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Global Islamic finance assets, projected to reach US$7.5 trillion by 2028, present a significant opportunity for Hong Kong. With its robust financial infrastructure and connectivity to mainland China, Hong Kong is uniquely positioned to become a gateway to sharia-compliant finance in Asia.

Takaful, or Islamic insurance, operates on principles of cooperation (Ta’awun) and charitable donation (Tabarru), with participants contributing to a shared pool to protect against risks. Unlike conventional insurance, Takaful avoids interest (Riba) and speculative uncertainty (Gharar), redistributing surpluses to participants. This ethical model covers family protection, general insurance and reinsurance solutions that comply with Islamic law.

Although challenges remain, Hong Kong’s regulatory framework has progressed in accommodating Islamic finance. The Hong Kong Monetary Authority’s framework allows Islamic banking windows, while tax neutrality for Islamic bonds (Sukuk) since 2013 has encouraged issuance. However, the lack of stand-alone Islamic banking licences and low local awareness limit growth potential.

Hong Kong should pursue strategic reform to capitalise on this market. Introducing a dedicated Takaful ordinance would provide clarity on capital and governance requirements. Partnerships with leading Islamic finance centres such as Malaysia and Qatar could accelerate product innovation, particularly fintech solutions. Establishing a Hong Kong-Qatar task force on Takaful would build on recent agreements , while an annual Islamic finance summit would raise Hong Kong’s profile.

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With its multicultural environment and financial expertise, Hong Kong is well-placed to become an Islamic finance hub. In embracing this opportunity, Hong Kong can diversify its financial services sector while promoting ethical finance principles globally.