DUBAI Nov 27 Hong Kong may present a bill to
lawmakers in the first quarter of next year to allow the
government to raise funds via Islamic bonds, according to a
discussion paper from the territory's Legislative Council.
The plans come at a time of increasing competition among
financial centres for a slice of Islamic finance business, which
is centred in southeast Asia and the Middle East.
Hong Kong's schedule could see it leap-frog Britain in
issuing a debut sukuk; Prime Minister David Cameron said last
month that the first British sovereign sukuk was expected "as
early as next year".
The discussion paper will be reviewed by the Legislative
Council next Monday, a Hong Kong Treasury spokeswoman said,
without giving details of the potential size or timing of a
The bill would allow the AAA-rated government to issue sukuk
under its existing government bond programme, which has so far
issued HK$107.5 billion ($13.9 billion), of which HK$90 billion
was outstanding as of Nov. 15.
The paper calls for legislative amendments to allow the use
of special purpose vehicles; such vehicles are often required
for sukuk, which are investment certificates that follow
religious guidelines such as bans on interest and gambling.
In July, Hong Kong regulators passed a bill to facilitate
issuance of sukuk in the local market, helping clarify their tax
status. Sukuk can face heavy taxation because they involve
multiple transfers of the assets backing them.
The idea of a Hong Kong sukuk was raised as far back as
2008, when the territory's airport authority considered selling
a sukuk of up to $1 billion, but no sale has taken place so far.
(Editing by Andrew Torchia)