Bandar Seri Begawan - At the recent Islamic Development Bank (IDB) Governors' Annual Meeting in Dushanbe, the IDB governor for Brunei Darussalam suggested that the IDB Group focuses on youths and the unemployment challenge.
This was yesterday disclosed by IDB Group Chairman and President Dr Ahmed Mohamed Ali in his keynote address at the opening ceremony of the Brunei Islamic Investment Summit 2013 (BIIS 2013).
In this regard, the IDB Group has launched a Youth and Unemployment Report, and as of last year, youth forums have been featured at the annual IDB meetings. He also firmly believes that the youths are not a challenge, but in fact the solution.
IDB Group welcomes any initiatives by Brunei Darussalam that can be extended to other member countries.
1DB Group stands ready to partner with Brunei Darussalam in hosting this conference and ensuring the success of this important initiative, he said, adding that he has witnessed encouraging progress in Brunei since it became a member of the IDB Group.
As the world is mainstreaming the theme of 'inclusiveness' and promoting the theme that "no one gets left behind", Brunei Darussalam can already claim that "No Bruneian is left behind".
"Today, size does not matter when we think of economic transformation. We have witnessed city-states like Dubai, Hong Kong and Singapore advancing their economies and the quality of life of their citizens much faster than other larger states."
The Sultanate can certainly be another spot for this region and a forum of this nature amplifies the readiness of Brunei offering to be part of the global value chain.
With regard to the forum theme, he noted that Ethical Investment (otherwise labelled as Socially Responsible Investment (SRI)), is a natural extension to the growing Islamic finance and banking industry. According to Forbes, over the last two years, SRI has gown by more than 22 per cent to US$3.74 trillion in total managed assets.
This, he added, suggested that investors are investing with their hearts as well as their heads and this is a very encouraging trend.
The current popular investment strategy that is solely focused on immediate monetary gains will not result in an inclusive investment strategy in the context of human development. In the long run, this investment strategy will create wider economic gaps and thus create social uncertainties.
Criterion for ethical investment is one that stems from Syariah-based investment itselfthat is in terms of fairness, risk sharing, economic purpose and avoiding prohibitive and non-productive activities and overriding these criteria are the inclusiveness and sustainability criteria of the venture.
"As such, the additional investment criteria will also consider the behavioral aspect of the investee, beyond the typical spread sheet-based feasibility."
IDB Group itself is a working model of an ethical investor as the group invests directly in human development projects in each of its 56 member countries.
The group has managed to,sustain a healthy investment portfolio over the last 39 years of its establishment with a cumulative investment of over US$90 billion and with continuous AAA rating for almost 10 years from all three Global Rating Agencies - Standards & Poors, Fitch and Moodys.
Today, the group is extending about US$10 billion annually and prospecting to grow by at least 10 per cent for the coming three years, for which about 15 per cent is on equity and fund investments, and in the business, IDB Group undertakes on average about 10 - 20 per cent of the total cost of financing.
Thus, there is a real opportunity for investment in human development, particularly in member countries and to this end, the group has established a networking forum, THIQA, to facilitate cross-border investment opportunities.
Many writers estimated that Islamic Financial Industry is now growing 15 -20 per cent with a strong foothold in many countries and an asset size exceeding US$1.7 trillion. The Islamic Financial industry has proven to be resilient as the conventional financial infrastructure was put in the spotlight for reforms for the past five years.
'As such, with the chairmanship of Asean, I wish to humbly suggest under the guidance and leadership of His Majesty the Sultan and Yang Di-Pertuan of Brunei Darussalam, that Brunei Darussalam, in its effort to expand the investment opportunities in Asean market, lead and promote ethical banking among Asean members."
This, he added, will further attract more investment from regions such as GCC to Asean market, and the IDB Group has offered to partner with Brunei in this endeavour.
"We have insisted that Islamic finance must be tied to the real economy. Financial system should be a servant to the real economy, as such there is no room for excessive speculation in Islamic finance."