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Hong Kong could issue Islamic bonds to fund the Northern Metropolis megaproject as long as they are a cost-effective option, given the city’s established legal and regulatory framework for such activities under the faith, the finance chief has said. Financial Secretary Paul Chan Mo-po made the remarks on Thursday as he wrapped up his trip to this year’s Future Investment Initiative forum in Riyadh, where his trade delegation also yielded five memorandums of understanding (MOUs). “The legal and regulatory framework for issuing Islamic bonds is mature. We can proceed at any time [for the Northern Metropolis], provided the market reflects that issuing these instruments is cheaper and yields better results,” he said in an interview with the Post in Riyadh. Chan said that the government would review funding options for the scheme, which aims to turn 30,000 hectares (74,132 acres) of land into an engine for economic growth and a housing hub, and would select the most cost-effective method while expediting development. In the annual budget announced in February last year, Chan said authorities planned to issue HK$95 billion (US$12.2 billion) to HK$135 billion in bonds annually over the next five years to drive the development of the Northern Metropolis and other infrastructure projects. Chan stressed on Thursday that Islamic finance was “always a component” of the government’s financial planning. He also said that, building on the momentum established at last year’s conference, five MOUs had been signed during the trip, with most involving technology firms and Hong Kong’s Trade Development Council (TDC). Maphive Technology CEO John Chan, who is part of the delegation team, expressed positivity about the trip, which culminated in the successful signing of an MOU with a subsidiary of Olayan Saudi Holding Company, part of the hospitality and events sector. “I was able to meet investors during the trip and build up solid connections with some of them,” he said, adding that this was his third visit to Riyadh. The TDC signed an MOU with the Digital Cooperation Organisation, a multilateral body that focuses on the digital economy. The deal aims to foster collaboration in e-commerce, innovation and inclusive economic growth. The cooperation would support the participation of micro, small and medium-sized enterprises in TDC trade fairs and business-matching events, the Hong Kong body said. Paul Chan also said Saudi companies showed great interest in utilising Hong Kong as a platform to access the wider Asian market during the meeting with enterprises from the country. “Hong Kong could act as a two-way platform for both Saudi firms and Hong Kong and mainland companies [to interchange and collaborate],” he said. He further stated that authorities were actively building an ecosystem to suit both parties, pointing to Hong Kong’s launch of Asia’s first exchange-traded fund (ETF) tracking Saudi Arabia’s Islamic government bonds earlier this year. Following the ETF launch, market anticipation is high for the first firm from the Middle East to list in Hong Kong. Chan noted that the first company could be listed in a few months, citing Dubai-based diaper maker Softcare, which began assessing investor interest in its Hong Kong initial public offering after passing its listing hearing in late October. “I expect that gradually we will see companies from Saudi Arabia come to Hong Kong to list, as the kingdom has a vast number of projects that require capital,” he said. Under the kingdom’s Vision 2030 plan, Saudi Arabia is aggressively modernising and diversifying its economy to reduce its reliance on oil. Speaking of forming close ties between Hong Kong and Gulf states, Chan said the authorities were actively progressing with plans to establish an Economic and Trade Office (ETO) in Riyadh, with “significant progress expected in the next few months”. The government currently operates one ETO in the Middle East, located in Dubai.
