The Autoriti Monetari Brunei Darussalam (AMBD) has granted approval for the first Islamic investment window to operate in the country, in line with the government’s economic reform programs and its promise of opening up new opportunities across its financial sector. NESSREEN TAMANO writes.
Conventional lender Standard Chartered Bank‘s subsidiary Standard Chartered Securities, formed in 2016, became the first capital market service license holder in Brunei to establish an Islamic window, as granted by the AMBD and the Syariah Financial Supervisory Board. For now, the company is offering one Islamic product: a Shariah compliant unit trust that consists of the RHB Global Sukuk Fund and the RHB Islamic Global Developed Markets Fund.
The milestone, while a long time coming, is consistent with the government’s plans to develop its Islamic finance sector. “To encourage development in the Islamic capital markets, the legislation also allows for Islamic windows, allowing conventional financial institutions to offer Islamic investment products and services subject to certain Shariah and operational requirements,” the AMBD‘s Financial Blueprint 2016–25, states.
Minister of Home Affairs Abu Bakar Apong, who is also the deputy chairman of the AMBD, noted the rise in demand for Islamic products in the country during his speech at the Standard Chartered Securities launch ceremony. He said that between 2019 and 2020, there was a year-on-year increase of 61.6% in investor participation in investment funds, 20% of which was in Islamic funds.
Brunei’s Islamic banking sector has strong potential, with total assets accounting for 37% of the total market share according to the central bank, and backing from the government, whose strategies place a special focus on elevating Islamic financial services in the country to attract international players.
However, there is only one fully-fledged Islamic bank (Bank Islam Brunei Darussalam) out of eight banks in the country. The central bank lists 31 licensed Islamic banking products.