Brunei Darussalam ranked 13th out of 136 countries globally in the latest Islamic Finance Development Report 2024: From Niche to Norm, according to a press release from the Brunei Darussalam Central Bank (BDCB).
The report reveals that Brunei Darussalam achieved 29 points on the Islamic Finance Development Indicator (IFDI) 2024, which measures the development of the Islamic finance industry based on data in 2023.
Meanwhile, the global average score increased to 12 in 2024 from 9 in the previous year.
The IFDI highlights another strong year for the global Islamic finance industry, with total assets increasing by 11 per cent from USD4.5 trillion in 2022 to USD4.9 trillion in 2023. Strong performances across key sectors drove this growth, and the IFDI forecasts total global assets to reach USD7.5 trillion by 2028, signalling sustained growth in the sector.
Islamic banking saw a robust growth of 12 per cent in 2023, reaching USD3.6 trillion in assets, with Afghanistan, Iraq, and Bahrain leading in growth rates. Sukuk followed closely, rising by 9 per cent, driven by increased sovereign issuances to maintain yield curves in key markets, sizeable offerings from non-traditional markets, and a notable rise in green and sustainability sukuk issuances, bringing the total outstanding amount to USD863 billion.
The takaful sector experienced modest growth, reaching USD86 billion, hindered by competition from conventional counterparts, a limited range of Syariah-compliant options, and pressures from the monetary tightening cycle.
In terms of total global Islamic finance assets, Islamic banking continued to dominate the Islamic finance asset distribution, holding a 73 per cent share in 2023, followed by sukuk at 18 per cent, Islamic funds at 5 per cent, other Islamic financial institutions (OIFI) at 3 per cent, and takaful at 2 per cent.
The five main indicators for IFDI are Financial Performance, Governance, Sustainability, Knowledge, and Awareness. According to the report, Malaysia and Saudi Arabia maintained their positions as the top two Islamic finance markets in overall development in 2023, with the UAE emerging in third place, replacing Indonesia, and achieving an IFDI score of 88.
While Brunei Darussalam’s Financial Performance indicator score remained at 11 points, notable improvements win the Takaful and Sukuk sub-indicators. Brunei Darussalam also secured 10th place in the Assets of OIFI sub-indicator under the Financial Performance indicator. In terms of Governance, Brunei Darussalam maintained a full score for the Regulations sub-indicator, contributing to a significant increase in the overall Governance score from 59 points in IFDI 2023 to 71 points in IFDI 2024. Additionally, the Awareness and Sustainability indicators also saw improvements, with the Awareness score climbing from 16 points to 24 points, and the Sustainability score rising from 13 points to 14 points.