AAM Brunei event hogs headlines in local press
01 November 2013
Category: News, Asia, Global, Brunei Darussalam
By David Macfarlane
Asia Asset Management’s 9th Annual Brunei Roundtable, which took place on Wednesday, October 30 at prestigious The Empire Hotel & Country Club, received widespread coverage in Brunei’s press. The Brunei Times, Borneo Bulletin and Media Permata (a Malaysian-language publication) all devoted substantial page space to what has become a ‘must attend’ fixture on the financial calendar.
The Borneo Bulletin’s devoted its front-page lead story to the coverage of the event.
James Kon wrote the following article entitled “Brunei’s investment growth shows promise”:
“Even though the domestic market may be small in size, the appetite of consumers in Brunei Darussalam for investment instruments has shown promising trend for further expansion of the market, according to Pehin Orang Kaya Indera Pahlawan Dato Seri Setia Awg Haji Suyoi bin Haji Osman, the Minister of Development who is also the Deputy Chairman of Autoriti Monetari Brunei Darussalam (AMBD).
Speaking at the opening of the Asia Asset Management’s 9th Annual Brunei Roundtable themed “Building and Sustaining Growth” yesterday, Pehin Dato Seri Setia Haji Suyoi pointed out that the total mutual fund size in the market, comprising both Islamic and conventional mutual funds, had risen steadily by almost 20 per cent over the last two years to B$176 million in 2013.
On the institutional side, assets under the management of licensed investment advisors, meanwhile, have grown substantially over the years from B$1 billion in 2008 to almost B$5 billion in 2013, he added.
In anticipation of an increase in demand for investment instruments, the minister said: “All stakeholders need to fulfil and further strengthen their roles including the regulatory agency and the market players.”
To facilitate the development, AMBD’s strategies will be focussed on establishing and improving the necessary infrastructures, as well as strengthening capacity to meet the upcoming challenges.
Pehin Dato Seri Setia Haji Suyoi also outlined some of the initiatives that AMBD is currently embarking on.
According to the minister, the enactment of the Securities Markets Order (SMO) 2013 as consented by His Majesty the Sultan and Yang Di-Pertuan of Brunei Darussalam in July this year, has further strengthened the capital market’s legal and regulatory framework.
The new and comprehensive legislation provides for the regulation and supervision of a broader range of capital market activities and products. In addition, the improved disclosure requirements will result in greater investor protection and increased market confidence.
Furthermore, it will help raise the regulatory standards in line with International Organization of Securities Commission (IOSCO) standards and best practices.
In terms of financial infrastructure, the minister revealed that work on the establishment of the national payment and settlement system is well underway.
According to him, the three key components of this system are the ‘Real Time Gross Settlement’, ‘Automated Clearing House’ and ‘Central Securities Depository’.
“The completion of these three components will further enhance the efficiency of the financial sector and greatly contribute to the development and facilitation of the capital markets,” he said.
Touching on the ‘Sukuk’ market, the minister explained that AMBD acts as the agent of His Majesty’s Government for the issuance and management of its Sukuk Al-Ijarah Programme. These Sukuk issuances are intended to establish a yield curve and to provide investors with an indication of future rates and economic activity. At present, the Sukuks are short tenors and only available in the primary market.
“God Willing, the authorities will plan to extend the programme to include longer maturities and create a secondary market in the near future,” he said.
Pehin Dato Seri Setia Awg Haji Suyoi also noted the programmes under the Centre for Islamic Banking, Finance and Management have received strong support and participation from the public and industry players.
However, in order to develop Brunei’s capital market, he said: “We are conscious of the need to educate and protect the public at large. Towards this, relevant agencies including the AMBD would need to work together in enhancing financial literacy for the benefits of greater segments of society. In this respect, we would learn from the experience of other jurisdictions, particularly in the designing of a national financial literacy strategy. This would be one of the upcoming initiatives of the authorities.”
The ultimate objective of these initiatives, the minister highlighted, is to elevate Brunei to become a “premier Islamic financial centre”.
Brunei’s political and unrivalled macroeconomic stability, strong commitment towards enhancing the ease of doing business and well developed physical infrastructures are just some of the many attributes that make the Sultanate an attractive investment destination, he explained.
With impeccable Islamic credentials and a strong philosophy of a Malay Islamic Monarchy, he said “we have tremendous potential to promote Islamic finance not only nationally but also globally”.
Earlier, Pehin Dato Seri Setia Awg Haji Suyoi mentioned that the financial sector has been identified as a major contributor to the diversification efforts of the country, whereby based on current data, the banking and other deposit-taking institutions contribute about 94 per cent to the financial sector assets, while the insurance and ‘Takaful’ sector accounts for five per cent. Capital markets, on the other hand, represent not more than one per cent of the overall financial assets. In terms of the contribution to GDP over the past years, the overall financial sector contributes around four per cent.”
Elsewhere in the Borneo Bulletin, Azaraimy HH took up Page 3 with an article entitled “Financial market infrastructures in the pipeline”:
“The Sultanate is working on establishing key financial market infrastructures including a payment and settlement system comprising a real-time gross settlement system (RTGS), automated clearing house (ACH) and central securities depository (CSD).
Mahani Mohsin, Executive Director, Insurance/Takaful and Capital Market Supervision Division, Regulatory Department, Authoriti Monetari Brunei Darussalam, said these would facilitate the development of the financial sector.
She was one of the panellists during a panel discussion on Asean Capital markets and The New Economic Order at the 9th Annual Brunei Darussalam Roundtable 2013, where she also mentioned that the new Securities Market Order had provisions for the licensing and regulation of market operators such as the stock exchange.
The event took place at The Empire Hotel & Country Club.
Mohd Farid bin Kamaruddin, Senior Fund Manager of Asian Fixed Income and CEO of Malaysia Threadneedle Investments, spoke about the development of Sukuk markets in the world today.
“We have gone through and survived the 2008 financial crisis, which was an important milestone. And we also pulled through the Dubai financial crisis in 2009, which was another important milestone. We have strongly recovered from these two financial crises”, he said.
Currently, he believed, the market is facing possible volatility.
He said Sukuk had grown a lot in terms of corporate participation and the sovereign’s participation and issuance of Sukuk (on the supply side of the market).
In addition to that, the asset class has also grown in terms of the players, he added.
“At first, the players were mainly Takaful companies, Islamic asset management and Islamic banks. But now due to the unique features of this asset class, conventional players are being drawn to it and have come on board.
Mohd Farid believed the approach being used must be further enhanced, a point which he elaborated on at the Annual Brunei Darussalam Roundtable 2013.
“There are several important attractions which conventional players have found in the Sukuk market. “At the end of day, we cannot run away from the fact that people from the investors’ side are interested mostly in the risks and returns involved.
“If you plot a chart on risks and returns, that is volatility, you will see that Sukuk as an asset class provides competitive returns, vis-à-vis at a slightly lower volatility,” Mohd Farid said.
Apart from providing value proposition, another reason why Sukuk had attracted conventional industry players boiled down to how rapidly it had grown, he added.
“The question is that will there be enough investors for issuance of Sukuk? I believed the Sukuk market is already proven,” he said.
“In term of size, the first global Sukuk was issued way back in 2001 by a Malaysian company, since then it has been fascinating to look at how it has grown today, where the Sukuk market can take over a billion in terms of size of issuances.
“Today not just Islamic financial companies are issuing Sukuk, but there are conventional institutions such as GE Capital issuing Sukuk involving US dollars.””
James Kon also penned a piece further on in the Borneo Bulletin entitled “Economic agenda discussed at annual financial forum”:
“Financial regulators and industry players came together yesterday to discuss the latest issues in the financial industry at the 9th Annual Brunei Darussalam Roundtable 2013 jointly organised by Asia Asset Management Hong Kong and the Centre for Islamic Banking, Finance and Management (CIBFM) supported by Autoriti Monetari Brunei Darussalam (AMBD) at The Empire Hotel & Country Club.
Pehin Orang Kaya Indera Pahlawan Dato Seri Setia Awang Haji Suyoi bin Haji Osman, Minister of Development who is also the Deputy Chairman of Autoriti Monetari Brunei Darussalam (AMBD) as the guest of honour attended the event. Also in attendance were Dato Paduka Awang Hj Ali bin Hj Apong, Deputy Minister at the Prime Minister’s Office, members of AMBD’s Board of Directors, permanent secretaries and senior government officials.
Among the topics discussed were Brunei Darussalam’s economic agenda, progress and development of capital markets in Brunei Darussalam, the overview and opportunities in the Sukuk market as well as the impact of regulatory reforms on fund markets and investments. Other topics that were presented are Asean Capital markets and the new economic order as well as how asset owners are coping in a low interest rate regime.
Tan Lee Hock, the publisher of Asia Asset Management in his speech said, “The theme of today’s event is ‘Building and Sustaining Growth’ which reflects the current circumstances under which we will operate in and the realities that we face in what is commonly termed as the New World Order.”
Datuk Ranjit Ajit Singh, Chairman of Securities Commission Malaysia in his presentation highlighted the importance of Asean integration by saying “Asean has major economic and financial opportunities given the scale and size of the combined population. Asean integration will be an important step. The Asean Economic Community (AEC) 2015 is an important target and the key issue is the journey to integration and therefore the efforts made toward the journey will be very important. AMBD is actively involved in the Asean Capital Market Forum.”
He also stressed on the mutual recognition of best practices, dispute resolution mechanism, Asean corporate government scorecard and framework.
Brunei Darussalam’s chairmanship of Asean this year with the theme of ‘Our People, Our Future Together’ he said is precise. “This is really in many ways that we should all act to make sure that all the cooperation that we have amongst ourselves will be able to strengthen the position of the region and be promoted as a major investment destination in the world,” he said.
In terms of capital market, he said, “The theme of ‘Building and Sustaining Growth’ ultimately depends on the regulators and industry players to make sure that investors trust the regulatory bodies and their policies in making sure that structural reforms to develop the marketplace are effective.”
The roundtable was attended by more than 150 local and foreign participants including industry players, financial regulators and government officials.”
The Brunei Times
Elsewhere, The Brunei Times kicked off its business section with an article by Debbie Too entitled “Progress in unifying ASEAN capital market standards”:
“ASEAN is making progress on harmonising capital markets in the region, the chairman of the Securities Commission Malaysia said yesterday.
During a keynote address at the 9th Annual Brunei Darussalam Roundtable 2013 held at The Empire Hotel & Country Club, Ranjit Ajit Singh said that while challenges abound, the region has already put in place a number of aspects of the capital markets integration.
As part of the initiative to fully integrate the region, the ASEAN Economic Blueprint requires a freer flow of capital among the member states.
Under the blueprint, the ASEAN capital market development and integration need to be strengthened through greater harmonisation in standards.
“While there are certain challenges to be addressed, it is a fact that people are coming together, the region’s capital market players are coming together, and a lot of the major aspects of the framework are in place,” he said.
He noted that around two weeks ago, Malaysia, Thailand and Singapore signed a memorandum of understanding that would enable fund managers to handle investments that are constituted and authorised in these markets to retail investors under a streamlined and facilitative framework.
“This is a very important initiative for us. All of us were in discussions for this framework and it allows other jurisdictions to sign on and participate,” he said.
He added that this move is critical because the countries adopted a set of common standards which would allow fund managers to offer investment products across the jurisdictions, a major step towards an ASEAN passport regime.
He also said that cross border fund raising and dispute mechanisms are currently being put in place, while the ASEAN Corporate Governance Scorecard is already in place.
“From a market infrastructure point of view, these efforts and connectivity of exchanges with trading links, we are now looking at areas in other areas of infrastructure including at the post-trade level,” he said.
He also said that while a 2015 deadline has been set for the integration of the region, “the key issue is that it is a journey”.
“The efforts we’ve made towards this journey are very important to recognise,” he added.
The Malaysian official said that there are three levels of integration in the capital markets: creating a regulatory environment, with rules and frameworks among jurisdictions harmonised; having infrastructure for connectivity; and creating products that will allow ASEAN to position itself as an investment hub.
In this regard, he said, the plan for an exchange traded fund in the region was “a very important initiative”.
An exchange-traded fund is a mutual fund that is traded on a stock exchange.
“In many ways, this is really what we should be aiming towards, along with the cooperation we have (with each other)... to be able to strengthen the positioning of the region and be promoted as an investor destination in the world,” he said.
He said that it was important to have a predictable regulatory environment to gain the trust of investors.
We continue to be committed to the development of institutions and the development of capacity building,” he said.
“We believe that as we do this, the industry themselves also play an important role... We believe the industry must support us for greater self regulation, greater market-based regulation, so it becomes an effort in collaboration,” he said.”
Debbie Too also scribed an article in The Brunei Times based on a presentation from Dr. Mark Konyn, CEO of Cathay Conning Asset Management, which she titled “ASEAN must assert itself: Expert”:
“ASEAN needs to “assert itself” in the global investment environment, a consultant said yesterday.
Dr. Mark Konyn, chief executive officer of Cathay Conning Asset Management, told The Brunei Times in an interview on the sidelines of the 9th Annual Brunei Darussalam Roundtable 2013 that the region has gone through “a period of incredible resurgence” after the 1997-1998 Asian financial crisis, and that it has been playing second fiddle to more industrialised economies in Asia-Pacific which managed to attract the majority of the capital.
“What we’ve seen post financial crisis is that (ASEAN) has the ability to pick up listed companies that were priced attractively, trading on lower valuations and people have forgotten about opportunity for economic growth elsewhere in the region, so I think that resurgence has played out very well,” he said.
Konyn said that with the credit rating upgrades in the region, investors have seen a large issuance in the hard currency bond markets, which have also helped to develop the depth of the ASEAN markets and the infrastructure.
It is now a question of whether policies will be put in place to take advantage of the “big steps” that have already occurred, he added.
Konyn said that the move of the region to form an integrated economic community by 2015 is “interesting”.
He added that conversation in the region has now started to revolve around the Asia-Pacific Economic Cooperation and the Trans-Pacific Partnership.
“I think ASEAN is a strong voice within the global community,” he said.
Noting that 60 per cent of the region’s economy is trade-dependent, Konyn also said that “trade friction” is starting to play out.
“I think ASEAN’s position in that would have to be properly managed to make sure that it doesn’t get sucked into that type of situation,” he said.
He said that ASEAN will also have a role to play in China’s investment environment, as the country will require access to natural resources. “We know that they are quite acquisitive in making sure they have sufficient resources to fuel their economy,” he said, adding that that the natural advantage that China had when it first entered the global trade community has “all but evaporated”.
“The advantage of cheap labor and ready supply of the population coming into the urban areas, to manufacturing, has been played out, and they’ve got rising costs,” he said.
“China is still an important component in the global economy, being the second largest economy in the world.””