No plans to extend sukuk to international market

National 2 minutes, 1 second


THERE are no immediate plans by the government to extend the issuance of sukuk or Islamic bonds into the international market, the Minister of Finance II said yesterday.

At the 12th Legislative Council Meeting yesterday, YB Pehin Orang Kaya Laila Setia Dato Seri Setia Hj Abdul Rahman Hj Ibrahim said that sukuk – issued by the country’s financial regulator Autoriti Monetari Brunei Darussalam (AMBD) – is originally issued to develop capital markets in the country.

“That is the primary objective of sukuk so it is not used to fund government projects or finance government linked companies,” he said.

He added that the government is continually examining and researching to see if sukuk issuances can be increased from $100 million, which is its latest issuance, to a larger amount.

He also said that issuance of bonds with a one-year maturity period began recently.

He said this in response to LegCo member YB Pehin Kapitan Lela Diraja Dato Paduka Goh King Chin who asked on sukuk issuances for international markets and to fund government projects.

For bonds to be issued to the international market, the minister said the country or the corporation would first need to be rated by accredited ratings agencies.

He then said that the government sees government linked companies as a catalyst to help drive private sector growth and support economic diversification.

He said that all investments into related projects will be examined for its commercial viability.

This includes exploring capital investments which generate better returns with minimal risks, he said.

He added that the establishment of capital markets is already in government plans with the set up of a body headed by the deputy finance minister to drive the initiative.

They have also hired a specialist to advise the government on the matter.

“Other factors must also be considered such as legal infrastructure, capacity building and knowing which companies will be listed on the stock market,” he said.

A year ago, AMBD issued the implementing guidelines for the Securities Market Order (SMO) which paves the way for the establishment of a capital market in Brunei.

The regulator enacted the SMO in July 2013 and said that the order is an important pillar to support growth of Brunei’s capital market by facilitating capital formation and develop more investment avenues.

The SMO also governs the activities and conduct of capital market participants, investor protection and ensures a fair, efficient and transparent market.

The Brunei Times