Economic Update

Looking to build on its recent good showing in the World Bank’s Ease of Doing Business (EODB) survey, where it made solid gains in a number of categories and improved its overall ranking, Brunei Darussalam is now looking to further enhance its business climate and attract increasing levels of foreign direct investment. Yet, it still has some way to go before it achieves its goal of being included in the upper percentile of the World Bank ratings.

The Sultanate was one of the biggest movers in the bank’s 2012 survey, released in late October, climbing 29 places to 83rd out of 183 countries. While some of this improvement is due to a change in the World Bank’s assessment methodology, the results are also a vindication of reforms the government has enacted over the past year to streamline bureaucratic processes and facilitate economic activity.

Brunei Darussalam recorded better results in a number of key criteria in the EODB survey, including processes for registering property, trading across borders and obtaining electricity connections. However, its further ascent in the rankings was hindered by weaker performances in other categories, including dealing with construction permits and obtaining credit, investor protection and the payment of taxes.

The government is taking steps to improve its performance via a dedicated state agency tasked with improving the country’s rankings on the EODB survey and monitoring reforms. The EODB Unit, part of the Ministry of Industry and Primary Resources (MIPR), was established in March and will be just one of the state agencies working with the private sector to achieve the government’s goal of propelling Brunei Darussalam into the top 20 of the World Bank’s rankings over the next two years.

To reach this target, the country will have to look long and hard at its business regulatory regime, identify weaknesses in the structure and implement reforms to resolve them, the minister of industry and primary resources told a business seminar on November 15.

According to Pehin Dato Haji Yahya, Brunei Darussalam can use the EODB report as a signpost for what it is doing right and where it needs to do more, while also studying best practices from other countries and passing those lessons on to the business community.

“It is not enough that we do things the way we do,” the minister said. “We have to catch on faster to what the other countries are doing. I strongly feel that we are moving in the right direction. However, whatever reforms and improvements the government agencies put in place will mean little if the stakeholders, namely the business community, is not aware of them and cannot fully reap the benefits.”

A senior official of the EODB project believes the Sultanate is closer to reaching the top 20 than this year’s report indicates. Sylvia Solf, the programme manager of the EODB project, told the Brunei Times in mid-November that further progress had been made since the cut off point for collating information for the latest survey.

“From our standpoint we know that there are a lot of initiatives going on, and actually some of them have not been captured because our data is effective as of May this year,” she said.

While progress had been made, Solf identified a number of key areas where further reforms were required. “Two of the areas which are still challenging are forming and starting a business, as well as dealing with licences. Starting a business is an area where countries around the world are focusing. Speed of change and implementation will matter a great deal for Brunei Darussalam in reaching the goal, and also expanding to other areas, particularly if the goal is to be among the top 20,” she said.

Though the Sultanate is keen to boost its rankings, it will still adopt a measured approach to reforms. Mariani Sabtu of Brunei Darussalam’s EODB Unit pointed out that care must also be taken to ensure such advances meet the Sultanate’s particular needs.

“Rankings are rankings,” Mariani told local media. “Everyone wants to occupy the best spot. But what we want is the best for our own business environment, the best for our small and medium-sized enterprises, and the very best for our investors without compromising the country’s interest.”

Brunei Darussalam has a way to go before it enters the upper echelons of the World Bank’s business rankings, with improvements needed in all categories. The climb up the rungs will also depend on the advances of other countries, for although the Sultanate is planning fast track reforms, so too may rivals. What should make a difference to investors in the short-term, however, are the changes underway now.