. at the same time, hong kong can also provide an ideal platform for issuers from the mainland and other parts of asia to issue islamic financial instruments for satisfying their funding needs. bringing islamic capital markets to the mainstream 11. addressing one of the key issues to be discussed today, hong kong ’ s involvement in islamic finance will also help to bring islamic capital markets to the mainstream in two ways : provide a level playing field and encourage market participation in islamic finance. 12. to bring islamic financial products to the mainstream, a key task would be to level the playing field with their conventional counterparts. on this front, a study conducted by the hong kong government in conjunction with tma earlier concluded that there are no major legal or regulatory obstacles to transactions involving wholesale islamic financial instruments in hong kong. 13. however, there is a need to refine the tax regime in hong kong in order to provide a level playing field between sukuk and conventional bonds. owing to shariah requirements, structuring sukuk often involves the originator setting up a special purpose vehicle for the purposes of issuing sukuk to sukuk holders, and multiple transfers of underlying assets between the originator and the sukuk issuer in order to generate profits. these complex structures, which are not required for conventional bonds, may incur additional tax and stamp duty expenses for the sukuk issuers. 14. i am pleased to see that an amendment bill to address this issue has been introduced into hong kong ’ s legislative council and is now in the final stages of enactment. source : institute for international finance. bis central bankers ’ speeches the bill, once passed, will enable sukuk to enjoy tax treatments similar to those currently afforded to conventional bonds. this would be a significant milestone in the development of a sukuk market in hong kong. 15. apart from providing a level playing field, equally important is the active participation of market players, including non - islamic arrangers, issuers and investors in the islamic capital markets, as they will be the ones who lead market development in the future. hong kong is fortunate to have a strong presence of international financial intermediaries who can leverage on their global network of expertise to develop and structure a variety of shariahcompliant products here. 16. it is also crucial for fund raisers and investors to be aware of the benefits of islamic capital market instruments and understand their structures and operations. so, we have been working very closely with

the tma and international bodies like the ifsb in bringing islamic finance seminars and workshops to hong kong market participants, like the seminar today, in an effort to raise the awareness and deepen the knowledge of islamic finance among the financial community. with the gathering of such a distinguished group of speakers, i am sure that we shall obtain useful insights and get a clearer picture on how to prepare ourselves for the exciting developments in the years to come. 17. i wish this seminar every success, and to our overseas friends, an enjoyable stay in hong kong. thank you. bis central bankers ’ speeches