The Islamic finance ecosystem composes of Islamic banks, takaful operators, Islamic investment dealers, sukuk issuers, and ancillary service providers. These components form a comprehensive framework that contributes to the country’s vibrant and dynamic Islamic financial landscape.
Brunei Darussalam aspires to establish itself as a prominent international Islamic financial hub, emphasising the creation of an optimal regulatory framework, structural foundation, and governance. This commitment is articulated in the Financial Service Blueprint 2016-2025, wherein positioning Brunei as a key player in the international Islamic finance landscape is a primary objective.
The pursuit of this goal extends to the standardisation of Islamic financial products and services, aligned with global best practices.
Underscored in the blueprint is the imperative of fostering a diverse foreign presence and heightened participation in the domestic Islamic financial markets, with a particular emphasis on the sukuk and takaful market segments.
As part of its ongoing commitment to advancing the global reach of Islamic finance, Brunei is dedicated to implementing various initiatives. One such initiative involves the introduction of additional Syariahcompliant financial products and services, designed to cater to diverse global demands.
The internationalisation of Islamic finance in Brunei is further exemplified by the participation of foreign banks in the country, offering products that adhere to Syariah principles. A notable example is the establishment of Standard Chartered Securities (B) Sdn Bhd (SCSB), underscoring the growing integration of Islamic financial practices into the offerings of international financial institutions operating within Brunei.
Authorised by the Brunei Darussalam Central Bank (BDCB) and the Syariah Financial Supervisory Board (SFSB), the financial service provider engages in Islamic investment business, offering an alternative dimension to its conventional operations.
In addition, Brunei actively participates on the international front as a member of the Islamic Financial Services Board (IFSB), receiving support from the BDCB and local Islamic financial institutions.
As a leading service provider of human capacity development in the areas of Islamic finance and leadership, the Brunei Institute of Leadership and Islamic Finance (BILIF) aims to shape future leaders, experts and innovators through immersive programmes and world-class events. Appointed by BDCB, BILIF is also the official licensing examination centre for Financial Planning Practitioners Programme (FPPP) and Qualifying Examination for Insurance/ Takaful Agents (QEFITA).
The nation has also been prioritising the quality of education in the realm of Islamic finance, exemplified by Universiti Brunei Darussalam (UBD) offering a Master of Islamic Finance course.
As of Q1 2023, total assets in the financial sector was valued at BND23.9 billion, of which BND14.1 billion (59.1 per cent) was held by the Islamic finance sector.
Recognition
Notably, Brunei has garnered recognition from the Asian Development Bank (ADB) as one of three countries achieving a market share exceeding 15 per cent in the domestic banking sector.
Universiti Islam Sultan Sharif Ali (UNISSA) through the Faculty of Islamic Economics and Finance (FEKim) has also been recognised for its role in producing graduates to push the advancement of Islamic financial development. UNISSA received the highly prestigious Global Banking Finance Award (GIFA) in the GIFA Market Leadership Award 2023 category (Education in Islamic Banking and Finance) in September 2023.
Regulatory landscape
The current Syariah governance framework in Brunei operates on a two tier structure. This comprises the Syariah Financial Supervisory Board (SFSB), where the BDCB serves as the secretariat, and an internal Syariah Advisory Body (SAB).
The SFSB holds the responsibility of ascertaining Islamic law in financial matters, issuing rulings on related issues, and providing guidance on any Syariah-related aspects pertaining to Islamic financial business, activities, or transactions.
Furthermore, the regulatory landscape for Islamic finance activities in Brunei is structured under specific orders. The Islamic Banking Order (2008) oversees Islamic banks, the Takaful Order (2008) governs the takaful sector, and the Islamic capital market activities fall under the purview of the Securities Market Order (2013), complemented by its supplementary legislation, the Securities Market Regulations (2015).
This comprehensive regulatory framework ensures the adherence to Syariah principles across various segments of the Islamic financial industry in Brunei.