Kyoto Bulletin of Islamic Area Studies, 8 (March 2015), pp * Formation and Characteristics of Islamic Financial Sector in Brunei Darussalam K

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1 Kyoto Bulletin of Islamic Area Studies, 8 (March 2015), pp * Formation and Characteristics of Islamic Financial Sector in Brunei Darussalam KAMBARA Kentaro The Islamic financial industry has been expanding rapidly not only in Middle Eastern countries but also in Southeast Asian Countries, especially in Malaysia since the 2000 s. It is obvious that the Islamic financial sector has been developed in Indonesia, the Philippines, Thailand, and Brunei Darussalam. However, there is little academic research on Islamic finance in Brunei Darussalam, where the Islamic financial industry has been expanding in terms of the market share. That is why the object of this paper is to survey the process and explore the prospects of the Islamic financial industry in Brunei Darussalam. Firstly, this paper discusses how the conventional sector in Brunei Darussalam has been established. Then it explains about the introduction and expansion of the Islamic banking sector. After that, it focuses on the framework of the Islamic financial system such as its laws, institutions, and economic policies. In addition, it shows the role of the financial sector and its impact on Brunei s economy. Finally, it summarizes the characteristics and the role of the industry in Brunei s economy. Negara Melayu Islam Beraja / Malay Islamic Monarchy *

2 Hong Kong Shanghai Banking Cooperation, HSBC Chartered Bank Malayan Bank United Malayan Banking Corp. National Bank of Brunei Khoo Teck Puat, Sidhu 2010: 124 Lembaga Matawang Brunei / Brunei Currency Board Sidhu 2010: 42 Bank of AmericaCiti Bank Oversea Union Bank Ministry of Finance Skully 1984: 5 10 Economic Planning Unit Island Development Bank Ltd 1984: 64; 1986: 186; 1986: ; Skully 1984: Sidhu 2010: Skully 1984: 24 25

3 Enrique Zobel 1986: 124 Abdul RahmanInternational Bank of Brunei 1987: 360; Saunders 2002: 182; Asia Year book 1987: 114 Sidhu 2010: : 362; Asia Year book 1989: : 386; Ahmad 1997: 57 Bahagian Institusi Kewangan / Financial Institution Division, FID Venardos 2012: Baiduri Bank Berhad Borneo Bulletin 1994 Brunei International Financial Centre, BIFC Khairuddin and Ashak 2010: Brunei Currency and Monetary Order 1986: 124 Saunders 2002: 182; Cleary and Wong 1994: 115 Saunders 2002: 182 Salma 2007: 281 Skully 1984: National Finance Khoo Ban Hock 1987: 357; Asia Year book 1989: : 349 Sidhu2010: 42

4 Wawasan 2035 / Vision 2035 Economic Development Board Brunei, EDBB Brunei s National Vision 2014 Autoriti Monetari Brunei Darussalam, AMBD 1984: : 353; Sidhu 2010: Perbadanan Tabung Amanah Islam Brunei, TAIB / Brunei Islamic Trust Fund Negara Brunei Darussalam 1999: 6, 17 Sidhu 2010: xxxix; 2010: 106

5 Religious Advisory Committee Negara Brunei Darussalam 1999: 6, 12 Salma 2007: 273; Venardos 2012: 173 Salma 2007: 273 Darussalam Holdings Sendurian Berhad 1995: 346 Bank Islam Brunei Berhad / Islamic Bank of Brunei, IBB 1994: 354; 1995: : 345 Salma 2007: 281 Islamic Development Bank of Brunei, IDBB Economic Planning Unit IDBB Takaful IDBB Sdn BhdSalma 2007: Bank Islam Brunei Darussalam, BIBD Bank Islam Brunei Darussalam 2013 Bank Islam Brunei Darussalam 2014 Oxford Business Group 2013 Islamic Banking Act 1999 Khairuddin and Ashak 2010: 48 Brunei International Financial Centre, BIFC Islamic Banking Order 2008 Bank Pembangunan Brunei / Development Bank of Brunei Sidhu 2010: 85; 1995: 346 General Takaful Family Takaful Salma 2007: : 171

6 Negara Brunei Darussalam 2008: 2903 Perbadanan Tabung Amanah Islam Brunei, TAIB / Brunei Islamic Trust Fund Financial Institution Division, FID Bank Islam Brunei Berhad / Brunei Islamic Bank of Brunei, IBB Islamic Banking Act 1999 Islamic Development Bank of Brunei, IDBB Brunei International Financial Supervisory, BIFC International Insurance and Takaful Order 2002 Brunei Currency and Monetary Board Bank Islam Brunei Darussalam, BIBD Islamic Banking Order 2008 Islamic Takaful Order 2008 Autoriti Monetari Brunei Darussalam, AMBD Khairuddin and Ashak 2010 Bashir 2013

7 Negara Brunei Darussalam 2001; The State Mufti s Fatwa Banks Financial Highlights 2014 Bank Negara Malaysia 2013

8 Negara Brunei Darussalam 2001 Autoriti Monetari Brunei Darussalam 2014

9 BIBD BIBD BIBD 7,964 20, % 9,544 24, % 8,818 23, % 281 2, % 155, , % 128, , % 65, , % 95, , % 172, , % 432, , % 46,169 96, % 172, , % 43, , % 66, , % 83, , % 34, , % 39, , % 50, , % 42, , % 46, , % 51, , % 258, , % 303, , % 343,070 1,090, % 135, , % 123, , % 133, , % 4,548 87, % 9,502 87, % 11,911 77, % 1,017,537 2,251, % 911,083 1,987, % 841,897 1,842, % 2,043,036 5,132, % 1,807,632 5,008, % 1,998,774 5,120, % Bank Islam Brunei Darussalam 2012; Bank Islam Brunei Darussalam 2013; Banks Financial Highlights 2014

10 AITAB Bank Islam Brunei Darussalam 2010; Bank Islam Brunei Darussalam 2011; Bank Islam Brunei Darussalam 2012; Bank Islam Brunei Darussalam :

11

12 (12), pp (1), pp n.d pp pp pp pp Asia Yearbook Brunei, Asia 1987 Yearbook: Far Eastern Economic Review. Hong Kong: Review Pub. Co, pp Brunei, Asia 1989 Yearbook: Far Eastern Economic Review. Hong Kong: Review Pub. Co, pp Autoriti Monetari Brunei Darussalam Monthly Statistical Bulletin. Bandar Seri Begawan: Autoriti Monetari Brunei Darussalam. Banks Financial Highlights < Bank Islam Brunei Darussalam (BIBD) Annual Report Bandar Seri Begawan: BIBD Annual Report Bandar Seri Begawan: Negara Brunei Darussalam Annual Report Bandar Seri Begawan: Negara Brunei Darussalam Annual Report Bandar Seri Begawan: Negara Brunei Darussalam Corporate Profile, < Bank Negara Malaysia Monthly Statistical Bulletin. Kuala Lumpur: Bank Negara Malaysia. Bashir, M. S Analysis of Customer Satisfaction with the Islamic Banking Sector: Case of Brunei Darussalam, Journal Business and Management Science 2(10), pp Borneo Bulletin (July 19). Baiduri Bank Opens Doors to Public. Brunei s National Vision < Islamic Bank of Brunei Berhad (IBB). n.d. Annual Report Bandar Seri Begawan: IBB.. n.d. Annual Report Bandar Seri Begawan: IBB.. n.d. Annual Report Bandar Seri Begawan: IBB.. n.d. Annual Report Bandar Seri Begawan: IBB.. n.d. Mesyuarat Agong Tahunan Bandar Seri Begawan: IBB.. n.d. Mesyuarat Agong Tahunan Bandar Seri Begawan: IBB. Khairuddin, K. A. and S. Ashak Brunei: a Niche Money Market for Offshore Islamic Finance, in

13 Venardos, A. M. (ed.), Current Issues in Islamic Banking and Finance: Resilience and Stability in the Present System, Singapore: World Scientific Publishing, pp Monthly Statistical Bulletin August < logue&pg=en_publication_msb&mth=8&yr=2014&lang=en&eid=box1>. Negara Brunei Darussalam Perbadanan Tabung Amanah Islam Brunei Act (CAP. 163). Negara Brunei Darussalam Brunei Darussalam Statistical Yearbook 2000/2001. Negara Brunei Darussalam Tambahan Kepada Warta Kerajaan: Bahagian II (Supplement to Government Gazette: Part II). Negara Brunei Darussalam. Oxford Business Group The Report: Brunei Darussalam Perbadanan Tabung Amanah Islam Brunei (TAIB). n.d. Laporan Tahunandan Akaun-akaun Perbadanan Bandar Seri Begawan: TAIB.. n.d. Laporan Tahunan dan Akaun-akaun Perbadanan Bandar Seri Begawan: TAIB.. n.d. Laporan Tahunan dan Akaun-akaun Perbadanan Bandar Seri Begawan: TAIB.. n.d. Akaun-akaun pada 31 Disember, 1994 Bersama-sama dengan Laporan para Pengarah dan Juruaudit. Bandar Seri Begawan: TAIB.. n.d. Akaun-akaun pada 31 Disember, 1995 Bersama-sama dengan Laporan para Pengarah dan Juruaudit. Bandar Seri Begawan: TAIB.. n.d. Akaun-akaun pada 31 Disember, 1996 Bersama-sama dengan Laporan para Pengarah dan Juruaudit. Bandar Seri Begawan: TAIB.. n.d. Akaun-akaun pada 31 Disember, 1997 Bersama-sama dengan Laporan para Pengarah dan Juruaudit. Bandar Seri Begawan: TAIB.. n.d. Akaun-akaun pada 31 Disember, 1998 Bersama-sama dengan Laporan para Pengarah dan Juruaudit. Bandar Seri Begawan: TAIB.. n.d. Akaun-akaun pada 31 Disember, 1999 Bersama-sama dengan Laporan para Pengarah dan Juruaudit. Bandar Seri Begawan: TAIB. Salma, L Islamic Banking in Brunei and the Future Role of Center for Islamic Banking, Finance and Management (CIBFIM), in Ali, S. S. and A. Ahmad (eds.), Islamic Banking and Finance: Fundamentals and Contemporary Issues, Jeddah: Islamic Research and Training Institute and Universiti Brunei Darussalam. Saunders, G A History of Brunei. London: RoutledgeCurzon. Sidhu, J. S Historical Dictionary of Brunei Darussalam. Lanhan: Scarecrow Press. Skully, M. T Financial Institutions and Markets in Southeast Asia. New York: St. Martin Press. The State Mufti s Fatwa Monetary Issues. Kuala Lumpur: Negara Brunei Darussalam. Venardos, A. M Islamic Banking & Finance in South-East Asia. Hackensack: World Scientific Publishing.

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