Islamic banking in Brunei Darussalam accounts for 39 per cent of the total banking industry’s assets of BND$15.5 billion, 36 per cent of the total banking deposits of $12.1 billion and 51 per cent of the total lending portfolio at the end of the 3rd quarter in 2007. This success is reflected in BIBD’s unaudited financial performance which has shown profit before tax and zakat of BND$126 million or equivalent to 70 per cent increase of profits compared to 2006.
This was revealed yesterday at the official launching of Bank Islam Brunei Darussalam (BIBD) Investment Banking at the Empire Hotel and Country Club. Pehin Orang Kaya Laila Setia Dato Seri Setia Awang Haji Abd Rahman, the Finance Minister II was present as guest ofhonour to launch the BIBD Investment Banking.
In his keynote address, the guest of honour applauded “the board of directors and the management of BIBD for successfully establishing the investment banking division of the bank, dedicated to provide investment banking services such as portfolio fund management and business advisory, business arranger: underwriting and distribution.”
He highlighted the positive developments and growth within the Islamic banking and finance industry in Brunei Darussalam, especially in realising the vision of His Majesty’s government to make Brunei a regional hub, offering business and investment competencies in many diversified fields, including asset management with particular emphasis on the provision of innovative and competitive Islamic financial solutions.
The minister also noted that creating a vibrant financial sector represents one of the key elements of the country’s economic diversification. His Majesty’s government through the Ministry of Finance continues to strive in creating a conducive business environment for the banking and finance industry to flourish and contribute effectively to the economic growth of the country, including providing steady employMent opportunities to graduates and school-leavers alike.
Furthermore, the Ministry of Finance is always mindful that the development of a comprehensive and robust financial industry offers bountiful opportunities to expedite and spur the process of economic diversification, particularly in supporting international trade and investment.
In this regard, the ten-year strategic plan of the Ministry of Finance clearly spells out that it is one of the conscious and continuous efforts of the ministry through a set of integrated policies, strategies and designs to promote and facilitate the development of a dynamic deep and sustainable financial industry in Brunei Darussalam.
One of the numerous key initiatives which are currently being undertaken is the development of a capital market in this country, which will hopefully be an attractive investment avenue to keep excess banking liquidity circulating within the domestic economic and financial system and be appropriately channelled towards investment and funding in the country.
The guest of honour highlighted a number of bold measures and steps that have been taken in the first two years of the adoption and implementation of MOF’s strategic plan. In April 2007, the Ministry of Finance issued its maiden syariah compliant government Sukuk Al-ljarah and aims to develop and establish a yield curve for issuance of other Sukuks and bonds by major institutions and corporations in the country.
The ministry has issued 10 tranches of these Brunei dollar short-tem Sukuk in July 2007 amounting to BND one billion, followed by the issuance of a one-year Sukuk in July 2007 amounting to BND 45 million. Thus he urged financial institutions to actively participate in the issuance of capital market instruments such as Islamic short-term and medium-term Sukuks to serve their respective clients’ needs and thus contribute towards the development and growth of the domestic Islamic capital market.
The policy directive of the Ministry of Finance on personal loan capping was aimed at containing excessive personal loans and financing to finance consumption, whilst conversely attempting to promote a savings and investment culture within the Bruneian society which can be channelled into a productive culture.
He also reminded the public who are seriously interested in investing to equip themselves with necessary financial literacy and be able to distinguish a genuine investment scheme. Investor’s education is absolutely necessary to ensure that investors do not fall prey to exploitative and unscrupulous schemes, which upon closer scrutiny, more often than not tend to reveal themselves as nothing but heavily disguised and deceptive forms and variations of the ponzi or pyramid scheme.
Consequently, financial institutions need to be dynamic in reasonably meeting the increasing expectations of the depositors and investors in terms of product returns and diversification in order to provide an attractive and sensible alternative to the apparently lucrative but potentially monetarily deleterious investment scams touted by the many increasingly daring unauthorised operators.
With the formation of a national Syariah financial supervisory board, particularly to instill public confidence in issues in relation to Syariah compliant products marketed in or from this country, he believes that Brunei Darussalam’s credentials with regards to Islamic matters puts the country in good stead in terms of the requisite Syariah governance and to thereby facilitate the development opportunities of many more syariah compliant products under our jurisdiction.