November 15, 2017
The non-performing loans (NPL) ratio of households in the Sultanate has improved to 1.9 per cent in the second quarter of 2017, compared to 3.3 per cent in 2010, thanks to the prudent practices of Bruneians who have started developing a saving-oriented culture.
This improvement mainly attributed to several regulatory developments and enhancements in the financial infrastructure within the seven-year period, said His Royal Highness Prince Haji Al-Muhtadee Billah ibni His Majesty Sultan Haji Hassanal Bolkiah Mu’izzaddin Waddaulah, the Deputy Sultan, in a sabda delivered at the First Meeting of the National Financial Literacy Council, at the Prime Minister’s Office building yesterday.
“However, a strong foundation in financial knowledge is still needed for the society to complement these supply-side improvements,” His Royal Highness added.
NPL ratio is the amount of non-performing loans over total loans, expressed as a percentage.
His Royal Highness said that a study conducted by Autoriti Monetari Brunei Darussalam (AMBD) in collaboration with Centre for Strategic and Policy Studies (CSPS) in 2015 had highlighted some gaps that need to be addressed.
“The study revealed that 34 per cent of respondents do not have a household budget, and 49 per cent do not actively save, while 24 per cent need credit to finance everyday needs.
“I understand that part of the council’s duty is to conduct regular studies to track these important indicators and recommend or undertake appropriate actions going forward.
“I hope that through such efforts, we would be able to see further improvements in these figures and positive impact on the lives of the people as they would be able to make better, more informed and responsible financial choices,” His Royal Highness added.
Although financial education serves as a viable solution, knowledge in itself does not necessarily translate into positive behaviour. This is evident from the AMBD-CSPS study that found Bruneians score highly in financial attitudes but are not commensurate with their financial behaviour, His Royal Highness said.
“Human beings can be easily driven by impulses which may result in reckless behaviours and lack of self-control. As such, in developing a national financial literacy strategy and implementing awareness programmes that cover different target groups, we must be mindful to consider and address behavioural and psychological traits.”
The Deputy Sultan also noted that the establishment of the National Financial Literacy Council is timely in paving the development of viable and meaningful strategies geared towards realising one of our Vision’s goals of raising the people’s quality of life, specifically in terms of financial wellbeing.
“Financial literacy education undoubtedly empowers an individual to make informed and effective decisions on his or her financial resources.
“According to the Organisation for Economic Cooperation and Development (OECD), financial education is important for both emerging and developed countries. In the former, financially educated consumers can support the financial sector to make an effective contribution to real economic growth including poverty alleviation, while in the latter, financial education influences an individual’s financial management, for example, in terms of retirement savings or avoiding over-indebtedness.
“This is in line with His Majesty Sultan Haji Hassanal Bolkiah Mu’izzaddin Waddaulah ibni Al-Marhum Sultan Haji Omar ‘Ali Saifuddien Sa’adul Khairi Waddien, Sultan and Yang Di-Pertuan of Brunei Darussalam’s New Year titah in 2012, which emphasised prudent practices as key to our stability and prosperity, be it at the level of government, household, or individual, and as a cornerstone of the nation’s economic survival.
“On the other hand, lavish spending beyond one’s means will lead to a tragedy. Therefore, inculcating a prudent and saving-oriented culture within our society should be the paramount focus of this council,” His Royal Highness said.
His Royal Highness, who is also the Patron of the National Financial Literacy Council, was greeted on arrival by Pehin Orang Kaya Indera Pahlawan Dato Seri Setia Awang Haji Suyoi bin Haji Osman, Minister of Education as Chairman of the council and Dato Seri Paduka Awang Haji Mohamad Roselan bin Haji Mohamad Daud, Deputy Minister at the Prime Minister’s Office as Deputy Chairman of the council.
His Royal Highness was then invited to join a group photo session with members of the council. The meeting proceeded with welcoming remarks by Pehin Orang Kaya Indera Pahlawan Dato Seri Setia Awang Haji Suyoi.
The National Financial Literacy Council was established with the objective of ensuring that all Bruneians are able to achieve the highest financial wellbeing through access to well-suited financial products, independent and credible information and advice. This is in line with Brunei Vision 2035’s objectives of creating a well-educated and highly skilled population, enhancing the quality of life of citizens and building a dynamic and sustainable economy.