Brunei-Malaysia Islamic banking ties touted

Wednesday, October 14, 2009-A COLLABORATION between Malaysia and Brunei in Islamic banking will be extremely beneficial to the Sultanate, and even help strengthen the industry's profile in the region, Islamic financial experts yesterday said.

"Brunei and Malaysia could collaborate extremely well together because both are strong Muslim countries and Malaysia is strong in sukuk issuance, Islamic banking infrastructure and product development," said a financial executive with a background in Islamic finance.

"Brunei could get an exchange of knowledge from Malaysia because of their experience and human resources, and it would benefit both countries' sukuk ratings," she said.

Malaysian High Commissioner to Brunei Dato' Ku Jaafar Ku Shaari had broached the idea of working side by side with Brunei in jointly promoting the two countries as an Islamic banking hub. Being both Islamic nations, he said, Malaysia and Brunei can work together to promote Islamic banking as an alternative to conventional banking.

Indeed, the financial executive said that Brunei could gain knowledge and assistance from Malaysia in terms of the syariah advisory board, and help develop Brunei's human resources.

Another executive officer from an international bank also welcomed the tie-up. "Islamic banking in Malaysia is a large industry, but it is also a large industry in Brunei, but based on sheer scale and numbers, Malaysia joining with Brunei would be extremely beneficial, and I wouldn't be surprised to see Indonesia joining in the future."

He said that Malaysia could help Brunei in terms of syariah principles, products, among others. "Without a doubt, this will be a good move. I do see that the region as a whole will be stronger in Islamic finance," he said.

He added that with the majority of the region being Muslim, it would only be natural to collaborate rather than take on the global Islamic banking market alone. "This would also probably lead to more Islamic financial institutes opening up in the region and in Brunei since there are more Muslims in the countries. Islamic banking will seem to be the obvious choice, rather than conventional banking," he said.

He added that Islamic banking was very similar, in concept, to halal food. "The idea is that it does not alienate people from the products, so even from the market in Brunei, the Islamic banking products are not just used by Muslim people."

The financial executive said that Malaysia's Islamic finance and banking standards are very popular with the Middle Eastern market. "Malaysia is more acceptable to the Arab world, and they are coming closer to the Malaysia market," she said.

She said that should Malaysia collaborate with Brunei on Islamic banking and finance, they could help introduce technological know-how to Bruneian players.

In a previous interview, Dr Humayon Dar, CEO of the syariah advisory firm BMB Islamic UK Ltd, said Malaysia was starting to take the lead to establish a syariah advisory service. "The Islamic financial services board based in Kuala Lumpur has come up with a governance draft, which is an exposure draft of the syariah governance standard." He said Malaysia is a global centre of excellence for Islamic finance.

Malaysia's top envoy had said that Malaysia is looking at the possibility of bringing in Islamic banking experts to Brunei as Malaysia's Islamic banking and finance sector is already quite advanced.

Courtesy of The Brunei Times