Renminbi sukuk 'a possibility'

BRUNEI is looking at the possibility of issuing sukuk or Islamic bonds in renminbi.

This is one of the possibilities for the Sultanate to benefit from China's growth wave, said Dato Paduka Hj Ali Hj Apong, Deputy Minister at the Prime Minister's Office and Chairman of the Brunei Economic Development Board (BEDB).

"As China continues to expand its trading volume with the world including Asean and that the renminbi has already been used to settle trading, I believe that Brunei has the opportunity to provide the platform to facilitate these services."

In his opening speech for the 7th Annual Brunei Roundtable, held at The Empire Hotel & Country Club, Dato Paduka Hj Ali said China's push to develop an offshore renminbi market in Hong Kong opens the possibility for the region and Brunei to further develop this market. "The possibility includes offering sukuk in renminbi."

"The renminbi will be a major global currency together with the US dollar and the euro, echoing China's rising influence in the world economy," Dato Paduka Hj Ali (picture) said, noting that China has remained resilient and has been able to weather the global financial crisis.

Brunei aspires to attract global fund managers to be based in Brunei Darussalam and to penetrate and "take advantage of China's financial market", said said Dato Paduka Hj Ali.

Brunei has, up to now, successfully issued sukuk in both the Brunei dollar and the US dollar. For portfolio investors, the deputy minister said that there is also a potential for Brunei to look into developing an Islamic Index to track the China region and that products can be built around this potential for onshore managers in Brunei.

The renminbi window "will also be helpful" for investors in Brunei which is eyeing an increase in inward foreign direct investments, he added, explaining that trading in renminbi will shield them from further foreign currency exchange exposures.

China's huge population and sizeable business opportunities provide "immense and tremendous business development potential" for Brunei's local companies, he said.

"Our strategic location which shares the same time zone with China will allow for the ease of business trading."

Some of the benefits that Brunei possesses, he said, include the exemption from corporate tax and income tax that will be reaped by offshore companies registered with the Autoriti Monetari Brunei Darussalam (AMBD).

"I believe AMBD and other stakeholders will continue to attract the building blocks required to develop the capital market that best fit the needs of the financial sector.

"Business opportunities in the Chinese currency for instance by providing a range of renminbi denominated products, including savings accounts, current accounts and time deposits to service clients' needs and possibilities of growing the renminbi transactions can be further explored," he added.

Dato Paduka Hj Ali sits on various boards, including the Brunei Investment Agency (BIA), the AMBD and Special Development Fund. The Brunei Times