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Ministry of Finance
Brunei International Financial Centre : Introduction
Brunei has for many years been a significant player in the ASEAN
region. Its very strong ties with the United Kingdom, Singapore and regional countries
have led to the build-up of considerable commercial activity. The economy has been
dominated by the oil and liquefied natural gas industries and Government expenditure
patterns. Brunei Darussalam’s exports consist of three major commodities, namely:
crude oil, petroleum products and liquefied natural gas. Exports are destined mainly for
Japan, the United States and ASEAN countries. But the country has entered a new phase of
development in its drive towards economic diversification and maturity.
Prior to formal establishment of the IFC, Brunei was already a busy
commercial centre, as witness to the existing active presences in the Banking sector of
HSBC, Standard Chartered, Overseas Union Bank, Citibank, Maybank, Baiduri Bank, Tabung
Amanah Islam Brunei and Islamic Bank of Brunei Berhad. All the major accounting firms have
significant presences, and there are some fifteen law firms.
National Goals –
Why an IFC ?
Unlike many IFCs, Brunei has the advantage of already being an affluent
society based on the fossil-fuel economy. The country’s motives in establishing an
IFC regime are therefore more subtle and socio-economic than simply to generate an
income-stream to supplement tourism.
The goals motivating the establishment of the IFC include developing the capacity to :
- Diversify, expand into and grow the value added financial service sector of the economy
of Brunei and the Asia Pacific Region (APR) as a Tier One Player.
Provide a secure, cost-effective, sensibly regulated IFC facility, which will offer a
safe harbour for the conduct of significant regional and international business for
corporate and private clients.
Provide well-qualified Bruneians with purposeful, challenging and rewarding careers,
following their educational advantages.
Attract overseas professionals to assist in running the IFC to the highest standards.
Encourage expatriate professionals to become involved in training and development of
rewarding opportunities for professionally qualified and trained Bruneians in the
International Business Sector.
Increase returns for the hospitality, transport and amenity industries, including
eco-tourism, culminating in an holistic result for the country’s economy.
Position Brunei as an equal partner in the globalisation of financial and commercial
activity, and thereby, to generate greater communication with and between other nations.
The Means to achieve
these Goals
Brunei will deploy its
sovereignty, wealth and human resources in a conservative but assertive manner to
establish a jurisdictional environment which will be tax-free, and free from
over-regulation or "business pollution". Brunei IFC offers a range of
international legislation carefully crafted to permit flexible, cost effective
capabilities which are right up-to-date. Such capabilities will include the full range of
facilities necessary for the efficient conduct of global business. There will be regular
liaison with regulatory bodies internationally.
Exclusion
of Money Laundering a First Priority
As a sovereign nation of
high repute (capable, for example of hosting the APEC 2000 Summit), Brunei served notice
at the outset that criminal abuses of its financial systems will not be tolerated. The
country took these steps voluntarily, rather than under pressure. This reflects
responsible economic and social attitudes.
The first tranche of legislation enacted for the IFC regime therefore
includes Money-Laundering and Proceeds of (serious) Crime measures implemented to
international standards. Severe Drug Trafficking legislation has been in place for some
time. Moreover, meaningful and enforceable regulation of the Trust, Company
Administration, Insurance and Banking industries has been legislated for before these
activities commence. At the outset Brunei IFC is well-prepared.
The initial legislation consists of the anti-crime measures already
mentioned and the following:
International Business Companies Order, 2000 ("IBCO")
Registered Agents and Trustees Licensing Order, 2000
("RATLO")
International Trusts Order, 2000 ("ITO")
International Limited Partnerships Order, 2000
("ILPO")
Insurance and Securities legislation is expected to be enacted early
2001.
General
Scheme – Parallel Jurisdictions
Accordingly, Brunei will be a
"dual jurisdiction", whereby the international legislation offers
"offshore" facilities, alongside the usual range of "domestic"
legislation drawn from that of England and Wales. The jurisdictional distinction is thus
jurisprudential rather than physical.
The judicial system will be common to both domestic and international
law. In this regard, Brunei is fortunate in His Majesty’s choice of senior and highly
respected judges including several drawn from Commonwealth countries. In a recent
judgment, Dato Sir Denys Roberts, KCMG, SPMP, a former Chief Justice of Hong Kong who for
some years has held that office in Brunei had occasion to observe. "There has never
been any interference by the executive with the judiciary, which has remained staunchly
independent…" All members of the (Brunei) Court of Appeal are distinguished
Commonwealth Judges. The importance of such a strong and experienced
"British/Commonwealth" judiciary in an Asian regional context cannot be
overstated. Final civil appeals are (by consent) to the Privy Council in London.
Regulatory – The
Authority
Brunei Darussalam has no
central bank and the Ministry of Finance exercises most of those functions. Monetary
policy has been determined by linking the Brunei Darussalam’s dollar to the Singapore
Dollar and there is parity between the two. The Singapore link is seen as a stabilizing
influence. Nor are there any exchange controls. Domestic companies are taxed, but there is
no personal income tax in Brunei.
The "international" legislation is supervised by "the
Authority", a segregated unit of the Ministry of Finance acting through the Financial
Institutions Division and the Head of Supervision (IFC). The Authority comprises a
multi-disciplinary unit with appropriate banking, insurance, corporate and trust
supervisory skills. It is a one-step Authority in the true sense, with line command
passing directly from the Minister of Finance, the Minister responsible for the
international legislation.
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