Financial Secretary Paul Chan says Hong Kong is ready to relaunch its drive to develop Islamic finance, after a three-day trip to the Saudi capital Riyadh opened his eyes to the untapped potential of developing more financial products that comply with Islamic law.

During the visit, the Hong Kong delegation led by the finance chief signed 10 memoranda of understanding to further cooperation between the two sides.

The agreements covered areas from mutual investment to collaborations in technology and innovation development, while a local tech firm signed on to launch insurance products with two Saudi companies.

Speaking to reporters on Thursday to conclude his visit, Chan said his exchanges made it apparent that Saudi Arabia is more interested in the Hong Kong, mainland and Asian markets than he had previously thought.

He told reporters that he came to understand that the kingdom wants to attract different sources of funding to support its infrastructure and industrial development, and hence there’s a demand for diverse forms of financing.

"Previously, we thought that market demand for Islamic finance wasn't that high. But after talking to them, we think we'll relaunch Islamic finance soon," Chan said.

"They have to do a lot of infrastructure work. During our exchanges with them, we discussed Islamic finance, as well as using funds raised from issuing green and sustainable bonds in the Hong Kong bond market to support them."

Islamic finance involves business transactions that are in full compliance with Islamic law – and which prohibits any involvement with, for example, gambling, alcohol and pork, while interest payments are also banned.

The finance minister also revealed that the Future Investment Initiative, or FII Institute, is eager to stage the FII Priority Summit in Hong Kong again.

He pointed out that Saudi Arabia is very interested in research and development of technologies, and welcomes SAR companies to set up shop in the kingdom.

Saudi Arabia found that it is worth taking reference to Hong Kong's way of nurturing start-ups and talent, according to Chan.

"They think that our way of nurturing talent through two parks and offering funds to support them, or even the tailor-made listing regime that allows start-ups without profits and income to be listed, is very worth taking reference to."

"As for nurturing talent, their insurance authority recently went to Hong Kong for an exchange with the local authority. They want to send someone to Hong Kong on secondment, so as to introduce some of our practice to the country. I think this is a good thing."

Chan also said there was no need to adjust Hong Kong’s full-year economic growth forecast, even though the city’s third quarter growth has slowed to 1.8 percent.

"During the announcement of the Financial Budget at the beginning of this year, we expected the economy to grow by 2.5 to 3.5 percent. I think that the growth could still be within this range. Therefore there's no need to adjust it," he said.

He added that the government will remain both cautious and optimistic.

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Last updated: 2024-11-01 HKT 11:33