Your Excellencies, Distinguished Guests, Ladies & Gentlemen,
As most of you know my name is Paulius Kuncinas.
For the last six years I have had the privilege and honour to be heading Oxford Business Group’s editorial coverage in Asia, which as you know has been primarily focused on fast growing ASEAN community of nations.
We have faced a few bumpy years and the wider global environment has not always been favourable. However I am very pleased to say – having attended a recent World Economic Forum in Davos - that ASEAN in 2012 is viewed as one of the
the top investment destinations by global companies . South East Asiaan region is regarded as a credible rival and important trade partner to China, India, Brazil and Russia.
We expect ASEANs contribution to global GDP will increase from current 5% to about 7% by the end of this decade.
More importantly this region is becoming one of the key sources of additional growth, resources, consumption and international trade – more advanced, more integrated and more competitive as a genuine trading bloc.
Despite its relatively small size we see Brunei playing a crucial strategic role in ASEAN’s international fortunes.
A member since 1984 it has already proven its role as skilful mediator between larger regional peers a well as global non-ASEAN giants such as India and China.
The best proof of this was the 29th ASEAN Ministers on Energy Meeting (AMEM) held here in Jerudong, in September last year, which was chaired by Pehin Dato Yasmin Umar.
Given its crucial role as supplier of LNG to Asian customers Brunei has the clout to drive forward ASEAN energy agenda - specifically the initiatives such as the creation of ASEAN power grid and
Implementation of the Trans-ASEAN Gas Partnership. These will benefit the region as a whole but also will cement Brunei’s role as a pivotal intermediary.
2012 in our view will be another important year for Brunei and ASEAN.
The world outside Brunei is changing very fast. For the first time in a decade we are likely to see a shift in China’s investment strategy with global investment spotlight on ASEAN – for the first time properly since the Asian crisis at the end of 1990s.
Following a devastating natural disaster, Japan is on the cusp of an unprecedented consumption and construction book that will drive demand for energy, construction materials and natural resources.
Indonesia is becoming a trillion US dollar economy offering vast opportunities for savvy investors from the Region especially with proximity to its borders.
Brunei is therefore faced with a historical opportunity to put itself forward as an ‘Entry Point for ASEAN Investors’ offering a range of high value added services.
While having a relatively small labour force Brunei can increase its regional market share in finance, transport, logistics, research, education, training and food processing.
Already the Sultanate has been focusing on investing on these on these non-energy sectors as part of its diversification efforts.
The sudden increase in ASEAN investment demand will persuade both private and public stakeholders to move faster on these opportunities – not least because the country has a surplus of capital and is looking to get a higher return on investment than currently offered by low yielding financial instruments.
Huge injection of liquidity globally means also that the interest rates in ASEAN will be at historical lows for a long time – which is good news for private sector investors seeking to capitalize on this opportunity.
If you look at what is happening in the ASEAN region from a big picture point of view then we think historically this could be Brunei’s ‘Swiss Moment’.
Switzerland as you know successfully leveraged its position as a politically stable yet neutral country with first class infrastructure to attract lots of global companies both at the beginning of the 20th century as well as recently.
To become an efficient facilitator Switzerland invested a great deal of its time on research and development and education – the cornerstones for any advanced knowledge economy in the 21st Century.
What gave it an edge was it provided political stability, ruthless adherence to property rights, transparent business environment with flexible yet business-friendly regulation.
We think Brunei is in a position to adopt its own version of the Swiss model to offer global companies a foothold in ASEAN.
We are mindful of the fact this transformation will not happen overnight and that a lot more needs to be done to create the conditions for international companies to come to Brunei.
The ‘to do list’ already identified by the Government includes investment in education, research & innovation, streamlining business regulation while creating new incentives for private and public sector.
These are the same factors that will determine whether Brunei can avoid the ‘Dutch Disease’ by making its economy less reliant on hydrocarbons.
We agree with many in the private sector who say that this process has been slower than expected.
Fortunately, due to the size of its energy resources and further exploration needs – Brunei still has some time and can afford to be selective in which business it targets during the initial stages.
At the end of the day the geographic and labour constraints dictate it cannot host all sectors on its soil.
We think quite rightly Brunei has focused initially on downstream petrcochemical sectors such as methanol production which plays to its strengths while making it part of the regional supply chain.
Some argue that spin off effects from this landmark project are not yet visible. However we have seen a surge of requests from international investors – many of who were seriously exploring investment opportunities in Brunei in 2011 when we were putting together our latest country Report.
The main message that this project sends to international community is that ‘Brunei is Open for Business’.
Secondly that when political will in Brunei is mobilized things can happen and happen relatively quickly. This is in stark contrast to many emerging market countries where projects never get off the ground and remain on the drawing board.
The most important development in the last 18 months was of course the new agreement with
Neighbouring Malaysia on offshore exploration rights.
This puts Brunei again in the driving seat to attract world class energy companies and once again become a leader in the newest energy and exploration technology.
The common criticism of this is that this will be a setback to diversification efforts and makes Brunei even more dependent on energy resources.
There is a lot of truth in that argument and we do see the risks of Brunei becoming more complacent taking its natural advantage for granted.
Fundamentally though we think additional revenues and macroeconomic safety from new energy resources will help to drive a new investment cycle that will focus less on physical but more important soft infrastructure – the core of which is human capital.
We think up-and-coming sectors such as ‘Brunei Halal’ brand, International Financial Centre, Eco Tourism and Construction remain the most attractive investment opportunities in 2012 – which will likely be boosted by ASEAN integration.
What is different in 2012 is that its neighbours be they in Sarawak, Malaysia, the Philippines or Indonesia are eager to engage with Brunei as partners rather than competitors.
There is a recognition by everyone we speak to in ASEAN that the Region as a whole is greater than the sum of its parts.
My contention to you today – having spent and worked in this Region for 6 years- that Brunei faces an unprecedented chance to play a leading role in expanding and integrating this pivotal region – which would help to fulfill the potential not just ASEAN’s but crucially also help Brunei reach the goals spelled out in WAWASAN BRUNEI 2035 .
It will help the country to become less vulnerable to future downturns in energy prices and make resilient to external financial shocks.
Above all it offers this wind of change in global and regional economics offers an opportunity to unlock Brunei’s human capital offering a high quality of life in a dynamic and sustainable economy.
Before I end my presentation today- I would like once again to thank all private and public sector stakeholders for engaging with Oxford Business Group in this continuous discussion on Brunei’s economic development.
Through our extensive research efforts, we would like to believe Oxford Business Group has made a contribution to this important debate and look forward to working with you again in the future in responding to both challenges and above all vast opportunities that ASEAN Region offers.