Saturday, 21 December 2013

"Taxpayers will foot bill for sharia banking"

The South China Morning Post ran my letter on the 17th:
Taxpayers will foot bill for sharia banking
Vikas Mohammed Khan ("Global financial centre can't afford to ignore Islamic banking", December 7), replying to my letter ("No place for 'sukuk' bonds in HK market", November 22) claims that my saying sharia banking is inefficient is "hardly credible, especially in the light of the 'efficiencies' of Wall-Street-type banking".
But whether or not Western banking is inefficient is irrelevant to the contention that sharia banking is inefficient. Many experts in sharia banking, including professors Timur Kuran and Mahmoud El-Gamal, attest to its inefficiencies.
None of this would matter if it did not affect those who don't wish to avail themselves of sharia banking, but it does. Hong Kong taxpayers will end up paying for that inefficiency. The government plans to give tax breaks to sharia banking, since it can't stand on its own without such exemptions. This affects all Hong Kong residents, as the foregone taxes are money that could be spent elsewhere.
Surely this deserves our attention. Or should we simply accept that tax exemptions are to be given to religiously mandated financing without examination? We should ask if it's right for our government to encourage inefficiencies by providing tax breaks at our cost.
Western banking has come under close scrutiny and regulation, especially since 2008. Sharia banking ought to be subject to similar scrutiny and debate, without it being characterised as "Western hype regarding Islam".
Mr Khan says I'm "fatuous" in connecting Islamic financing with a "global religious conspiracy". I did not say there was a "conspiracy". I said it was openly an "Islamist programme", not by my judgment, but by the clear statements of Islamic leaders including Egyptian cleric Yusuf al-Qaradawi, who calls it "jihad with money". If Mr Khan denies that, he ought to direct his remarks to such gentlemen, rather than to me, I am simply reporting them.
Peter Forsythe, Discovery Bay