HRH Brunei Crown Prince: Strong Islamic Philosophy Key To Be Finance Hub

Strong Islamic philosophy key to be finance hub
August 3, 2017

| Danial Norjidi |

BRUNEI Darussalam’s key competitive edge towards becoming an international Islamic Finance hub lies in its strong Islamic philosophy, which is embedded in its way of life and naturally contributes to the purity of the country’s Islamic finance.

This was stated in a sabda yesterday by His Royal Highness Prince Haji Al-Muhtadee Billah ibni His Majesty Sultan Haji Hassanal Bolkiah Mu’izzaddin Waddaulah, the Crown Prince and Senior Minister at the Prime Minister’s Office and Chairman of Autoriti Monetari Brunei Darussalam (AMBD), during the opening ceremony of the Brunei Darussalam Islamic Investment Summit 2017 (BIIS 2017).

“The global and regional economic environment has changed dramatically over the last 10 years, bringing with it new risks and challenges. Against this backdrop, the Islamic finance industry has seen extraordinary growth and has continued to evolve,” His Royal Highness said.

“According to the World Bank, the Islamic finance industry has expanded rapidly this past decade, growing at 10-12 per cent annually.”

His Royal Highness noted that at the end of 2016, Syariah-compliant financial assets are estimated at US$2.3 trillion, covering bank and non-bank financial institutions, capital markets, money markets, insurance companies and Takaful operators.

In many Muslim-majority countries, Islamic banking assets have grown faster than conventional banking assets, His Royal Highness said, adding that there has also been a surge of interest in Islamic finance from countries such as the United Kingdom, Luxembourg, and South Africa.

“With Muslims accounting for more than 20 per cent of the world’s population, and the increasing awareness on Islamic Finance, the Islamic finance industry looks poised to continue its remarkable growth. The Global Islamic Finance Report 2017 forecasted that Islamic Finance assets will grow to between US$3 trillion to US$4.3 trillion by 2020. In this regard, this Summit’s theme ‘Globalisation of Islamic Finance: The Road Ahead’ is therefore timely and appropriate.

“The value proposition of Islamic finance lies in its emphasis on risk-sharing and its ability to link finance to the real economy,” His Royal Highness continued.

“More significantly, it prohibits contracts involving speculation or the like, as mandated in the Al-Quran, Verse 90 of Surah Al-Ma’idah.”

His Royal Highness said that the strength of Islamic finance to face any adversities was demonstrated during the Global Financial Crisis in 2008 when highly complex and risky financial structures crippled the world’s financial system.

At the time, Islamic financial institutions had avoided from investigating in speculative instruments and came out relatively unharmed.

“In recognition of these strengths, the appeal of Islamic finance has extended beyond faith and origins. Global financial centres in London, Luxembourg and Hong Kong have started ambitious initiatives to tap into the potential of Islamic finance.”

Domestically, in over 20 years of inception, Brunei Darussalam’s Islamic Financial eco-system has continued to develop and now comprises Islamic banks, Takaful operators, Islamic investment dealers, Sukuk and other ancillary services, His Royal Highness said.

Currently, Islamic Banking and Takaful assets have grown to account for 53 per cent of the total market share.

His Royal Highness also highlighted that true globalisation of Islamic finance requires collaboration among regulatory and supervisory authorities; and harmonisation of international standards.

“On that note, I am pleased that as a regulator, AMBD has continually strived to adopt international best practices and plays an active role in its development. AMBD is now an active member in a number of standard-setting bodies such as the Islamic Financial Services Board and International Islamic Financial Market.

“Recognising the importance of public trust and fiduciary duty within the financial sector, AMBD has issued the Guidelines on Corporate Governance for Banks which shall take effect on January 1, 2018. Similar requirements shall also be applied to insurance companies and takaful operators in the near future.

“Complementing this corporate governance initiative, I am pleased to note that AMBD will also be introducing a Syariah Governance Framework for Islamic financial institutions,” His Royal Highness said.

“Alongside this, AMBD will be enhancing the Syariah audit framework to ensure that all approved Islamic financial products and services continue to adhere to Syariah standards. I am confident that all these initiatives will provide confidence to stakeholders.”

His Royal Highness affirmed that a strong and dynamic workforce is crucial for the industry to retain its competitiveness.

His Royal Highness said that, in this regard, AMBD with the support of Centre for Islamic Banking, Finance and Management will be introducing Continuous Professional Development (CPD) requirements for all financial practitioners, which will enhance the skill set of those working in the financial industry.

“I am most encouraged that all these developments are in line with the aspirations of His Majesty Sultan Haji Hassanal Bolkiah Mu’izzaddin Waddaulah ibni Al-Marhum Sultan Haji Omar ‘Ali Saifuddien Sa’adul Khairi Waddien, Sultan and Yang Di-Pertuan of Brunei Darussalam to realise the country’s vision in becoming a world renowned Islamic financial hub.”

As a national agenda, His Royal Highness urged AMBD and relevant government and non-government agencies to continue their close collaboration in realising His Majesty’s vision.

“Our key competitive edge towards becoming an International Islamic Finance hub lies in our strong Islamic Philosophy which is embedded in our way of life. It naturally contributes to the purity of Brunei Darussalam’s Islamic Finance.

“Furthermore, the country’s continued political and macroeconomic stability and favourable ties with our international partners are conducive for foreign direct investments (FDIs) to locate their new operations in Brunei Darussalam.”

Courtesy of Borneo Bulletin