Brunei has to make use of its intentions to establish itself as a halal hub to further develop the Sultanate’s Islamic banking and finance industry, said Universiti Kebangsaan Malaysia’s Professor of Banking and Financial Economics Dr Abdul Ghafar Ismail.
Dr Abdul Ghafar said that Brunei “needs” to combine the two industries as it will allow the country to kill two birds with one stone in terms of economy diversification. “The halal food and Islamic banking and financing industry goes together hand in hand. You want to produce halal goods but the big question I want to ask is, where does the money to produce this come from,” he said.
“If you want to create halal products then the money should come from halal financing… this is the concept. In this perspective, it will be good if the government can synergise these two because both industries should really go together,” said the professor.
He spoke of similar opportunities when it comes to Brunei’s oil and gas industry. “Oil and gas is the main revenue for the country and this needs money. In order to ensure that these big players can get the financing they need, they will have to be backed by a big financial institution,” he said. “They need these services so this is an area that these industries can cooperate, work and develop together,” he added.
Speaking on the topic of “Contemporary Islamic Finance: Challenges and Responses” at the International Conference on Islamic Finance 2010, the professor said the objective of establishing Islamic financial institutions in the country is not only to create wealth but also to contribute to the well being of the community.
“They have the task of distributing the wealth fairly and justly. It should not only be Syariah compliant but must also aim to achieve this objective,” he said. When asked what would be the best Islamic banking model in Brunei, Dr Abdul Ghafar replied that there is no single best method.
“There is no true answer because there are so many different models of Islamic banking in the world. The question should be which method or model can distribute the wealth most fairly. It depends on the design of the country,” he said. “It would be really good if you can have a variety of financial institutions that can offer the products or services that can fulfil what the community needs,” said the professor.
“If in Brunei, you need microfinancing services then why not do this to cater to the neglected individuals or community. Also those in the corporate sector will normally ask for corporate financing services so why don’t banking institutions offer this.” — source TBTimes