The Islamic Finance Handbook: A Practitioner's Guide to the Global Markets

Chapter 4BruneiIslamic Banking and Finance

Muhd Jamil Abas bin Abdul 'Ali

Legal Advisor, Abrahams, Davidson & Co.

Tan Thiam Swee

Partner, Abrahams, Davidson & Co.

Lee Yun Chin

Partner, Lee & Raman

Brunei Darussalam is called the Abode of Peace to reflect the fact its people enjoy harmonious living coupled with a low crime rate and almost nonexistent serious crimes; it has also, to date, been free from natural disasters, epidemics, and pollution. Hence the peoples of Brunei Darussalam are blessed with a true serenity of life.

The official religion of Brunei Darussalam is the “Religion of Islam,” according to the Shafeite sect, as declared in its Constitution of 1959. Brunei had an early Islamic history that can be traced back through the records to King Awang Khalak (Alak) Betatar, who converted to Islam and took the name Sultan Muhammad Shah in the late 14th or early 15th century. Brunei's legal code, the Hukum Kanun, was partly based on Islamic precepts and dates back to the 16th century. These laws were enforced until the intervention of the British in Brunei's affairs in the 19th century. English models of law were introduced in 1906, and Islamic law was relegated to the personal areas of Muslim life and matters of worship. English law was applied to all areas of commerce, including banking, and these laws, though amended from time to time, continue to apply and influence Islamic banking and finance.

Brunei Darussalam attained its independence in February 1984. Recent years ...