Regulatory Framework For Islamic Finance In Brunei Darussalam: A Critical Analysis

Abstract

The development of Islamic finance in Brunei Darussalam commenced with the establishment of Tabung Amanah Islam Brunei (TAIB) in 1991. Under the auspices of the Brunei Darussalam Central Bank (BDCB) and with the continued support of the Ministry of Finance and Economy (MOFE), the nation has progressively strengthened its position within the global Islamic finance sector. A robust regulatory framework is imperative to sustain this development, attract investment, and foster stakeholder engagement. Nevertheless, despite this progress, the sector's regulatory infrastructure requires continuous refinement to keep pace with industry advancements. While the Islamic Banking Order (IBO) 2008 established a foundational legal structure, several provisions require revision and enhancement to meet contemporary market demands. This paper critically analyses the current regulatory framework governing Islamic finance in Brunei Darussalam. Employing qualitative documentary analysis, the study examines primary legal instruments, including Acts, Orders, Guidelines, and Notices, supplemented by secondary academic literature. The findings reveal that additional legislative measures are essential to establish a more comprehensive and resilient regulatory framework. Although Brunei Darussalam currently has only one full-fledged Islamic bank, a robust regulatory framework remains critical to ensuring the effective and consistent application of Shariah principles across Islamic financial operations. The paper concludes by offering targeted policy recommendations for the relevant regulatory authorities, thereby contributing to the broader discourse on strengthening the legal and regulatory architecture of Islamic finance.