OBG talks to Dato Haji Mohd Rosli, Former Managing Director, Autoriti Monetari Brunei Darussalam (AMBD)

Interview: Dato Haji Mohd Rosli

What steps can the AMBD take to encourage further development of the country’s capital markets?

DATO HAJI MOHD ROSLI: Currently, capital market activities in Brunei Darussalam are mainly in the areas of investment advisory and distribution of foreign financial instruments. The AMBD, as an agent to the government, issues sukuk al ijarah (Islamic asset bonds) to primary dealers according to a specified schedule. The main objective of the government sukuk programme is to create a yield curve that can be used as a benchmark for corporate issuances, and thereby promote the development of the domestic capital market.

At the same time, we are laying the groundwork for further development. Works to enhance existing financial infrastructure are making good progress, such as the modernisation of the payment and settlement systems and the establishment of the central securities depository. Successful development of the capital markets will also depend on human capacity. The Centre for Islamic Banking, Finance and Management (CIBFM), now under the AMBD, was created especially to cater to the development of human talent for the financial industry. The AMBD is collaborating with CIBFM to promote continuous professional development and accreditation by implementing training programmes.

Besides tightening credit availability, in what ways can a stronger savings culture be fostered?

DATO ROSLI: It has always been our aspiration to inculcate a strong savings culture in Brunei Darussalam. This is good not only for the social well-being of the public but also for the long-term stability of the financial system. To this end, the AMBD has introduced another direct measure for banking institutions by setting minimum rates for savings and term deposits. We also encourage financial institutions to be more innovative in offering a wider variety of financial products to cater to the ever-growing demands and needs of the public. In undertaking this, one of the main challenges facing regulators is to increase public awareness of the products and services available. Hence, increasing financial literacy has always been at the top of our agenda.

How has the Securities Markets Order of 2013 changed the nation’s financial sector?

DATO ROSLI: The main objective of this legislation, which replaces the Securities Order of 2001 and Mutual Funds Order of 2001, was to bring our legal and regulatory framework up to international standards based on the principles of regulation laid out by the International Organisation of Securities Commissions. More importantly, it provides greater investor protection and increased market confidence through better disclosure and oversight. We envision that the new order will be used as a platform to further stimulate growth and development of capital market activities. This is in line with our efforts to diversify the financial sector, especially non-bank segments, and to promote the development of Islamic financial services.

What incentives have financial institutions been given to increase their lending to SMEs?

DATO ROSLI: The continuous nurturing of SMEs is crucial to the sustained economic growth of Brunei Darussalam. The AMBD, as the central bank and regulator of financial institutions, works closely with banks to ensure this. We have stressed the need for banks to channel excess liquidity to finance more productive sectors of the economy, especially SMEs. The AMBD has issued a number of directives to financial institutions over the years to drive this initiative, such as the personal loans directive in 2005, the credit card regulation in 2012 and, most recently, the interest rates regulation issued in March 2013. This last directive aims to encourage lending at more favourable rates to SMEs that are considered low-risk and also to those in specific sectors such as oil and gas, government-related procurement and infrastructure projects. Our credit bureau has also enabled banks to make better-informed credit decisions, and we hope that this, too will boost lending to SMEs.