Education and training is the first way forward. To develop Brunei as a center for Islamic finance, it is essential to groom sufficient local talent simultaneously. Brunei ‘s leading educational facilities seek to support the government’s policy of developing the Sultanate as a center of Islamic financial excellence. In addition, the CIBFM, which was established by the Ministry of Finance to tackle key challenges in Islamic financial practice and to assist in the development of human resources for the sector, as well as other institutions, are also working to deepen the pool of qualified personnel in Brunei Darussalam.
The Universiti Brunei Darussalam (UBD), along with the Sultan Sharif Ali Islamic University and other centres, offer a range of courses on various aspects of Islamic finance and in mid-April 2012, the UBD announced it would be reviewing its curriculum for its Islamic finance courses to ensure their content was relevant to the sector, a process that would also include seeking input from the industry itself.
It should be a priority to nurture local talent to strengthen the industry. Programmes that tie in with empowerment should also be available. Many corporations complain about young graduates not being equipped to make that transition from university to the workforce.
Secondly, it is essential to attract foreign experts with high-level knowledge and practical experience in the Islamic finance industry to help train personnel in Brunei in an effort to improve their general quality. In addition to that, Brunei can proceed with cooperative ties with more standard setters and regulators, international financial institutions, organizations, established universities and non-governmental societies from other countries in order to recruit more talent.
Thirdly: cooperation with other key players. Currently, various cooperative measures are being taken by Brunei with important key players in Islamic finance industry. However, to truly benefit from this cooperation, Brunei needs to have a clear policy with clear objectives and targets.
The issue of collaboration is very essential. According to Bank Negara Malaysia’s Governor Dr. Zeti Akhtar Azizat the Brunei Darussalam Islamic Investment Summit 2013:
“Whilst there needs to be continued efforts at the national level to develop the institutional foundations for Islamic finance that will foster effective and efficient financial flows, and ensure that financial stability is preserved, the new wave of internationalization for Islamic finance requires increased collaboration across jurisdictions to strengthen the international financial infrastructure of Islamic finance going forward into the future, this will be particularly important given that the international environment has become more challenging. This is to ensure that the greater internationalization of Islamic finance takes place in an environment of financial stability”
Cooperation between countries is essential. In December 2013, it was reported that Malaysia and Brunei have agreed to enhance cooperation between the national banks of the two countries in the Islamic finance sector. This was agreed in conjunction with the signing of a deal by Malaysian prime minister Najib Tun Razak and Sultan Hassanal Bolkiah of Brunei, for Malaysia and Brunei to jointly drill for oil and gas in the area near the offshore border shared by the countries between the northern parts of Sarawak, Brunei and Sabah.
Fourthly, there must be legal certainty, reflected in the existence of up-to-date legislation. Laws should be codified, e.g. the basic rules of classical concepts like Mudharabah, Musharakah and Ijarah, to reduce arguments and promote certainty, which benefits product developers and lawyers. As Islamic banking and finance gains in complexity, involving combinations of an array of Islamic classical concepts, this will become more difficult. For example, Riba, amongst a host of other legal issues, has been debated for 1,500 years with no conclusion. Inclusion of the four Madhhabs with conflicting views produces flexibility but invites uncertainty in the law. The emphasis on legal certainty should not be construed as rejecting creativity or innovation. What is necessary is to have finality in deciding whether a product is shariah compliant or not. In Malaysia, the Shariah Advisory Council of Bank Negara Malaysia (SAC) was established in May 1997 as the highest Shariah authority in Islamic finance in Malaysia. The SAC has been given the authority for the ascertainment of Islamic law for the purposes of Islamic banking business, takaful business, Islamic financial business, Islamic development financial business, or any other business, which is based on Shariah principles and is supervised and regulated by Bank Negara Malaysia. As the reference body and advisor to Bank Negara Malaysia on Shariah matters, the SAC is also responsible for validating all Islamic banking and takaful products to ensure their compatibility with the Shariah principles. In addition, it advises Bank Negara Malaysia on any Shariah issue relating to Islamic financial business or transactions of Bank Negara Malaysia as well as other related entities.
In the recent Central Bank of Malaysia Act 2009, the role and functions of the SAC was further reinforced whereby the SAC was accorded the status of the sole authoritative body on Shariah matters pertaining to Islamic banking, takaful and Islamic finance. While the rulings of the SAC shall prevail over any contradictory ruling given by a Shariah body or committee constituted in Malaysia, the court and arbitrator are also required to refer to the rulings of the SAC for any proceedings relating to Islamic financial business, and such rulings shall be binding.
Overall, Islamic finance industry in Brunei seems promising. There is a strong support from the government and key players in the industry and the country is in the right track. However, to safeguard the future of the industry, there should be no compromise in nurturing new talents. Without sufficient experts and manpower, the development will be unnecessarily halted.
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