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Sunday, 7 December 2008

Brunei: Levelling The Playing Field In Islamic Banking

Bandar Seri Begawan - Brunei Darussalam is well on its way to realise its goal of becoming a leading international Islamic Finance Hub following the introduction of the Islamic Banking Order 2008 and Takaful Order 2008.

Last month, the Second Minister of Finance, Pehin Orang Kaya Laila Setia Dato Seri Setia Awang Hj Abd Rahman bin Hj Ibrahim, said that the new Islamic Banking Order legislation was aimed at attracting foreign participants to strengthen the industry as a whole and to nurture local knowledge and expertise.
The Second Minister of Finance also mentioned that the Takaful Order 2008 was a new comprehensive legislation that would govern the activities of the domestic Takaful industry and provide the legal platform for a level-playing field between conventional insurers and Takaful operators.
Local stakeholders in the banking industry have expressed their support to the new regulations.
Awang Javed Ahmad, the Acting Managing Director of Bank Islam Brunei Darussalam (BIBD), told the Sunday Bulletin that new legislation is a move on the right direction for the Sultanate.
One of the most important aspects of any legislation is to protect consumers, he said.
With regards to the new Islamic Banking Order 2008 and Takaful Order 2008, these orders will ensure that executives of Takaful as well as Islamic financial institutions "are fit and proper to operate", the Acting Managing Director of BIBD added.
In his opinion, the new legislation has brought Brunei to the best of international standards. The next stage would be to go out to the international community, where investors and Islamic institutions are, and to inform them about how good the legislation as well as Brunei's regulatory environment is.
"This would give them the confidence to come over and start their businesses here," the Acting Managing Director of BIBD said.
The Deputy CEO of HSBC Brunei, Rosdi Amin Yaakub, meanwhile, told the Sunday Bulletin that new legislation represents "a very important opportunity" for the bank in Brunei.
"We are currently reviewing the various options and possibilities for HSBC Brunei. It will open up new things for us," he said, adding that the new legislation will help push the Sultanate forward as a financial centre.
The criteria for granting a licence to carry out Islamic banking business in Brunei were also clearly explained during yesterday's briefing.
It was mentioned that under the Islamic Banking Order 2008, the minimum ‘paid up capital’ for Islamic banks were B$100 million for local Islamic bank, B$500 for a foreign head office and B$30 million for a net head office fund.
Under the new Islamic Banking Order, every Islamic bank will have to pay annual licence fees for its head office (B$50,000), branch ($10,000) and ATM (B$3,000).
With regards to approving Islamic products, it was stated that all Islamic banks in Brunei will have to apply to the board for approval to see if its Islamic product is in accordance with ‘Hukurn Syara’.
The Sunday Bulletin has also learnt that Islamic banks in Brunei have a one-year grace period to comply with the Islamic Banking Order 2008, while the Takaful operators will have six months to comply with the Takaful Order 2008. -- Courtesy of Borneo Bulletin
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