Brunei Darussalam’s economy has maintained its competitive edge over the past year, according to a recent report, putting in a solid performance in difficult times as the world struggles to rebound from recession. However, the study also identified a number of key areas where the Sultanate needs to step up if it is to further improve its rankings.
In its latest Global Competitiveness Report, issued September 7th, the World Economic Forum (WEF) ranked Brunei Darussalam 28th out of the 142 countries covered in its annual study. It received the same spot last year, though it is worth noting three more nations were added to the list in 2011. The annual report, which assesses the strengths and weaknesses of world economies based on 12 criteria, ranked the Sultanate highly in several categories, including labour market efficiency, education system quality and macroeconomic environment, where it was rated as having the world’s best.
The nation’s fiscal situation also put Brunei Darussalam at the rankings’ forefront, with gross government debt as a percentage of GDP, change in consumer inflation, and gross national savings as a percentage of GDP all assessed as among the world’s best performing. The Sultanate topped the first two categories and was rated 4th overall in the third.
Brunei Darussalam scored strongly in the category measuring to what degree terrorism threats imposed costs on doing business, with the Sultanate getting a mark of 6.4 out of seven, placing it eighth globally. Along with rating seventh on low levels of crime adding to the cost of doing business, the report suggests that the country is seen as one of the world’s safest countries in which to operate, a definite plus when trying to attract foreign investment.
The Sultanate also did well compared to its Association of South-east Asian Nations (ASEAN) neighbours, with only Singapore, at second place, and Malaysia, ranked 21st, standing above it. Below Brunei was Thailand, ranked 39th, Indonesia at 46th, Vietnam at 65th, the Philippines at 75th and Cambodia at 97th.
However, not all was positive in the report, with the WEF noting several areas where Brunei Darussalam could improve its competitive credentials. While the report lauded the government for its readiness to procure advanced technological products, it also noted that the country’s ranking in the overall availability of the latest technologies, the ranking of internet users across the population compared to other countries, and the willingness of private sector firms to adopt technology were all below its overall rating.
Perhaps unfairly, the Sultanate’s ranking was dragged down by the relatively small size of its domestic market. Its limited population base was deemed restricting to opportunities, placing the Sultanate 121st in that category.
Looking forward, if Brunei Darussalam is to achieve the goals in its “Vision 2035” blueprint, including having a knowledge-based economy and developing into a regional financial centre with a strong private sector, it will need to reduce the amount of bureaucratic red tape involved in starting new businesses, improve regulatory oversight for the financial sector, and bolster its scientific research, innovation and technological capacity.
The Sultanate may not have climbed further up the WEF’s ladder in 2011, unlike its steady progress over the past few years when it moved from 39th in 2008 to its present position, but it is consolidating its place near the top of the list. In its study, the WEF assesses the country’s economy as one in transition, moving from having a factor-driven economy (one utilising natural resources and an unskilled workforce) to an efficiency-driven one based more on higher education levels, financial market development and technological readiness.
The government is taking steps to facilitate this transition and to take the country to the next level, to that of an innovation-driven society, through overhauling and strengthening the education system, encouraging investment in information and communication technology and research, and by investing in measures aimed at diversifying the economy away from its dependence on hydrocarbons revenues.
All of this will take time, especially in the case of reshaping the education system to better meet a modern economy’s needs, where it will be some years before students groomed under the new format enter the workforce. However, Brunei Darussalam has already begun to reap the benefits of past reforms, as evidenced by its progress to date up the WEF ladder, and it is well within its capacity to climb a few rungs more in the coming years as further reforms are enacted.