Brunei Darussalam: Faith in the economy

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From food to pharmaceuticals and finance, Brunei Darussalam is looking to diversify its economy while also building on its already impressive credentials as a country that combines social values with sound business practices.

While hydrocarbons are going to underpin the economy for the foreseeable future, the state’s longer-term plan will help ease dependence on finite reserves of oil and gas. Central to this strategy is the promotion of sharia-compliant services, both domestically and at the international level.

One of the key planks is the Brunei Halal brand, the trademark name the government wants to see on an increasing range of locally made products complying with stringent halal standards for the domestic and international markets.

By tapping into the halal market, the Sultanate will be able to develop its economy and meet its obligations as part of the wider Muslim community, according to Pehin Yahya Bakar, Brunei Darussalam’s minister of industry and primary resources.

While Brunei Darussalam may aspire to becoming a major halal products supplier, it does face a number of obstacles, not least of which is the country’s lack of raw materials. With the Sultanate having to import many of the staples required for domestic consumption, it has only a few commodities readily at hand to process for export sales.

According to Peter Vogt, the managing director of international food giant Nestlé, if the cost of production, including the expense of importing raw materials and exporting the finished product, is too high, it would be difficult to be competitive.

“If you cannot have an efficient and cost-effective way of importing, it will not be possible for a local Brunei Darussalam manufacturer to export as there are limited raw materials in the country,” Vogt said on the sidelines of the conference.

The government is moving to boost investment in logistics services, improving sea and air transport links and also developing a specialised halal production centre located at the newly developed port of Pulau Muara Besar.

Parallel to efforts to promote production of halal products are measures aimed at having Brunei Darussalam’s own guidelines on standards for halal goods and services recognised internationally and for the country to become an accreditation centre, certifying that products from other countries meet the exacting requirements of halal.

To this end, Brunei Darussalam recently released its guidelines on halal pharmaceuticals, traditional medicines and health supplements, a vital adjunct to its guidelines on food products and production, published in 2007.

The pharmaceuticals guidelines cover all aspects of medicinal and health products, including raw materials, manufacturing, packaging, transporting and storing.

Certification of halal products is increasingly becoming an undertaking in itself, with many countries establishing bodies of experts to assess the purity of goods and services. Beyond national boundaries, international bodies such as the International Halal Industry Alliance and the World Halal Council have sought to put in place globally accepted standards, while the Organisation of the Islamic Conference (OIC) is also looking into the issue, using work developed in Brunei Darussalam as a reference for the establishment of its global food standards.

The twin-pronged approach to the halal industry, of being both a producer of certified products and a certification authority in its own right, will raise the profile of the Sultanate and establish it as a creditable manufacturing centre of sharia-compliant goods and services. Significantly too, it has the potential to provide employment and attract investment, vital in a future that will see falling returns from the energy sector and an increasing population.

The drive to promote the Brunei Darussalam halal brand is just part of a far greater effort to elevate the Sultantate’s strong commitment to both the social and economic pillars of the Islamic faith as a means to benefit the nation. There is huge potential in the halal market, not only in finance and the food industry, but increasingly in the tourism industry, says Hjh Suriyah bte Hj Umar, the permanent secretary of the Ministry of Industry and Primary Resources.

“We also recognise the increasing importance of Islamic finance in the halal industry and Brunei Darussalam’s commitment to Islamic finance, halal and halal-friendly tourism,” she said on June 6. “And maybe something that we should look into is creation of education and training programmes and coursework that combine all these three elements.”

David Evans, the managing director and senior analyst at consulting group Imarat Consultants, agrees, saying that if Brunei Darussalam established a halal business academy to provide integrated courses on subjects such as Islamic finance, halal food manufacturing and eco-friendly tourism, it could reinforce its credentials as a leader in the halal sector.

“These are the three things Brunei Darussalam wants to be strong in and they’re all thrusts for diversifying the economy, which the government wants to achieve,” Evans said in an interview with the local press in mid-June. “If you have an academy for training those integrated topics, this would be a first, because there is nothing like it in the world. Sure, you can study Islamic finance, but you can't study for something like a halal MBA or halal business management.”

Though Brunei Darussalam faces a challenge to compete at the mass production level in the international halal sector, it is very well placed to carve out a niche as a producer of specialised quality products, while also providing globally recognised accreditation services and potentially even training for future business leaders in the industry.

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