Regulatory landscape
The Brunei Darussalam Central Bank (BDCB) oversees the country’s Islamic financial sector. Brunei enhanced its Shariah governance framework in 2006 by establishing the Syariah Financial Supervisory Board. This was then followed by the launch of the Brunei Institute of Leadership & Islamic Finance in 2010.
The regulatory framework has evolved since. In 2022, the BDCB introduced the Notice on Application Process of Islamic Product, requiring financial institutions to obtain approval from the central bank’s Shariah board before offering Islamic financial products. The regulator has also issued formal Shariah standards for Islamic financial contracts including Tawarruq, Murabahah, Wakalah and Mudarabah.
More recently, the BDCB broadened its regulatory agenda to include sustainable finance. In November 2025, it launched the Brunei Darussalam Sustainable Finance Roadmap (SFR) 2025-30, highlighting the role of Islamic sustainable finance guided by Maqasid Shariah.
Policy development also continued. In March 2026, it was noted that a Waqf Act was in its final drafting stage.
Banking and finance
Islamic finance in Brunei dates back to 1991 with the establishment of Perbadanan Tabung Amanah Islam Brunei (PTAIB), the country’s first institution to offer Islamic financial products and services. Brunei is home to at least seven banks including Bank Islam Brunei Darussalam (BIBD), the country’s only full-fledged Islamic bank. The sector expanded in 2017 with the launch of Bank Usahawan, which offers Shariah compliant financing solutions for SMEs.
BDCB data shows Islamic banks accounted for 52% of Brunei’s total financial system assets in 2025, while four Takaful operators held BN$600 million (US$464 million) in assets, representing 2.4% of the financial system.
Brunei is also developing its Islamic fintech ecosystem. In 2024, Jana Kapital, an Islamic crowdfunding platform for MSME financing, completed testing in the BDCB’s Fintech Regulatory Sandbox. The sandbox framework was expanded in May 2026 to allow banks and financial institutions including Islamic banks and PTAIB, to participate alongside fintech companies for the first time.
Capital markets
Brunei’s Islamic capital market remains relatively shallow and is dominated by short-term sovereign Sukuk. Since 2006, the government has issued monthly Sukuk Ijarah securities, while BDCB Islamic bills provide additional Shariah compliant liquidity management instruments for the sector. As of July 2026, the BDCB had issued BN$18.55 billion (US$14.46 billion) under the Sukuk Ijarah program.
Corporate Sukuk activity however remains limited. The country’s inaugural corporate Sukuk was issued by Brunei LNG in 2005 through a US$100 million Sukuk facility, but the market has seen negligible issuances since. Although the BDCB has expanded structures by introducing Sukuk Ijarah Mawsufah Fi Zimmah, long-term and corporate Sukuk remain vastly scarce.
Brunei also does not yet have a stock exchange, limiting the development of an Islamic equity capital market and broader investment products linked to listed securities. The government plans to launch the country’s first stock exchange in Q3 2027, hoping to broaden capital-raising avenues and develop Islamic investment products.
Asset management
Brunei’s fund industry operates under a capital markets framework established by the Securities Markets Order 2013 and its accompanying regulations. The framework governs both conventional and Islamic collective investment schemes (CIS). Despite this, Brunei’s Islamic asset management sector remains small.
By end-2025, the country had around 11 Islamic CIS including seven Islamic sub-funds managed by a single Islamic asset manager, showing limited domestic Islamic investment products. The sector continues to rely heavily on cross-border offerings, with BIBD Securities (BIBDS) providing Shariah compliant brokerage services that enable investors to access securities listed on the Malaysian and Singaporean stock exchanges.
Cross-border collaboration has also continued to expand investment options. In July 2026, BIBDS partnered with Lion Global Investors to launch the Lion-BIBDS Islamic Income & Growth Fund, a Shariah compliant multi-asset fund investing in global equities and Sukuk. However, these products are largely domiciled in overseas jurisdictions.
The limited Islamic fund ecosystem leaves the sector dependent on offshore funds, restricting it to an early stage of Islamic capital market development.
Takaful
Brunei’s Takaful sector is regulated by the BDCB under legislation including the Takaful Order 2008 and the International Insurance and Takaful Order 2002. The Brunei Insurance and Takaful Association serves as the industry’s representative body.
According to the BDCB, there are four Takaful operators in the Sultanate. The sector continued to expand in 2026. Takaful assets increased to BN$633.72 million (US$496.28 million) in Q1 2026, driven primarily by growth in the non-life segment.
Outlook
Brunei’s Islamic finance sector is likely to remain banking-led, supported by sustainable finance initiatives and digital innovation. The SFR, expansion of the fintech regulatory sandbox and proposed Waqf Act should further enhance institutional movements. However, the development of the wider Islamic financial ecosystem will depend on deeper capital markets.
The absence of a stock exchange, limited corporate Sukuk issuances and a relatively small asset management industry continue to constrain the growth of Islamic investment products.
