GLOBAL CRISIS WILL NOT DERAIL HONG KONG'S ISLAMIC BANKING TARGET

HONG KONG, Nov 25 (Bernama) -- The global financial crisis will not upset Hong Kong's plans to become an Islamic banking centre as it clamps its eyes on China and the Middle East markets.

"Our priority is to push ahead with the development of an Islamic bond
market. There should be no doubt about our determination to establish a platform
for Islamic finance in Hong Kong." Hong Kong Monetary Authority (HKMA) deputy
chief executive Eddie Yue said Tuesday.

Yue said there was long-term potential in Islamic finance and it was a
priority for Hong Kong to tweak its tax regime to provide a level playing field
for Syariah-compliant finance transactions.

"We believe that this is a good time to do the groundwork of installing the
necessary legal, taxation and market infrastructure," he told a one-day forum
on Islamic finance forum here.

Yue said the sharp falls in the Islamic finance markets, including for
sukuk or Islamic bonds and also Islamic funded equities, had more to do with the
general market conditions and a reluctance to issue US dollar
instruments.

"This also reflects how closely integrated Islamic finance is with the
global financial system, which is not at all bad news for the industry because
when global markets stabilise and take a turn for the better -- as they must in
the long run -- Islamic finance will ride on that curve and excel," he
said.

Hong Kong, long established as a conventional financial hub in Asia, moved
on Islamic banking last year to tap into the growing pool of Islamic assets that
are tipped to swell to US$1 trillion by 2010 and vast millions to be raise for
infrastructure projects in Gulf region.

Yue also stressed on Hong Kong's links and proximity with China as a key
strength in developing an Islamic finance market.

"Our close and increasing economic cooperation with the mainland
undoubtedly
makes Hong Kong the natural choice for anyone wishing to tap into China's high
savings rate and huge growth potential," he said.

"There are opportunities for us to extend our reach to potential Islamic
investors and financiers in the Middle East and Asia. The addition of Islamic
finance as a new asset class in our financial system will add value to Hong
Kong as a thriving financial centre and a leading financial services hub in
Asia," he added.

At the forum, Yue also witnessed a memorandum of understanding between the
Hong Kong branches of Malaysia-based CIMB Islamic and Hong Leong banks for the
former's first Syariah-compliant produce in the island city, an interbank money
product backed by commodities.

The two banks are the first to offer Islamic banking in Hong Kong.

CIMB Islamic chief executive officer Badlisyah Abdul Ghani noted Hong
Kong's commitment to establish its Islamic banking centre.

He said size and liquidity would dictate how fast Hong Kong could grow its
Islamic banking pie.

"I think they have made a strong effort to on the regulatory side to
support
that. A lot will depend on the speed of issuances, if there are more issuances,
the better," Badlisyah said.

CIMB Islamic, part of Malaysia's second largest financial services provider
CIMB Group, is the global leader in sukuk issuance with a 20 percent share.
-- BERNAMA