BANDAR SERI BEGAWAN — More people have poured money into investment funds despite the COVID-19 pandemic’s impact on the economy, said the deputy chair of Autoriti Monetari Brunei Darussalam (AMBD).

YB Pehin Orang Kaya Seri Kerna Dato Seri Setia (Dr) Hj Awg Abu Bakar Hj Apong said participation in investment funds rose 61.6 percent year-on-year, of which 20 percent were invested in Islamic funds.

“This shows that there has been an increase in local demand for investments. It is hoped that financial institutions can leverage on this opportunity to cater to the growing demand, especially in Islamic funds,” he added.

During the Brunei Darussalam Islamic Capital Market Conference 2021 on Wednesday, he said the delivery of financial solutions has not been able to keep up with consumer demand during the COVID-19 pandemic.

There is a need to close the gap between customer expectations and quality of financial services, he said.

The deputy chair added that the COVID-19 pandemic is a wake-up call for individuals to realise the importance of setting aside money to an emergency fund.

Some of the guests in attendance at the Brunei Darussalam Islamic Capital Market Conference 2021. Photo: Rasidah Hj Abu Bakar/The Scoop

AMBD eyes formation of fintech hub

YB Pehin Dato Hj Awg Abu Bakar, who is also the home affairs minister, said the regulatory environment has been improved for financial technology (fintech) companies to operate in Brunei.

AMBD is setting up a fintech hub as a centralised platform for Islamic fintech-related activities, he added.

Outlined in the central bank’s White Paper on the State of Fintech in Brunei Darussalam, the fintech hub aims to integrate major players into an ecosystem, including startups, financial institutions, technology firms, venture capital firms and government authorities.

The deputy chair further said a fintech operator in AMBD’s fintech regulatory sandbox is testing the establishment of an Islamic crowdfunding platform.

Without giving details of the fintech operator, he said the platform is a marketplace to match eligible startups and MSMEs requiring asset financing with investors.

According to the fintech white paper published in 2020, Jana Capital was the only startup in AMBD’s fintech regulatory sandbox that is building a Syariah-based peer-to-peer crowdfunding platform.

Launched in 2017, the AMBD fintech regulatory sandbox allows companies to experiment and test their innovative financial solutions for a limited time.

AMBD has stated that basic regulations on crowdfunding have been put in place, with rules on other fintech areas to follow.

Islamic finance opportunities remain untapped

The minister said more innovative solutions and opportunities in Islamic finance are largely untapped, especially in the Islamic capital market sector.

The use of a more diverse set of financial instruments such as Islamic social finance tools (zakat, waqaf and sadaqah), sukuk and Islamic fintech can be further explored to stimulate a more vibrant Islamic finance industry, he added.

YB Pehin Dato Hj Awg Abu Bakar said Brunei has a “fintech-ready population” as consumers are becoming increasingly tech-savvy with the use of mobile banking and better access to information.

There has also been growing attention on greener and more resilient post-pandemic economic recovery.

“The pandemic has presented the world with a rare window of opportunity to build a clean, climate-friendly and socially inclusive future.

“The Islamic financial system could play an important role in financing environmentally-friendly projects that ensure environmental protection and promote future sustainability,” the minister added.

YB Pehin Dato Dr Hj Awg Abu Bakar said the ICD-Refinitive Islamic Financial Development Report 2020 highlighted that Islamic capital markets, funds and banking were the main drivers of asset growth, with sukuk and Islamic funds contributing 19 percent and 5 percent, respectively.

The industry is expected to grow to US$3.7 trillion in assets by 2024.

Held as part of the first Brunei Mid-Year Conference and Exhibition, the virtual Brunei Darussalam Islamic Capital Market Conference 2021 is jointly organised by the Brunei Institute of Leadership & Islamic Finance and Malaysia’s International Centre for Education in Islamic Finance.