National and Global Islamic Financial Architecture:
Prolems and Possible Solutions for the OIC Member Countries
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The architectural institutions related to Islamic finance in Hong Kong are summarized below:
Legal infrastructure
Hong Kong has provided for tax neutrality for sukuk, but has made no other changes to its legal
framework.
Financial System Regulation and Supervision Framework
Hong Kong has made no changes to its financial system regulation, though it has issued some
relevant guidance.
Shariah Governance Framework
No specific steps have been taken for Shariah governance either at the national or firm levels.
Liquidity Infrastructure
Hong Kong has issued sovereign sukuk, but, since it has no Islamic banks, the issues of liquidity
are largely irrelevant.
Information Infrastructure and Transparency
Hong Kong reporting standards have been fully converged with IFRS. It has made no
amendments to accommodate Islamic finance.
Both international and Chinese ratings agencies are active in Hong Kong. There are no Hong
Kong-specific developments relevant to Islamic finance.
Consumer Protection Architecture
There appear to be no developments specific to Islamic finance in the areas of consumer
protection and financial literacy.
Deposit Insurance is provided by the Hong Kong Deposit Protection Board. It has no
provisions specific to Islamic finance, and since there are no Islamic banks in Hong Kong,
issues of interpretation have not arisen.
Human Capital and Knowledge Development Framework
There are no significant developments relevant to Islamic finance.
5.3. Comparison and Analysis
The five centres studied display different patterns, both strategically and in terms of their
success in Islamic finance.
In strategic terms, what all five have in common is that they have, at various speeds, made the
necessary adaptations to their tax systems to bring Islamic instruments onto a level playing
field with their conventional counterparts. None have followed the Malaysian approach of
offering positive incentives for Islamic instruments or firms. Also, and more interestingly, none
have materially changed their financial services regulation, although Singapore has made some
minor adjustments, again with the broad aim of parity of treatment. However, the UK made
one to clarify the treatment of sukuk and prevent some of them being treated as collective
investment schemes (FSMA 2010). The jurisdictions have, in general, been prepared to
interpret their regulations sympathetically but, for example, they have not, with the exception
of Singapore, adjusted their capital adequacy regimes to take account of the way Islamic banks
derive funds. Nor, more importantly, has any of them either established Shari’ah governance