Quick Facts about Islamic Finance and Banking in Brunei

Islamic Finance in Brunei

Brunei ranks as one of the nine countries where Islamic finance has taken an important position. At present, Islamic finance in Brunei accounts for more than 15% of domestic banking assets. Both Conventional and Islamic Banking operates side by side in Brunei. The country is a home for 250 000 inhabitants whose majority is Muslim. So, Brunei plans to excel in Islamic banking as an alternative to conventional banking. Even though the country shows a great effort to develop the sector, it can face significant challenges because of competitors such as Malaysia and Singapore (key centers for Islamic Finance) in the international phase. 

The policy vision called Wawasan 2035 aims to place Brunei as an international financial center that greatly emphasizes Islamic finance. This policy plan intends to increase the financial sector’s contribution to the country’s GDP from 5% in 2015 to 8% by 2035.

Islamic Banking in Brunei

Islamic Banking services were first introduced into Brunei in 1991. In 1993, the Island Development Bank introduced itself as the first fully-fledged Islamic bank providing services as the Islamic Bank of Brunei (IBB). At present, there are two Islamic banks in Brunei:

1- Tabung Amanah Islam Brunei (TAIB or Islamic Trust Fund of Brunei)

Perbadanan Tabung Amanah Islam Brunei Act in Brunei Darussalam is the basis of the establishment of Tabung Amanah Islam Brunei in 1991. Furthermore, the bank has two fully owned subsidiaries, namely Insurans Islam TAIB Sendirian Berhad (Takaful/Insurance) and Darussalam Holdings Sendirian Berhad (Haj/Umrah Services, Travel Agent).

The bank provides services such as savings and term deposits, retail financing services, saving accounts, investment deposit accounts, banker guarantees, remittances, etc. Moreover, the bank provides travel agency and insurance services, as well as operating a petrol station.

2- Bank Islam Brunei Darussalam (BIBD)

On July 7, 2005, The Ministry of Finance announced that His Majesty The Sultan of Brunei has given his approval to the proposed merger of Islamic Bank of Brunei Berhad (IBB) and Islamic Development Bank of Brunei Berhad (IDBB). On September 10, 2005, a new corporation, Bank Islam Brunei Darussalam (BIBD), was established.

Furthermore, The bank provides savings accounts, personal and corporate financing, development financing, hire purchase financing for vehicles and consumer products, investment products, insurance, and mobile banking.

Takaful and Sukuk In Brunei

Islamic Insurance company – in 1995, the Islamic Bank of Brunei Berhad supported the establishment of IBB takaful Berhad. Currently, the IBB takaful is the largest Islamic insurance company in Brunei. In 2014, the takaful market in Brunei accounted for 33 % of total insurance assets. 

Brunei has years of experience in issuing Islamic bonds. The first Sukuk was issued in 2006, with some BN$9.5bn ($6.8bn) in total offered over the following years. However, there have been several challenges because of the issuance of short-term Sukuk in Brunei. As a result, the AMBD (Autoriti Monetari Brunei Darussalam) aims to issue longer-term Sukuk in the following years.

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