BRUNEI is on its way to develop itself not only in conventional accounting, but also in Islamic accounting, an industry expert yesterday said. “The standard is already there because the development of Islamic banking is linked with the development of the Islamic banking infrastructure,” said Makhtar Abdullah, acting chief executive officer of the Centre of Islamic Banking, Finance and Management (CIBFM), and moderator at session of the 16th Asean Federation of Accountants (AFA) Conference.
He said that at the moment, Brunei is capable of supporting the Islamic accounting development with the local expertise available and that should the need arises to bring in foreign expertise, “Brunei has the capacity to do so too,” he said.
“The government knows who is the best to come in, but one thing good about Brunei is that in all the second tiers or levels of an organisation, be it government or private sector, they are all locals, with at least 15 years of experience, and the best part is that the Brunei government has the capacity to retain these people, for the next one or two generations, before the younger generations start to look for jobs as well,” he said.
“Brunei’s development in Islamic accounting developed quite late, but the speed is there, when you’re looking at the volume of about 400,000 people. You have a lot of professionals in Brunei, and there are mergers of the banks into bigger banks, the conversion of banks and the government’s move to start CIBFM, so these are the positive images and developments projected out from Brunei,” he said.
He added that the “support is there and the initiative comes from the government and His Majesty himself”.
“You don’t get this from other countries in other countries. In other countries it is only a political or consumer push,” he said.
He said as the volume of transactions increases, the accounting standards also expand, noting since there will be more “dos and don’ts” accountants would need guidelines on how to audit them the lawyers would need a standard documentation on how to bind parties.
He added that in terms of catching up with regional Islamic hubs such as Indonesia and Malaysia, Brunei can always adopt best practices so “the wheel doesn’t need to be reinvented”, which is a positive for the Sultanate.
“The development of the (market) volume in Islamic banking coincides with the development of infrastructure, but coming back to the fast-track of the development of products in Islamic banking, it is not as big and as fast as conventional banking, so there is less creativity in terms of Islamic products unlike conventional banking,” said Makhtar.
He said that Islamic banking, however, does have a controllable pace, where the development is there, and so is the pace so when an economic crisis occurs, the push for Islamic finance is faster and bigger, which transforms the sector faster as well.
“This will also bring good input and more guidelines and with more awareness, transparency and disclosure increases which is good,” he said.
One example that Makhtar gave was when oil prices rose to US$140 per barrel people were suddenly looking for alternative fuel. “Similarly to the economic situation, people started to see flaws in the conventional system and they start looking for best practices elsewhere and the only one available is Islamic finance, and this is linked to Islamic accounting,” he said.
Source : The Brunei Times