The government in Brunei Darussalam is moving to speed up business processes and improve communication between the public and the private sectors amid calls for the introduction of measures to boost foreign direct investment (FDI).
The Sultanate has fared well in recent international appraisals of its business climate, rising four places to 79th in the World Bank’s Doing Business 2013 survey, released in October.
However, observers have highlighted the importance of boosting private sector participation and facilitating FDI as part of a long-term aim to diversify the economy, which remains dominated by oil and gas.
The introduction of a new system aimed at speeding up the approval process for construction permits is thought to have contributed to the Sultanate’s improved rating in the survey, while also compensating for drops in other categories. The 2013 survey saw Brunei Darussalam fall three places in investor protection and drop two spots in its rating for credit access. However, the Sultanate retained its fourth position among ASEAN member countries.
The chairman of the Ease of Doing Business Steering Committee, Yahya bin Begawan Mudim Bakar, was positive about the country’s overall performance, but acknowledged that improvements could be made. Speaking in November on the ease of doing business, Yahya said the indicators were crucial in attracting FDI. He also admitted that the “low scores and deterioration of rankings” caused him concern.
He said the results underlined the need for “more speedy and focused efforts to improve all government business processes”, adding that his committee was studying “new target and catalytic strategies” aimed at improving coordination among private sectors and stakeholders.
In the same month, the Economic Research Institute for ASEAN and East Asia (ERIA) highlighted the need for greater efforts to be made in centralising the Sultanate’s investment promotion activities. Joint investment promotion, carried out by the Ministry of Industry and Primary Resources (MIPR) and the Brunei Economic Development Board (BEDB), would improve consultation and feedback for investors, the institute said.
The ERIA called for local businesses to be included in public-private partnerships and effective dialogue and forums, saying such measures would increase their knowledge and boost private sector involvement.
In-keeping with the ERIA’s proposals to get the private sector more involved, in August the government launched the Brunei Agro-Technology Park project, with one of its key responsibilities attracting more FDI. The park will act as a “one-stop shop” for the industrial community, with the initiative set up following recommendations that the government should establish a free trade zone (FTZ) to enhance foreign exchange earnings, develop export-orientated industries and generate employment.
The government has also identified improved regional relations as a route to improving foreign investment. After launching free trade agreements with Japan and ASEAN, the country this year joined the US-led Trans-Pacific Partnership (TPP) agreement. The Sultanate’s compliance with TPP rules on financial services, labour and environmental and intellectual property issues are likely to reassure potential overseas investors.
The Brunei Economic Development Board (BEDB) has also identified several key industry clusters it plans to encourage within the export-oriented manufacturing and services sectors. A key FDI initiative the BEDB has pursued is creating industry cluster-specific sites for sectors such as pharmaceuticals, food, petrochemicals, renewable energy, and information and communications technology.
The BEDB has also launched initiatives to improve intellectual property (IP) rights. In July the BEDB implemented an international filing system for patents which means local applicants can seek patent protection for their inventions in 145 Patent Cooperation Treaty-contracting countries. In September Vincent Cheong, CEO of the BEDB, also urged SMEs to focus on the creation and protection of IPs to safeguard innovation.
With higher education also identified as a key factor for major investors, the Sultanate has forged key partnerships with international institutions and taken a leadership role in regional education. In June, the University of Brunei Darussalam and the US-based East-West Centre, a research organisation aimed at promoting better relations between the US and Asia, signed a memorandum of understanding to provide English-language instruction in all 10 ASEAN countries.
The Department of Economic Planning and Development has yet to publish its foreign investment figures for 2012. However, data indicates that the petroleum industry received the lion’s share of FDI last year, with wholesale and retail trade coming second.