliminate settlement risk in foreign exchange transactions between the US dollar and Indonesian Rupiah by ensuring the simultaneous delivery of US dollars in Hong Kong and Rupiah in Indonesia. Banks in Indonesia can better manage their counterpart risks arising from the foreign exchange transactions and enhance their operational efficiency in settling those transactions during Asian hours.

“We hope to introduce the same service to Brunei Darussalam’s financial market,” she added.

The Hong Kong financial sector will look into the possibilities of getting involved with Islamic banking and will work with countries like Brunei Darussalam in making this new venture for Hong Kong a reality.

Despite the small Muslim population in Hong Kong, Ms Subrina said due to Hong Kong’s mature capital market, “We feel that we could get involved in Islamic bonds, insurance, Takaful and other sorts of capital market,” which will be one of the areas discussed in March when the financial secretary of Hong Kong visits the Sultanate.

Though Islamic bonds are issued through a number of banks such as HSBC’s sister company Hang Sang Bank Limited, the Hong Kong government, according to Ms Subrina, is interested in helping the industry develop through increasing the volume and diversify the sort of products related to Islamic banking.

The unrestricted clientele, which also allows non-Muslims to partake in investments, is one of the attractions. “Naturally,” said Ms Subrina. “They (Islamic banking) have a bigger, potential pull of investors for these bonds.”

One major reason the government of Hong Kong would like to forge more cooperative relations with the government of Brunei and other Islamic countries in the region is to learn more with regards to Islamic banking due to the country’s experience and expertise considering that Hong Kong is less familiar with the laws related to the field.

Later this year, the Hong Kong Education Secretary Michael Seun will also make a visit to Brunei Darussalam to further forge ties by attracting Brunei’s students to study in Hong Kong’s reputable universities.

The Director of Hong Kong Economic and Trade Office in Singapore said, ” For the past few years, our universities have been aggressively promoting their programmes. We would like to attract more international students to our universities especially from US, Europe, China and Southeast Asian countries like Brunei. “In addition, we would also like to work with Universiti Brunei Darussalam for joint research in various fields for capacity building.”

Speaking on the history of the long business ties between both countries, she said, ” In the 60s, Hong Kong businessmen had already set up factories in Brunei Darussalam. After China opened its market in 1980, most of them moved to China. However, lately many Hong Kong businessmen find it necessary to diversify their business and are looking at potential markets in Southeast Asia.”

She acknowledged that tourism is a growing sector and that many Hong Kong people are coming to Brunei since there are direct flights to Hong Kong.

Miss Subrina, who also visited Ulu Temburong national park before returning to Hong Kong yesterday, said, “The scene from atop the canopy is magnificent, there are not many places where we can see rainforests in their pristine state. Overall, I feel that Hong Kong people will show great interest in visiting the national park.”

source :topix

World economic crisis and the Islamic Economy: Realities and Illusions

 Global economic crisis is the event which outlined the framework very well, especially the profile of the leading geopolitical and geo-economic centers on the planet.  The collapse of several leading financial institutions in the U.S. cause a domino effect in the adjacent to these economies.  Logically, this proved to be the euro area and Japan.  Recession in these economic region is stronger as their economic development is practical for the most powerful economy in the world – the U.S..

 Subsequent developments in the Arab and Islamic capital market and commodity demonstrate once again that the economy has its own rules and logic.  It can not prevail over politics, or at least – is not able to fight artificial economic principles.  Changing the performance of Arab stock exchanges, particularly the Gulf, is in no way different from those in highly developed countries.  Until now, experts reported losses exceeding 180 billion dollars in the Gulf.  In net terms the largest they have in Saudi Arabia – about 150 billion, a percentage – in the United Arab Emirates.  The same applies to the largest market outside the Arab Gulf area – Egypt.  The value of the Egyptian national index over the past few days were reduced by about 10% per day.  However, state authorities refused to take special measures, de, as all officials claimed that the Treasury has enough cash to get to the bankruptcy of the banking system.

 The resulting economic events in the Arab world give reason to make some basic conclusions:

 1.  The economies of most developed Arab countries – those in the Gulf are very closely connected with the world and especially in the U.S. economy.  In fact, they have her appendix.  The accumulated revenue from the oil capital resources (several hundred billion dollars), however, is so large that whatever happens in some of the centers of the world economy, this huge mass of money can offset the impact.  By calculations of experts, the depth of the crisis in the U.S. and the Gulf States is proportionate.  Arab financiers have set October 6 as “black Monday” for local farms.  In this day only in the Gulf “have vanished around 150 billion dollars.”  U.S. lawmakers were forced to allocate 700 billion dollars to prevent the collapse of the national economy.  Most likely Congress will grant a new $ 150 billion for the same needs.  For countries exporting oil such measures will be needed despite the working capital of the local stock exchanges.

 2.  At the beginning of the crisis emerged a number of analysis and forecasts according to which the recession in the Arab world would not be significant due to the existence of so-called.  “Islamic banking system. Its adepts argued that it is built on principles that create a fully independent, the global economy and the traditional banking and financial system.  They constantly publish statistical data, according to Sharia finance is increasingly winning positions.  Scientific forum in Paris, in 2008 it was noted that the Islamic banking system, has working capital of 800 billion dollars.  It is expected that in 2010 it reached 1.4 trillion.  The size of the crisis in the richest and most obviously Islamic countries such as the Gulf countries, outlined the contours of the real and true meaning of “Islamic economics”.  If she has a burden, it is relatively modest and is mostly a political dimension.

 It is noteworthy that the quotes for “benefits” of the Islamic economy have disappeared from the major Arab financial publications.  Some of them, frankly secular in orientation, they were not even pay attention.  At the same time, Islamic preachers economically manipulative note speeches on the virtues of economy system of leading European editions, “Journal des finances”.  Mentions that the French Higher Council for Financial Supervision issued the license under which the country can apply Islamic principles in financial transactions on the local market.  Moreover, it was reported that one of the universities of Strasbourg considered to begin training students in the subject “Islamic economy”.  All these measures reflect the desire of the French authorities to attract more investment from Gulf states, and not reflect the existence of ideological or religious motives.

Arouse interest in the answer to the question of whether Paris wants to shift the position of London from the fringes of Islamic banking.  So far, this system is applied by individual intitutsii in 51 countries.  Understandable reasons in the first four centers are located in the Gulf – Dubai, Abu Dhabi, Manama and Doha.  British capital ranked fifth in the world with a concentration of Islamic banking institutions.

translated source : teamorientbg