Interview: Yusof bin Haji Abdul Rahman
How can Brunei Darussalam’s economy best take advantage of the upcoming establishment of a local stock exchange?
YUSOF BIN HAJI ABDUL RAHMAN: The establishment of a stock exchange will enhance financial industry activity in Brunei Darussalam and increase the contribution of financial services to GDP, as per the Wawasan Brunei 2035 (Brunei Vision 2035). It will give local companies the opportunity to expand through capital formation and provide individuals with a platform for secure investments. An equity market will also allow the Sultanate to take part in ASEAN exchanges and move towards ASEAN integration. Furthermore, it will provide an efficient public platform from which to enhance opportunities by providing an alternative means to raise capital, aside from bank loans, to support existing companies for expansion and innovation, and facilitate the raising of capital for local small and medium-sized enterprises. Finally, we hope it will create more job opportunities in the financial sector, create awareness and reduce dependence on oil and gas.
In November 2014 AMBD implemented the Real-Time Gross Settlement system (RTGS). AMBD and the licensed banks are currently preparing to introduce a new automated clearing house. AMBD has also begun the implementation of a central securities depository system, which will enable the automation of auctions and securities trading for the public and private sector bond markets.
The establishment of the stock exchange is currently in progress and is expected to be officially launched some time in the next few years. AMBD, alongside the Ministry of Finance, is currently still at the stage of laying down the groundwork for the stock exchange. The plan will also include market readiness, which caters to the readiness of the regulatory framework, the market intermediaries in the country, and the preparation of the companies.
How attractive are Brunei Darussalam’s sukuk (Islamic bonds) issuances?
ABDUL RAHMAN: Brunei Darussalam’s sukuk issuances are mostly of sovereign sukuk. The government sukuk are issued with the objectives of developing the Brunei Darussalam government’s securities yield curve as a benchmark for corporate sukuk, and providing a safe and liquid investment instrument for all financial institutions in the Sultanate.
AMBD is currently preparing for long-term government issuances. This is to further support the objective of developing the government securities yield curve. Corporates and government link companies can use these issuances as benchmarks and alternative financing. In further developing the market, AMBD is also preparing for the government sukuk to be extended to the secondary market. This will give institutional and retail investors access to government sukuk, providing them with alternative investment opportunities.
How can a savings culture be developed in Brunei Darussalam and will education play a part?
ABDUL RAHMAN: We conducted a financial literacy survey and found that only 51% of Bruneians actively save and 60% would only be able to cover two months of expenses or less if they lost their income. Thus we intend to work on building a savings culture in Brunei Darussalam. We introduced a total debt service ratio policy, whereby an individual’s monthly debt obligations cannot exceed 60% of their net monthly income, to reduce reliance on credit.
We also encourage financial awareness, especially among young people, with the purpose of creating a self-reliant generation with stronger money management habits. To this end, we launched a three-day financial exhibition, AMBD Day 2015, that guided the public through different financial products for all stages of life through fun and interactive games.
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