On the sidelines of the recent Islamic Finance News (IFN) Roadshow 2010, Javed revealed exclusively to The Brunei Times, his prospects for BIBD in 2011 and key elements of development in the Islamic Finance industry's growth.
"As I mentioned earlier, the beauty of our country is that it is the public wants (this industry here), as opposed to regulators pushing for it. In a lot of countries, if you look at Malaysia, there's more than 27 years of regulators push(ing) and you have come to 20 per cent market share."
Here in Brunei, he said, Islamic banking takes up a whopping 40 per cent market share; "so it tells you that the public's interest is there".
Where regulations play a key role in the Bruneian landscape, he said, "is making sure it is a level playing field where Islamic institutions have the same opportunities as the conventional institutions and that there is transparency, there is consumer protection".
This is reflected in what the Ministry of Finance has been doing over the last couple of years, he added, "to make sure that our regulatory framework is strong. There is no such thing as reaching a stage where there is no more regulations. Regulations are such that, no matter where you are it will evolve, and as it continues to develop (and) evolve purely because of the new challenges they'll be facing, regulators need to make sure that they come on top of these changes."
Of course, he observed, this will actually contribute to the way the Islamic Finance industry evolves and there will actually never be enough, in terms of work that will need to be done.
"So what you want to do, is make sure you have a regulatory environment that is business-friendly, that is actually looking after the interest of the consumers and makes sure that the Islamic institutions and the conventional institutions actually have a level playing field."
"I think we are actually on the right track," he said of how the local Islamic finance industry in Brunei is developing so far, but added that "one area where we need some work is really looking at the tax regime".
In doing an Islamic transaction, he said, there is a lot of buy and sell "which subsequently means our traditional stamp duty and tax legislation comes from a very conventional background".
If you do an Islamic transaction, said Javed, the cost of doing business becomes a lot higher. In the UK and Malaysia, he noted, there have been legislations to make sure that Islamic banking is actually at par with conventional banking in terms of taxes.
In terms of BIBD's own growth and prospects in this fast-growing industry, Javed admitted that they have been heavily investing into developing key areas. "While you might not see all of it (now), it's something that you'll see once we are ready. We are investing into technology, investing into our people, our properties as well, and we will have, very soon, an institution that is proficient (and) modern in terms of technology forms and has an international reach as well."
But this does not mean that BIBD will be opening an international office just yet, although "our banking customers would be able to enjoy some of our banking facilities not only here but in other countries as well".
BIBD is also continuing their upgrading with their strong regional business in mind, "so (we're) making sure we provide a first-class service on the retail side". To do so, said Javed, you must have a first-class system, office and team members in place. "But also together with that, we are also trying to make sure we focus on the high-quality corporate customers, and the institutional market as well," he said.
Javed agreed that this was more about creating a balanced focus between the retail and corporate sides, and not neglecting their corporate clients.
"Not neglecting, if anything, it's a big push and the big push is to make sure that all these important businesses are our customers as well. We don't want them to be simply banking with someone else."
Asked if many businesses were turning to Islamic banking over conventional institutions, Javed said, "Ultimately, if you provide a good quality service with a product that basically, meets a customer's needs, then whether you're a conventional or Islamic, doesn't really become an issue."
As an Islamic institution, he said, BIBD has to ensure that a customer's finances is managed according to Islamic principles. "But together with that, we make sure we actually provide them in full with services that basically looks at customers as customers and not whether they are Muslim or not," he added.
By doing so, said Javed, BIBD should be able to broaden its customer base. The Brunei Times