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Friday, 1 February 2008

Brunei Plans To Enhance Financial System, Islamic banking in particular

Bandar Seri Begawan - The government of Brunei Darussalam is aware that an efficient and strong financial system is a requirement to realise the country's economic potential. The country has long aspired to develop its financial services, Islamic banking in particular. In the RKN 8, the banking, finance and insurance sector was identified as one of the promoted sectors.
Amongst the issues and challenges of the economy, according to the Brunei Darussalam Long-Term Development Plan publication, is the lack of incentive to save. This is due to the banking system offering lower savings interest rates. In order to encourage savings, an increase in the savings interest rates and more attractive banking products are necessary.
Prospects and programmes in RKN 2007-2012 include the government plans to launch its 10-year strategic plan that includes programmes to fully develop the capital markets as well as to achieve a stable monetary and financial system.
Strategies to realise this will include strengthening of relevant legislations, setting up of an efficient data compilation system, issuing of short-term Sukuk, developing fund management services, developing capacity to comply with and implement BASEL II principles, and to develop this country as an Islamic financial centre.
Recommendations of bank supervisors and central bankers from 12 countries that make up the BASEL Committee on Banking Supervision are represented by BASEL II to revise the international standards for measuring the adequacy of a bank's capital.
The publication said, "This is to promote greater consistency in the way banks and banking regulators approach risk management across national borders."
To develop a wider capital market in the country, concerted efforts will also be made and the government will continue to exercise prudence in managing and regulating the banking and financial sector.
The key to successful development of this sector is a high standard of regulatory regime and effective capacity building strategy. The capacity building will also remain an important agenda and be undertaken continuously in tandem with the nation's current and future needs.
The RKN 2007-2012 period also saw the merger of Brunei Darussalam's leading Islamic banks, the IBB and the 1DBB, a move intended to consolidate the bank's assets, strengthen their operations and make the new entity more competitive locally and globally.
Also in the RKN 2007-2012 period, a number of RKNfunded programmes and projects have been identified for implementation, which includes the expansion of Treasury, Accounting and Finance Information System (TAFIS) programme and network infrastructure and related hardware and software project. The monitoring and evaluation of the sector will be carried out by KPIs, including national savings rate, the depth and liquidity of the financial system, the stability of the exchange rate, the level of inflation and court's efficiency in settling bankruptcy cases.
RKN8 has also seen some progress made, including the enactment of some new laws for banking, finance and insurance sector, as well as the operations of several banks and financial institutions registered with Brunei international Financial Centre (BIFC). --(Borneo Bulletin)

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