TAP POTENTIAL ISLAMIC PRODUCTS BUSINESS IN CHINA & HONG KONG

KUALA LUMPUR, Nov 9 (Bernama) -- Malaysian capital market players can
now fast track the entrance of their Islamic products into Hong Kong and tap
into potential business in mainland China.

This follows the Mutual Recognition Agreement (MRA) on the Development of
Islamic Capital Market and Islamic Collective Schemes signed between the
Securities Commission (SC) Malaysia and the Securities and Futures Commission
(SFC) Hong Kong Monday.

The agreement also allows authorised Islamic funds, primarily regulated by
the SFC and managed by SFC-licensed managers, to be marketed here.

SC Chairman Zarinah Anwar said it was very important for Malaysian
market players to take advantage of the linkages built between both regulators
in order to develop the local market.

"Our fund management business is only RM300 million (US$85.71 million) as
opposed to Hong Kong's US$750 billion market.

"That is why we are urging the players and intermediaries to go abroad and
grow their business," she told reporters after the signing ceremony.

At the same event, SFC Chairman Eddy Fong said he hoped there would be more
opportunities for Islamic funds to come to Hong Kong with the MRA.

He said collective scheme investors could also learn from Malaysia's
experience, adding that many Islamic investors and issuers were keen on
mainland China.

"As part of the mainland, we can help them develop their business. We don't
have a very big market on Islamic products, but what we can offer is a
very open market," he said, adding that 60 per cent of its funds are from
outside Hong Kong.

Earlier, in his welcoming address, Hong Kong's Permanent Secretary for
Financial Services and Treasury (financial services) Au King-chi said Hong
Kong was relatively new to Islamic finance sector and there was a lot to
look and learn from Malaysia.

"We believe areas such as product development, infrastructure enhancement,
and investor education are key successes of Islamic finance development," she
said.

She also promoted Hong Kong as well, positioned to bridge the investment
need of the Middle East liquidity, with investment opportunities of Mainland
China.

"This is the niche market we are eyeing," she said.

Au, however, noted that Hong Kong was preparing legislative amendments to
level the playing field for Islamic financial products vis-a-vis conventional
financial products.

"We have been advised by market players and experts from other Islamic
finance centres that the major impediment for Islamic finance development in
Hong Kong is our taxation regime," she said.

Second Finance Minister Ahmad Husni Hanadzlah, who was also present, said
Islamic finance must escape the confines of the endless arguments of multiple
interpretations and indignant righteousness if it is to progress beyond what it
is today.

He said the pillars of Islamic finance were based on fumdamental universal
values of humanity.

With fairness and justice for all transacting parties, he said the
insistence on having every transaction directly linked to real economic
activities, and the assurance that the transaction was not detrimental to the
community were principles desirable in any society.

"Islamic finance has been viewed through lens too narrow. We have to focus
on the substance, not form," he added.
-- BERNAMA