In April 2013, the AMBD inked a memorandum of understanding (MoU) with Bank Negara Malaysia (BNM) to “further strengthen cooperation in the financial sector” between Brunei and Malaysia. While the specifics of the MoU were not revealed, the press statement issued during that time stated that both central banks will be working together in the development of Islamic finance as one of the agenda. Then, in October 2013, the Securities Commission of Malaysia and the monetary authority of Brunei, Autoriti Monetari Brunei Darus Salam signed an MoU to further facilitate cross-border activities: especially in Islamic capital markets.
By 2013, the number of Islamic financial institutions in Brunei is 2 while the number of Takaful operators stand atn 4. Islamic banking assets are estimated to be US$6.0 billion, gross Takaful contributions US$220.3 million while total sukuk issuance is US$4.71 billion
In December 2013, the Council of the Islamic Financial Services Board (IFSB)9resolved to appoint its Chairman and Deputy Chairman for the year 2014. The Managing Director of Autoriti Monetari Brunei Darussalam (AMBD), H.E. Dato Mohd Rosli Sabtu will steer the Chairmanship of the IFSB, while H.E. Agus D.W. Martowardojo, Governor, Bank Indonesia was appointed Deputy Chairman. H.E. Dato Mohd Rosli Sabtu will take over the helm of the international standard-setting organisation from H.E. Sheikh Abdulla Saoud Al-Thani of Qatar Central Bank. This is expected to have very positive effects to Islamic finance industry in Brunei.
Since Brunei aspires to adhere to Islamic principles, the selection of Islamic finance as the preferred method to handle financial transaction in the country is not difficult to be appreciated. With adequate legal and regulatory framework, strong political will and cooperation from key players in the industry, Islamic finance in Brunei seems promising.
However, there are challenges. The major challenges in developing Brunei’s economy Brunei include high labor costs, a shortage of skilled labor, a small domestic market and a large bureaucracy but small entrepreneurial class. 10 To certain extent, these challenges are also extended to its Islamic finance industry. Fortunately, these challenges can be overcome.
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