Heavy Lending Is Unhealthy
By Lyna Mohamad

Bandar Seri Begawan - The country's banking sector has been, and still is, being dominated by commercial or retail banking activities due to the prevailing demand for such services.

However, the government is wary that over-reliance on lending to the personal sector is not healthy for the management of the country's financial system.

Pehin Dato Hj Abd Rahman also urged the concept of financial planning must now be made more familiar, with banks advising their customers on more productive choices for their financial resources and inspire them to save and invest for the future and for retirement.

The continuous barrage of spectacular news emanating from the 'sub-prime' mortgage crisis and credit crunch in the US has been dominating the media for a number of months, he said.

It is a clear and high-profile example of the costs of excessive and poorly managed debt situations, he said and added that His Majesty's government will re-emphasise the need for strong financial regulation and risk management to keep financial institutions in this country robust and resilient.

"Though credit crunch is not directly impacting our economy, the lessons to be learned are as pertinent."

He said, "The government through the Financial Institutions Division, MoF, is tasked with regulating financial institutions to ensure that banking risks are well managed and backed up by adequate liquidity as well as long-term capital."

The prudential provisions of the Banking Order relating to the core risks faced by banks, said the minister, will be strictly implemented to ensure the health of the banking industry on a continuous basis.

The MoF also realises the importance of having a robust and dynamic financial sector to support the government in its efforts to strengthen other sectors of the economy and enhance their contributions to the country's growth.

"Hence, it is actively promoting activities in sectors such as banking and finance, insurance, fund management, mutual funds and trust businesses," he said.

The issuance of government Sukuk signals the ministry's efforts in promoting the Islamic financial sector that is aimed at paving the way for similar initiatives by the major corporations in the country, for funding developments in particular.

Establishment of the National Syariah Financial Supervisory Board in early 2007 also added another important dimension to the ministry's pursuit of the strategy to turn the Sultanate into a significant player in the field of Islamic financial services.

"The Brunei International Financial Centre will continuously strive to create a climate conducive to making Brunei a financial hub in this region by putting in place the necessary legal infrastructure and investment incentives for attracting offshore businesses and already offers a comprehensive suite of international banking licenses which include Islamic banking, insurance and securities business and fund management," he said.

He further pointed out that in creating a credible legal environment, and conscious of the vulnerability of offshore centre to financial crime, the nation's Anti Money Laundering legislation was enacted as far back as 2000, aimed at protecting the integrity of the Sultanate's financial system at all times.

His Majesty's government is acutely aware of the need to enhance the capability of our human capital and upgrade, the level of skills and knowledge of the local workforce in many fields. The government has made and continues to make significant investments to educate its population.

Equipped with the requisite qualifications, this well-educated citizens can be hired and trained by businesses with international reach and resolve business challenges competently and to be exponents of good corporate governance in positions of responsibility in their fields.

"Their immersion in the workings of modern and dynamic financial markets will increase their sophistication to give them the confidence necessary to become capable and desirable Bruneian employees needed to grow your businesses in true partnership with Brunei Darussalam," he concluded.  -- Courtesy of Borneo Bulletin

Related News: Financial Institutions Urged To Curb Excessive Personal Lending | Private Equity Funds Set Up

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