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Table 4.32: Recommendations to Improve Supply (Sell Side) – Medium-Term Solutions
Issues and challenges Supply (sell side) opportunities
No corporate issuance so far Leverage the strong bond market infrastructure to promote the
sukuk market and attract corporate issuance, both foreign and
domestic, in using Hong Kong’s sukuk platform.
Provide additional incentives, in the form of tax, easy and
flexible incorporation of SPVs, and competitive pricing, to
attract corporate issuers.
No retail sukuk market Leveraging the high education levels that prevail in Hong Kong,
the government can promote retail sukuk issuance to
encourage participation in sukuk by its limited Muslim
population and its general population.
Competition from other
Islamic financial centres
To attract foreign corporate issuers, Hong Kong should examine
the ecosystems in other Islamic financial centres, such as
Malaysia, to improve its own sukuk infrastructure.
Competition from other IFCs Hong Kong should examine the infrastructure made available in
other reputable IFCs such as the Cayman Islands, London,
Luxembourg, Jersey, Bermuda and Labuan, which are deploying
competitive strategies to attract Islamic finance business and
sukuk structuring in their jurisdictions.
Shariah governance As a secular regulator, Hong Kong still does not have an
established Shariah governance framework. Instead, issuers
rely on the expertise of their own Shariah boards. This leads to
additional structuring costs for issuers. The establishment of an
improved Shariah governance structure could instill more
confidence among issuers.
Sources: RAM, ISRA