Letters | Hong Kong has what it takes to be an Islamic finance hub

Worldwide Islamic monetary belongings, that are anticipated to achieve $ 7.5 trillion by 2028, are an excellent alternative for Hong Kong. Due to its sturdy monetary infrastructure and communication with the primary mainland of China, Hong Kong is in a singular place to change into a portal of financing suitable with Sharia in Asia.

Takaful, or Islamic insurance coverage, works primarily based on the rules of cooperation and charitable donation (Tabarru), with members who contribute to a joint group of threat safety. In contrast to conventional insurance coverage, Takaful avoids curiosity (RIBA) and the induction of hypothesis (GHARAR), and redistribution of surpluses with the members. This ethical mannequin covers household safety, public insurance coverage and reinsurance that complies with Islamic legislation.

Though the challenges are nonetheless current, the organizational framework of Hong Kong has superior in absorbing Islamic financing. The Hong Kong Financial Framework permits Islamic banking home windows, whereas the tax neutrality of Islamic bonds (SUKUK) has been inspired since 2013. Nonetheless, the shortage of impartial Islamic banking licenses and the low potential for native consciousness.

Due to its multicultural surroundings and monetary expertise, Hong Kong has change into place to change into an Islamic finance heart. In adopting this chance, Hong Kong can diversify the monetary providers sector whereas enhancing the rules of ethical financing worldwide.