Malaysia Seeks to Strengthen Islamic Finance and ESG Collaboration with Hong Kong
Malaysia is eyeing Hong Kong’s position as a financial hub to bolster its own Islamic finance sector and foster collaboration in environmental, social, and governance (ESG) initiatives. During The Minister of Finance, Tengku Zafrul Aziz’s official visit, discussions revolved around financial sector cooperation and potential talent exchanges between the two economies. Malaysia sees Hong Kong’s established status as a key factor in supporting Malaysian businesses’ fundraising efforts. Of particular interest is Hong Kong’s expertise in ESG investing, which aligns with the principles of Islamic finance.
As the Islamic finance industry prohibits speculation and interest payments, it shares similarities with ESG principles. Tapping into Hong Kong’s ESG maturity could open doors for Malaysia to expand its global leadership in Islamic finance. ESG assets are projected to exceed $50 trillion by 2025, representing a significant portion of global assets under management. Collaborating on decarbonizing economies and embracing ESG principles holds immense potential for Malaysia and Hong Kong.
The two countries also explore opportunities in the halal economy, encompassing permissible goods and services for Muslims. By channelling capital into halal industries and supply chains, Malaysia and Hong Kong can contribute to the growth of the global halal economy. Additionally, cooperation in the digital economy extends beyond e-commerce and digital trade, encompassing start-up financing and leveraging each other’s strengths in the sector.
The issue of talent was also discussed, with a focus on the digital sector. While both Malaysia and Hong Kong face challenges in securing top-tier tech talent, exploring avenues for talent sharing and mobility remains a priority. Malaysia aims to be more liberal in accepting foreign talent, especially in sectors where domestic talent is scarce. This openness to international expertise aligns with Malaysia’s commitment to foster innovation and attract investments.
The visit also highlighted Malaysia’s readiness to embrace foreign investments, such as Amazon’s $6 billion investment in data centres, viewed as a vote of confidence in the country’s administration. Investments like these have the potential to spur the digital economy and create a ripple effect in terms of skills development and energy consumption. Collaboration in this area is crucial for sustainable and responsible growth, considering the energy demands of data centres and their environmental impact.
The partnership between Malaysia and Hong Kong presents a unique opportunity for both countries to leverage their strengths, drive economic growth, and solidify Hong Kong’s position as a global financial centre. With a focus on Islamic finance, ESG collaboration, the halal economy, digital innovation, and talent exchange, this cooperation holds the potential for mutual development and long-term success.