The tax amendment by Hong Kong will definitely allow a more facilitative platform for Islamic finance to thrive there, and therefore increase its competitiveness in the global financial market, according to CIMB Islamic Bank Bhd chief executive officer Badlisyah Abdul Ghani.
Badlisyah, who spoke on Bloomberg Television’s “On the Move” yesterday, said the only competitive disadvantage that Hong Kong currently had as compared to financial markets in other part of the world is the lack of Islamic finance offerings of value proposition.
He said the amendment would open up value proposition in Hong Kong and makes it very competitive to other financial markets such as Singapore and rival them in attracting potential investments and issuers.
Hong Kong Secretary for Financial Services and the Treasury Prof KC Chan presented a bill to the Legislative Council yesterday that will exempt sukuk sellers from paying tax on the transfer of underlying assets for four Islamic debt structures, he said in a Dec 28 statement.
Badlisyah added the prospects of Islamic finance in Hong Kong is bright as there are various interest from Hong Kong companies and other foreign corporation looking at the country as a potential financial market for them to tap in sukuk issuance.
“The players have been waiting for such framework for many years. With the coming of this new framework, I believe there would be ample activities coming up,” he added.
For example, he said in October 2011, Khazanah Nasional Bhd had announced the issuance of a three-year benchmark offshore 500 million yuan (RM246 million) sukuk via Malaysian incorporated special-purpose vehicle Danga Capital Bhd. He said the sukuk issuance had attracted 35 investors accounts.
According to Bloomberg on Tuesday, Maybank Kim Eng Holdings Ltd and Clifford Chance LLP are training Hong Kong staff for the city’s first sukuk sales before lawmakers review a bill to give debt equal tax treatment.
Maybank, the world’s third-largest Islamic bond arranger in 2012, has been preparing its investment banking teams in Hong Kong and China to chase Shariah-compliant deals, chief executive officer Tengku Datuk Zafrul Tengku Abdul Aziz said in a Jan 4 interview.
Clifford Chance, the UK’s highest grossing law firm, has moved a sukuk specialist from Dubai to the city, Qudeer Latif, the company’s head of global Islamic finance, said before the bill was first debated by the Legislative Council on Wednesday.