Land permitting: New policies are easing the process of obtaining a permit

Land for private construction for residential, commercial or industrial purposes is limited in Brunei Darussalam, creating some constraints for the construction industry. Only about 5% of the Sultanate’s land area is available for private acquisitions, and nearly 75% of this is used for agricultural purposes, according to a 2009 report by the ASEAN Valuers Association. Of the remaining quarter, 15% is for residential use and 8% for mixed residential and commercial, while commercial and industrial projects receive less than 1% each.

LONG-TERM PLANNING: Brunei Darussalam’s policymakers are not blind to the economic effects of the Sultanate’s conservative land-use policy. The national think tank, the Centre for Strategic and Policy Studies, commissioned an Australian consultancy in 2011 to develop a long-term land use plan that would complement the Sultanate’s economic diversification goals.

The consultancy, SGS Economics and Planning, delivered the first phase of its report in early 2011, estimating that Brunei Darussalam needed 515,000 sq meters of commercial floor space and 1300 ha of industrial its goals. Land use adjustments, SGS found, could help spur foreign direct investment and help grow the transport and communications, business and financial services, and education sectors. However, hitting these targets would require a relaxation of laws governing zoning and land use. Indeed, 1300 ha of privately held land would represent nearly 6% of the total – a more than four-fold increase over industry’s current share.

Developing on private land is, of course, possible within the existing legal framework, but the process poses difficulties for contractors and architects. “The approval process for the planning stages of construction needs to be speeded up,” Mohd Billy Lim Abdul Aziz, the chief architect at Arkitek Rekajaya, told OBG. “Changing the land use designation on certificates of land ownership, for example, can be difficult and takes a long time to process.” Some developers report that their applications are left in limbo for months or even years, creating uncertainty that can deter potential investors.

RAPID IMPROVEMENTS: While it remains unclear how the government intends to address this persistent concern, it has been attentive in addressing another bottleneck in the process: permit granting procedures.

The Ministry of Development established the Authority for Building Control and Construction Industry (ABCi) in August 2010, combining the functions of four offices: the Construction Planning and Research Unit, Bumiputra Guidance and Development Unit, Housing Control Unit, and Housing Development Department and Development Control Unit. Applications now need only to be submitted to the ABCi and the Department of Town and Country Planning.

According to the minister of development, Pehin Dato Suyoi Osman, this consolidation has resulted in significantly faster processing times for both the land development and the building development permits.

Whereas both processes took over 50 days each before the establishment of ABCi, the reforms have cut the times to around 25 days on average, Pehin Suyoi reported, and the ministry hopes to cut them to 14 days.

MOVING UP: The rapid improvement, at least on paper, helped catapult Brunei Darussalam up 45 places in the “dealing with construction permits” section of the World Bank’s 2013 “Doing Business” report. “In terms of building applications getting approval, there has been a major improvement thanks to the establishment of ABCi,” Abdul Aziz told OBG. However, several industry sources have contested the accuracy of official figures, and others pointed out that the delays still seen in transferring property and changing its land use permit are more significant, each taking at least six months and often several years in some cases.

Shortening the construction approval process is one key step to incentivising private sector development in the Sultanate, and the progress achieved in this area has shown the ministry’s attentiveness – and responsiveness – to industry concern. However, further progress in licensing and increasing the availability of land is still ongoing to win over potential investors.

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The Report: Brunei Darussalam 2013

Construction & Real Estate chapter from The Report: Brunei Darussalam 2013

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