12 | Friday, December 14, 2018 HONG KONG EDITION | CHINA DAILY COMMENT HK

Yu Wah-yung TO THE POINT STAFF WRITER Bay Area’s development NPCSC decisions same status as Basic Law interpretation will facilitate HK’s third The Court of First Instance ruled on made use of proxies to apply for a judicial Thursday that the co-location checkpoint review; and the proxies, many of whom are arrangement at the West Kowloon terminal either retirees or recipients of government of the Guangzhou-Shenzhen-Hong Kong subsidies, have always applied for legal aids Express Rail Link can remain in operation to cover the legal costs that will eventu- economic transformation as it is legally sound and constitutional. It is ally arise, abusing public resources at the to be hoped that the court verdict will help same time. For example, Kwok Cheuk-kin, members of the opposition camp awaken a retired civil servant and one of the four Yu Wah-yung discusses important ways in which from the illusion that they can always delay judicial review applicants in the co-location or even derail any government initiative they arrangement case, have reportedly fi led Hong Kong can not only contribute to national dislike by launching legal challenges. more than 20 judicial review applications Over the years, the opposition camp has since 2006, with at least eight of them hav- rejuvenation but also revitalize its own economy repeatedly abused the judicial review pro- ing been supported by legal aids. cess by making it a handy tool for achieving Thursday’s court ruling on the co-loca- t the seminar cel- and deep-seated economic problems kick-start the economic development their political ends. For instance, no major tion arrangement has undoubtedly dealt a ebrating the 40th begin to surface. Major issues, includ- momentum of Hong Kong and Macao, infrastructure project in the city has ever big blow to those naysayers in the opposi- anniversary of the ing the sharp decline in the size of the while Hong Kong can complement succeeded without fi rst surviving a bitter tion camp who have made it their default country’s reform and overall manufacturing industry and Shenzhen’s inadequacies in fi nance, legal battle staged by the opposition camp. option to oppose any major government opening-up, Wang industries becoming more homogenous, higher education, medical and other This has been the case with the third run- project without any regard to its benefi ts Zhimin, director of are seriously hampering the next eco- public service sectors, and Dongguan way of Hong Kong International Airport, to Hong Kong society. But more impor- the Liaison O ce of nomic transformation. By studying vari- with its strong manufacturing capabili- the Hong Kong-Zhuhai-Macao Bridge, the tantly, the verdict has in e ect highlighted the Central People’s Government in the ous major economies around the world, ties can give a hand in promoting tech- Northeast New Territories development a signifi cant fact for Hong Kong society AHong Kong SAR, called for Hong Kong we have realized that none of them has nological advancement, institutional project and the Guangzhou-Shenzhen-Hong — particularly members of the opposition to proactively participate in the country’s abandoned their secondary industries, innovation and internationalization of Kong Express Rail Link — aside from the co- camp — to take note: The decisions made national rejuvenation, particularly the i.e. the industrial sector. However, Hong the Bay Area. Innovation and technol- location arrangement. by the Standing Committee of the National development of the Guangdong-Hong Kong’s industrial sector withered, with ogy will surely become an important The fact that they have never succeeded People’s Congress, the nation’s top leg- Kong-Macao Greater Bay Area. Indeed, its ratio over the GDP falling to only 7 area for collaboration between Guang- in striking down any of these projects and islative body, based on the provisions of by proactively participating in the city percent at the end of 2014, of which the dong, Hong Kong and Macao, as well as other government proposals they dislike is the Basic Law of the Hong Kong Special cluster project, Hong Kong will not only manufacturing industry accounted for a major driving force for Hong Kong’s testament to their aggressiveness and reck- Administrative Region are valid and thus contribute to national rejuvenation but less than 1.5 percentage points. third economic transformation. lessness in abusing the judicial review pro- are binding on the courts of Hong Kong also benefi t tremendously from it. The However, Hong Kong’s economy still Secondly, the impact of the Bay Area cess. To avoid potential legal consequences, with the same e ect as its formal interpre- development of the Bay Area, which enjoys many favorable conditions and development on Hong Kong will go far the opposition camp has always craftily tation of the Basic Law. has complete modern industrial chains, development opportunities. Internally, beyond the economic sphere. The pro- will help facilitate Hong Kong’s third Hong Kong has a healthy fi nancial posed “Bay Area high-quality living cir- economic transformation, and acceler- condition and increasing fi scal sur- cle” has great appeal to residents living ate the process of the city developing an pluses. Externally, the Belt and Road in the region. The future development international innovation and technology Initiative and the construction of Bay will base on connectivity through high- hub while strengthening its status as Area city cluster have brought unprec- speed rails and infrastructural facilities, HK should aim to be a an international fi nancial, shipping and edented opportunities for Hong Kong. and on e ective sharing of public ser- trade center. This will surely help diver- Constrained by its fl awed industrial vices. This will create a high-quality liv- sify Hong Kong’s functions as well as structure, Hong Kong has been con- ing space for Hong Kong residents and sharpening its competitive edge. fronting the dilemma of a lack of new particularly for the youth. hub for Islamic fi nance Hong Kong has undergone two eco- economic growth points in recent years; Thirdly, the Bay Area can be devel- nomic transformations in the past. The the Bay Area project can hopefully inject oped into a giant hub for the BRI, a slamic fi nance is a fi nancial system fi rst one began in the 1960s, when a new new momentum into the Hong Kong world-class economic platform and an which operates according to Islamic wave of industrial restructuring was economy, facilitating its third economic international innovation and technol- Law (sharia). Like the conventional taking place on a global scale. At that transformation and diversifi cation. ogy center, which houses advanced fi nancial system, Islamic fi nance features time, Hong Kong preempted other Asian For companies residing in the Bay manufacturing industries and modern Iinstitutions such as banks, capital markets, economies in developing labor-intensive Area, Hong Kong enjoys a comparative service sectors. The Bay Area has mature investment fi rms, etc. A basic feature that industries such as textiles, clothing, etc. advantage as a global hub for economic manufacturing chains, good produc- di erentiates Islamic fi nance from regular In the process, the SAR became the most activities and a convenient platform for tion bases and ample hardware facili- fi nance is the fact that interest charges (riba) Oriol Caudevilla important doorway for the Chinese reaching to the global industry chains. It ties. It has transformed in recent years are prohibited. Even though Islamic theories The author has worked as a business analyst mainland to conduct economic exchang- has become a popular location for main- from a resource-driven, “a shop in the of economics have existed for more than a mil- for a Hong Kong publicly listed company, and es and trade with the rest of the world. land companies to set up regional head- front and a factory at the back” mode lennium, the modern Islamic fi nance industry was appointed fellow in 2017 at the Centre for Financial Regulation and Economic Develop- The Chinese mainland started the quarters to manage their overseas busi- of operation to a region propelled by made its debut only in the 1970s. ment, CUHK, where he studied the situation of nesses as well as to enter the internation- innovation, advanced manufacturing reform and opening-up process in 1978. There is now a clear recognition of the Islamic fi nance in Hong Kong. Hong Kong’s manufacturing industries al market. The Bay Area development industries and modern service sectors. importance of Islamic fi nance in the global took the great opportunity to gradually can help Hong Kong enterprises expand It has provided su cient driving forces fi nancial system, and not only in Muslim relocate to the Pearl River Delta to shun their presence on the mainland. Hong for the manufacturing industry to move countries. According to the 2018 Islamic The development of Islam- the high operating costs in Hong Kong. Kong can deepen collaboration with up the value chain, as well as promot- Financial Services Industry Stability Report As the country had yet to fully open regional cities in areas such as fi nancial, ing various innovative economic activi- by the Islamic Financial Services Board in ic finance in Hong Kong is its market at the time, a huge volume innovation and technology, supply chain ties that can help facilitate Hong Kong’s Malaysia, the Islamic fi nancial services indus- a natural extension of Hong of imports and exports still had to be management, professional services, third economic transformation. try’s total value has exceeded the $2 trillion transshipped through Hong Kong, and transportation and logistics sectors to If Hong Kong can leverage its unique mark. The main growth drivers were sukuk Kong’s role as an interna- this brought in a considerable amount support the Belt and Road Initiative. This advantages under the “one country, two (sharia-compliant bonds) issuances. The size of fund settlement business in the city. will expand the scope of economic devel- systems” policy to unleash its develop- of the Islamic fi nance industry has more than tional financial center. Hong Kong’s economy quickly completed opment necessary for completing the ment potential and integrate itself into doubled since 2009. its second transformation, shifting from third economic transformation. national development, it will be able to While growth has slowed since the global manufacturing industries to service The Bay Area development can pro- accelerate its third economic transfor- fi nancial crisis, the industry has plenty of Council amended the Inland Revenue Ordi- industries. By the end of 1980s, service mote the third economic transformation mation. By then, the city will have a good scope to grow further. When it comes to top nance (Cap 112) and the Stamp Duty Ordinance industries accounted for more than 80 in three ways: chance of breaking its economic bottle- countries for Islamic banking penetration, (Cap 117) to provide a taxation framework for percent of Hong Kong’s GDP, and the Firstly, Guangdong proposes to work neck and revitalizing the economy. the Islamic banking share of total banking sukuk issuances comparable to that for issu- city gradually established its status as an with Hong Kong to create a Guangzhou, assets is 100 percent in both Sudan and Iran, ances of conventional bonds. international trade and fi nancial center. Shenzhen, Hong Kong and Macao Sci- The author is the vice-chairman of the 57 percent in Brunei, 51 percent in Saudi In 2014, the government o ered its fi rst As the reform and opening-up on the ence and Technology Innovation Cor- Chinese General Chamber of Commerce Arabia, 27 percent in Qatar and 24 percent sukuk under the Government Bond Pro- mainland deepens, the competitive edge ridor dedicated to innovation develop- and a Standing Committee member of in Malaysia, to quote some examples. It is gramme (a second one was o ered in 2015 and of Hong Kong as a doorway is gradually ment in the Bay Area. Shenzhen’s robust All-China Federation of Industry and also worth noting that the market for Islamic a third one in 2017). The 2014 sukuk, with an diminishing. A large number of latent technological capabilities can help Commerce. sukuk bonds has become quite strong in sev- issuance size of $1 billion and a tenor of 5 years, eral non-Muslim majority states, such as the marks the world’s fi rst US dollar-denominated United Kingdom. sukuk originated by an AA-rated government. Editor’s note: China Daily Hong Kong Edition has launched a photo-sharing cam- In Asia, Malaysia remains a leader in However, only three sukuk issuances have tak- paign on Instagram. You can share your photos by tagging #hk24hr, and we’ll choose Islamic fi nance. However, Singapore (a coun- en place in Hong Kong, and, none of them has the best ones to publish in the newspaper. try whose Muslim population represents been considered extremely successful yet. For roughly 14 percent of its total population) is example, at 3.132 percent, the yield of February Selfie with artwork trying to become an Islamic fi nance hub. It 2017’s sukuk is less than that of most other AA- has launched a new sharia-compliant index rated 10-year sukuk in the market. which will serve as a benchmark for sharia- Despite this, Hong Kong should not let up compliant funds looking to invest there. its e orts to become a hub for Islamic fi nance, Geographically, Singapore has an advantage, because it has all the ingredients to succeed. given its proximity to the most populous Hong Kong has not had traditionally an array Muslim countries. However, there had been of Islamic fi nancial products, so it takes time only 20 sukuk issuances in Singapore over to create this array. Rome wasn’t built in a day. the past 16 years. But it’s important to start with the right steps. But what about Hong Kong? Can it become The development of Islamic fi nance in Hong a hub for Islamic fi nance? I have no doubt Kong is a natural extension of Hong Kong’s that this is feasible if Hong Kong can cleverly role as an international fi nancial center. As a leverage its mature fi nancial market. Indeed, fi nancial gateway to China, it is an ideal place it should not let this opportunity slip by. While to intermediate between Islamic fi nance inves- Hong Kong profi ts from being “the gateway tors and issuers. At the same time, Chinese to China”, this role will admittedly diminish mainland companies have increasing funding as the Chinese mainland keeps opening its and investment needs (credit is hard to obtain economy and fi nancial system to outside play- in the Chinese mainland, hence the gradual ers. Thus it would be wise for Hong Kong to growth of a shadow banking system there), diversify its economy as much as possible. It so mainland issuers may consider the Islamic must therefore grab hold of any opportunity fi nance market as a potential source for fund- to do so. And becoming an Islamic fi nance ing and investment. hub is just such an opportunity. To sum up, the growing Islamic fi nance Hong Kong’s initial attempt to develop Islam- industry o ers massive opportunities for ic fi nance started in 2007 when the then chief Hong Kong as it has all the right conditions executive Donald Tsang Yam-kuen mentioned to facilitate its growth. It is an ideal place for in his Policy Address the possibility of develop- sharia-compliant institutions to narrow the A woman takes a selfie near graffiti of a girl with her hair curled and wearing red headphones at Art Lane in Sai Ying Pun. ing an Islamic fi nancial market and a sukuk gap between the Islamic world and China, and @ STREET_PHOTOGRAPHY_PHILIP / INSTAGRAM market. To pave the way for this, the Legislative other East Asian developing countries.