In Donald Tsang’s 2007-2008 Policy Address, he mentioned that we should development an Islamic bond market in Hong Kong.
The Islamic bond Sukuk (note: this Wikipedia article is not the best I have read) is a financial certificate similar in nature to bond, but instead of paying a fixed income or interest (usury is forbidden by the Shariah) it is supposed to realize a potential cash flow.
For capitalism to develop and function, it must be relatively easy and inexpensive to raise capital. A guaranteed fixed interest is a good way to lower the cost of capital. The Jews and the Italians well understood this even during the medieval, althou usury was also forbidden by the Roman Catholic Church then. The ingenious Italian bankers turned the Bill of Exchange, a financial instrument for conducting money exchange transactions, into a loan instrument, before the Church eventually caught up and condemned the Dry Exchange (a form of Bill of Exchange used solely as a loan instrument). Christians in Europe were in theory forbidden from charging fixed interest, but they had no problem paying interest, so money lenders (e.g. Jews and powerful Italian bankers) existed. OTOH, the Shariah also forbid paying interest, so in theory a good Muslim can’t put his money into a saving account, nor could he buy a house with a mortgage or make a bank loan.
While I don’t know too much about the Sukuk, I would imagine that not being able to charge or pay fixed interest for capital is a major disadvantage for business development in the Islamic world. From the perspective of a moden capitalist, not being able to charge interest for capital is simply archaic and primitive. So when I first heard about Donald Tsang’s suggestion of developing a market for a primitive business practice, my first reaction was, WTF? Why would we want to deal w/ something so archaic and primitive?
But the more I thought about it, the more I like the idea (whether the Islamic people would like to do business in Hong Kong is entirely a different matter). Hong Kong has always enjoyed great success acting as the middleman. She was a big import-export port during the 50s and 60s. While she had great success w/ industries during the 70s and 80s, she has made her biggest fortune yet from being the middleman between China and the rest of the world since the 80s and 90s, and well into the first decade of the 21st century. We are so good at bridging the primitive and the advanced. I am sure our natural talent would shine in doing business with the Islamic world, if we put our mind and effort into it.
Way to go!