Datuk Noripah Kamso, CIMB-Principal Islamic Asset Management Sdn Bhd and Scott Leiberton, Principal Global Investors
IT IS no secret that Islamic finance is one of the financial sectors that Brunei is trying to develop, and according to experts, this is "rightly so", with His Majesty the Sultan and Yang Di-Pertuan of Brunei Darussalam's focus on encouraging a more "Syariah lifestyle" for the country. (full story)
IT IS no secret that Islamic finance is one of the financial sectors that Brunei is trying to develop, and according to experts, this is "rightly so", with His Majesty the Sultan and Yang Di-Pertuan of Brunei Darussalam's focus on encouraging a more "Syariah lifestyle" for the country. (full story)
Datuk Noripah Kamso, chief executive of CIMB-Principal Islamic Asset Management Sdn Bhd, and Scott Leiberton, managing director of equities from Principal Global Investors, share their thoughts with The Brunei Times on the prospects of Islamic finance in Brunei. CIMB-Principal Islamic Asset Management Sdn Bhd is the joint-venture company between CIMB and diversified asset management firm Principal Global Investors.
BT: You mentioned that you see a potential in CIMB-Principal partnering with Brunei. In your opinion, what potential does Brunei have?
Datuk Noripah: We like, and look forward to working closely with Brunei, because Brunei is very fortunate to have a lot of opportunities. (Firstly), it is very very stable and number two, is that it is a country that is rich with oil. That is evidently shown by the high GDP per capita of $45,000 ... , which is the top five in the world. Brunei is 67 per cent Muslim, and we have identified that it is a very good partner for the Malaysia Islamic Financial Centre (MIFC) to work together with the Brunei International Financial Centre (BIFC). We are happy to share our experiences to bring Brunei to the next level from the standpoint of connecting the various linkages. There have been many market players, which are very interested in coming up with Islamic products.
What makes Brunei unique from all the other Islamic markets out there?
Datuk Noripah: The uniqueness of Brunei is that I think as a regional Islamic hub, its success is with it starting its own Syariah advisory board. It has got its own act since 2006, and it has the call by His Majesty to encourage a Syariah lifestyle.
Brunei may be a bit behind on the global development of the Islamic finance sector, how do you think Brunei can start to be on par with global Islamic financial sectors?
Datuk Noripah: There are two levels, one is on a strategic level and another is from the execution level. They can start from the bottom-up first, but we see that if Brunei is different from the standpoint of more savings, and borrowings, so we see an early chain of Syariah growth should be from asset management, then only banking. Currently, we look at the global value chain in the Syariah space, and the activity starts with Islamic banking, and then takaful, and then the capital market, and then asset management. The asset management would have to manage the takaful money and then the sukuk that is coming out. Brunei is unique, because Brunei doesn't need to take this value chain, and they can do the reverse value chain reverse because His Majesty wants the population not to have credit cards, and to be debt-free, which is very Syariah. It makes a lot of sense to start with asset management first. I suppose that the growth of Syariah in different countries depends on the uniqueness of the sensitivity of the country and the financial sensitivity.
Scott: You are absolutely right, because there are so many Syariah markets focused first on the financing and because of the high savings and debt level, it has a really unique opportunity and is actually quite unique to most countries around the world. (Brunei) can focus first on investment opportunities and where we can add some value is just in terms of experience, logistics, operations and development, and then alternately, assist local institutions in bringing better diversification to local savers. I think that global expertise and Syariah expertise can be combined and opens a lot of avenues where local investors can gradually expand their diversification in a very Islamic and Syariah way.
Datuk Noripah: Since we are on the topic of 'bottom-up', CIMB-Principal can contribute on this. Here we are, a global asset management house ... so we are able, as Scott Leiberton mentioned, to manage and hold the hands of the investing public to invest beyond this part of the world, beyond Singapore. (There has been very strong inclination to embrace Singapore capabilities). So here we are having capabilities for Asia, or Asia-Pacific ex Japan, or greater China, or global equities or sukuk. So we are encouraging them to use what we are offering to them to invest in global equities. Currently Scott is managing four global equity mandates that are Syariah, so there is already a track record, and there is already experience managing global Islamic equities. Even if there is demand in emerging market, here we can assist to answer is to help Brunei's investing community invest beyond what we are doing now.
What do you think the challenges are? Brunei is still considered a small market, do you think that this will be a major challenge?
Datuk Noripah: Yes, there are challenges with a small market, but at the institutional level, meaning that there are Islamic institutions in Brunei that are already leading, and we are planning to work with them. We can help them come up with products that they can distribute so they become distributors, but we are appointed as the investment manager. So for example, an Islamic entity in Brunei XYZ wants to come up with a global equity fund, and they can get it. It just needs to be registered with the regulators and come up with it in Brunei dollars, but you need an asset manager to manage and the asset manager is Scott Leiberton, on the Syariah-compliant equities, so while (the institutions) handle the population, we deal with the institution itself.
Scott: It is very much a strategy partnering on financial institutions, there is no intention to establish a large retail presence in the local market. The experts are the local institutions, and they give us the local perspective, and we provide the local expertise and compliment that with global expertise and that will allow us to offer some customised capabilities. For example, a regional sub-set of the global market, whether it is sukuk or global equities, of if they have preferences for the Asean countries, Asia-Pacific or Greater China. Whatever the case may be, the investment expertise that resides in Brunei is local, and we can help compliment that with expertise in other markets around the world, while still respecting the connections between the retail investors here, and the local institutions, so we're not here to compete with local institutions, we're here to partner with them.
What instruments do you think are recommended for Brunei?
Datuk Noripah: We noticed that (institutions) have been repeating the word 'simplistic', and they want just simple products, that's number one. We are looking at very simple equity and sukuk products. Like you say Brunei is still an industry which is very infant and still young, and positioning Syariah is already a challenge, what more with 'innovative Syariah', so we'll stick with simple equity and simple sukuk.
Scott: Those two building blocks provide with greater capability, to cater to different risk profiles. So if a particular client type, is more comfortable with sukuk then that's fine, but for others that are perhaps more interested in long-term accumulation, the equity component can be ramped up within that. I think just to emphasise Noripah's point, is that we want to provide transparent, easy-to-understand, capabilities, and both of our companies place a great deal of emphasis on our responsibility to investors in the face of some of the more exotic instruments that are offered in other markets. We don't want to run the risk of being innovative for the sake of innovation. We want to offer capabilities that again, provide a simple, value-proposition, of enhancing diversification that is consistent with Syariah concepts.The Brunei Times
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