Halal Financial Products In Demand In Brunei

Halal Financial Products In Demand In Brunei

Bruneians have clearly shown a healthy appetite for Islamic investment products as can be gleaned from the recent issuance of sukuk or Islamic bonds, which generated strong demand from buyers, a banking expert at Universiti Brunei Darussalam said yesterday.

More and more Bruneians are gaining confidence in investing their money in Syariah-compliant financial products such as sukuk, said Hjh Salma Latiff, director of the Centre for Islamic Banking Finance and Management (CIBFM).

Although sukuk are generally not capital-secured, many favour them due to their tradeable feature in the secondary market and the fact that they offer investors an entitlement to any profits made. Also, due to certain caps in the market allowed by the Syariah law for investments, Islamic investments are not as volatile as conventional investments, she added.

Sukuk issuances by the government and Islamic financial institutions in Brunei have been received very well by the general public, said Hjh Salma.

“The recent issuance of government sukuk was oversubscribed,” she told The Brunei Times, citing the sultanate’s healthy appetite for Islamic investment products.

“This is probably why most conventional banks are expressing interest to venture into sukuk,” she explained, adding that Brunei is indeed capable of becoming host to more Islamic financial institutions as – it already has the infrastructure in place. “All the acts are already in place,” Hjh Salma said.

However, the Ministry of Finance is currently revising the guidelines on the establishment of Islamic banks in Brunei. The ministry is reviewing the existing Syariah law which governs the area of banking. Although it remains unclear when the order would be finalised, the CIBFM director is upbeat that this will encourage the entry of more Islamic financial institutions which in turn would provide local consumers with more Syariah-compliant investment products.

Already, the Hong Kong and Shanghai Banking Corporation (HSBC) and Standard Chartered Bank have expressed interest in establishing a separate Syariah-compliant banking operations once the Islamic Banking Order `has been finalised.

In an earlier interview with The Brunei Times, Tareq Muhmood, HSBC CEO lauded the review as it will act as a catalyst to attract more Islamic financial institutions.

“Once it’s approved we’ll look into whether to apply for an Islamic banking licence… It’ll definitely attract more competition (in the local Islamic banking environment), which is good,” he said.

In general, Islamic banking in accordance with the Syariah law is permitted to trade and invest in halal (acceptable by Islam) markets and must strictly shy away from prohibited matters (haram). Hence, investing in areas related to alcohol and gambling is forbidden. Unlike conventional banking, Syariah law prohibits interest charges or funds which are termed as riba.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s