Muhd Jamil Abas Abdul Ali, senior partner at Abrahams Davidson and Co, said, "Laws have to be sufficient. If they are not sufficient, you can find or you will find players, such as bankers, syariah advisory committees of banks, lawyers, accountants they will have difficulty in trying to structure, research and come up with viable products," Jamil said during a panel discussion entitled "Islamic Finance Regulatory and Infrastructure Developments".
Most of the time, he added, they'll end up trying to guess what will happen, how it will be dealt with, which of the laws will be applied and "most of all, you might find that, in particular, lawyers and bankers, will not know whether particular products such as documents, all documents, will or will not be upheld by a secondary court".
Jamil also said that one of the main elements to address in the Islamic Finance industry in Brunei, "is that the major players in the industry require sufficiency of laws, (and) where there are gaps, where they just (don't) exist, the law has to be affected to provide what your own regulatory (and) legal framework (doesn't)".
"You also have to bear in mind, what are to be constituted in these legal framework?," he posed a question to the approximately 100 attendees, adding that "within the legal framework, there are certain acts that have gaps".
These should be filled in, he said, with solutions that are not only suitable, but "assist the development and growth of Islamic banking and finance towards product development and implementation".
For the lawyers at least, and the bankers, Jamil said, "certainty of laws, clarity of laws, is our main pull, without which we cannot of course, do our work".
He added, "By way of the acting laws, I'm thinking there are two ways. One, if you put annex laws relating to islamic finance which are either transaction-specific, or it can be contract specific".
If it is contract-specific, he said, we will have other examples from other countries like the Middle East, and conversely, "If it is transaction-specific, you could look at places such as Pakistan, where they have enacted specific laws for various specific products".
This will help all industry players and bankers, he said, "to know what they're holding, what they're developing, what they're implementing, what they're trading to the public, and they will know with what degree of certainty whether it will be upheld by a court, whether it's secular or syariah. One of the benefits of course, of certainty and clarity of laws, he added is reduced work for the lawyers, "because then you don't need lawyers that much anymore. But if the laws are not sufficient or clear, lawyers cannot give good opinions saying maybe this, maybe that. So it's not going to be helpful to this who need a legal opinion".
Jamil also suggested that revision of guidelines or creation of instruments within the government, would help all industry players including regulators and other bodies, to function better.
"Because frequently when you pass laws, whether they are main acts or regulations or by-laws, or subsidiary laws, you find that these laws made up of combined language, is never sufficient."
There will be grey areas and questions, he said. "There will be certain things that people want to clarify so instruments or guidelines is one way to cure all the problems of language and communication, and personal thoughts."
This is also one way, he added, to shorten the market and have certainty. "Personally, I see that the role of governmental bodies and regulators is not only to regulate, pass laws and supervise, but to assist better, the private sector to do their job," he said.
Another possible role of government bodies, Jamil suggested, was to provide for re-education and further education in relevant subject matters on Islamic banking and finance. Jamil also said that increasing the human resources pool such as the number of legal players, accountants and bankers, is a key issue to address.
"Currently, Brunei has an inadequate pool of all relevant sectors required for Islamic finance and banking development. There are not very many lawyers in Brunei, I think there are probably less than 150 or about 130 (in the private sector)."
Of these 100 plus lawyers, he said, "you'll find that there are not many who are involved in Islamic Finance, with even less who were familiar with Islamic finance and Islamic laws and principles".
"If these lawyers can be made interested in or encouraged at all to learn more about Islamic banking, not only about the product but what Islamic banking is, more on its principles and ideas, I think it will help lawyers to advise and draft documentation for and to suit, Islamic finance," he concluded.
The Brunei Times