| Danial Norjidi |
TWO key innovations with potential as growth drivers in the financial sector are Islamic finance and FinTech (financial technology).
This was said by Pehin Orang Kaya Indera Pahlawan Dato Seri Setia Awang Haji Suyoi bin Haji Osman, the Minister of Education and Deputy Chairman of Autoriti Monetari Brunei Darussalam (AMBD) while delivering a keynote address at the 12th Annual Brunei Darussalam Roundtable yesterday.
He described 2016 as being “a year of great uncertainty for the global financial market”. Amidst all these challenges, investment managers must still deliver positive returns to meet investors’ expectations.
“Thus, capital markets, especially in Asia, must be supported with strong fundamentals in order to be able to become more dynamic, innovative and sustainable in this fast-changing investment environment.”
The minister said that, to achieve this, Asian capital markets must move into the future towards the growth drivers of the 21st Century economy.
“In the financial sector, there are two key innovations that I see as potential growth drivers,” he said.
“The first is Islamic finance with its alternate proposition for more equity-based and risk-sharing finance than conventional bank lending,” he shared. “The second is the rise of FinTech which leverages on advancements in technology to revolutionise finance.”
In his speech, the minister said that Islamic Finance continues to be a potential growth driver.
“Its equity-based and risk-sharing nature offers a micro and macro-economically sounder alternative to traditional bank lending, in particular in the world of moral hazard created by the spread of modern deposit insurance and high leverage that pushed commercial bank shares into the riskier corner of investors’ investment portfolios.”
Minister of Education and Deputy Chairman of Autoriti Monetari Brunei Darussalam, Pehin Orang Kaya Indera Pahlawan Dato Seri Setia Awang Haji Suyoi bin Haji Osman making a speech.
One of the panel discussions under way. – PHOTOS: DANIAL NORJIDI
“In Asia, more countries have set out to significantly grow and develop Islamic capital markets through active issuance of sukuk,” he continued. “As more countries enter the industry, the scope for cross-border Islamic capital markets also increases. We are beginning to see more cross-border sukuk issuance within Asia as well as between the Middle East and Asia.
“Brunei Darussalam will leverage on our comparative advantage in Islamic finance as the country continues to uphold the purity of Islamic values in executing our Islamic finance contracts,” he said. “This aligns with our aim of making Brunei Darussalam an Islamic financial hub for the region, which will enable the growth of Brunei’s financial sector beyond the confines of the domestic market.”
“Domestically, I am pleased to announce that AMBD, as the agent to the Brunei Government on managing the issuances of the Brunei Government Sukuk Al-Ijarah, has achieved another milestone with the automation of the sukuk auction through the Bloomberg platform.”
He shared that government sukuk has so far reached a total of 135 issuances with a total value of BND10.085 billion since its maiden offering on April 6, 2006. Additionally, various maturities and structures of sukuk are currently being considered.
The minister went on to highlight that while FinTech was initially seen as a disruptor to the financial industry, he believes there is value in embracing rather than avoiding it.
He cited a recent Accenture study, which states that the global investment in FinTech ventures in the first quarter of 2016 reached US$5.3 billion, representing a 67 per cent year-over-year increase, and the percentage of investments going to FinTech companies in Europe and Asia-Pacific nearly doubled to 62 per cent.
“The growth of FinTech is exponential and is expected to continue as innovators leverage on the preferences of technology savvy millennials, as well as small businesses and the underbanked who are sensitive to cost,” said the minister. “In the area of capital markets, FinTech has the potential to improve efficiency and transparency, as well as promote financial inclusion.”
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