Is Hong Kong & Singapore as safe as Malaysia; for Islamic Finance?

By: Dr.Asmat Hayat ALVI.

Most Muslims don’t like speculation in share market or future trading; consider these forms as Riba(ÑÈÇ). Riba is prohibited in Islam. Muslims prefer in Real Investment; called Mudarba(ãÖÇÑÈÀ) or Sharia Complaint products.

At present Malaysia is Asia’s biggest Islamic Finance Market. To attract Middle East Funds Malaysian issued bonds called Sukuk. Sukuk or  Islamic Finance has had crossed the figure of US$ 1:8 trillion last year.

Malaysia has a strong and shock-proof economy; as proved in last two decades. Every businessman recalls mid-eighty financial crises and Financial Tsunami of 2008; when every Asian, European & African economy followed America and crashed. Malaysian economy unaffected in both crises. Malaysian currency ringgit is strong; as no deficit in National Budget. Malaysian GDP growth is stable and has one of the best financial systems in Muslim countries. Malaysia does not depend much on American Imports and its foreign policy is independent of American and European influence. Above all these, Malaysia had successfully created an environment where Islamic Funds flow into Islamic Assets. In other words, Muslims Finance is in safe hands in Malaysia.

Out of Asia London is the biggest centre for Islamic Finance. After success of Muslim Finance in Malaysia & London; Hong Kong & Singapore both decided to entre in Muslim Finance (Mudarba or Sharia Complaint Fund) few years ego. Hong Kong & Singapore are established financial centers in Far East. After becoming China second largest economy of the world; Hong Kong has an edge on Singapore and Malaysia. Hong Kong could provide a gateway for new investors interested in mainland China. Although Muslims are minority in Hong Kong & Singapore, but it does not preclude the emergence of an Islamic finance sector, as London is proving.

In last two years; Hong Kong amended many laws to draw business, while Singapore offered many incentives. Hong Kong reviewed tax laws to ensure Islamic Finance profitability. In February 2008; Singapore decided to give 5% concession in tax on income derived from Muslim Fund management, lending and insurance.

During past two years Hong Kong & Singapore has had succeeded in attracting many finance houses and fund managers from Middle East.

Now Hong Kong & Singapore both are struggling hard to attract more and more Muslim funds of Middle East, America and Europe.

At present; picture looks very rosy and future seems very bright. One fact makes me worry, “Although Hong Kong & Singapore both are Chinese majority cities; but most of the Banking Institutions are in hands of Jews or Jewish minded people.” It’s possible, “When Muslims of the world will put almost all their money in these two finance centers. There is a chance of Financial Scandal; just like BCCI scandal.    

Aug 17,2010.