Development Plans

Brunei this week unveiled its ninth National Development Plan (RKN9), outlining the sultanate’s economic blueprint until 2012. The plan focuses on encouraging economic diversification, improving education and developing businesses.



The plan is the centrepiece of a three-pronged government strategy. It covers a long-term national vision, called Wawasan 2035, which includes the goal of Brunei having one of the world’s top-ten per capita GDP figures within the next 27 years. The other component of the government’s overall plan is an outline of strategies and policies for development, which lists eight sectors central to progress in the sultanate. Those include education, economics, security, institutional development, local business development, infrastructural development, social security and the environment.



Working within those areas, RKN9 includes 826 specific projects, which are each slated to receive a share of the budgeted $6.8bn, an increase over the previous plan that budgeted $5.2bn.



Of the total budget, almost one third is to find its way to institutions providing social services, while 15.7% is earmarked for public utilities provision and 10.8% for boosting industry and commerce. This last sector, which includes Brunei’s key ventures in tourism, finance and manufacturing, performed well in 2007, increasing its contribution to GDP as its exports exceeded $712.3m. Investment in such areas of business remains fundamental to Brunei’s efforts to move away from a purely oil-based economy. With the government predicting 6% annual growth until 2012, it is setting benchmarks for the tourism industry. Examples include increasing average hotel occupancy to 50% to 60% and tourism-related employment from about 5350 jobs in 2004 to not less that 8000 jobs by 2010.



The necessity of this long-term economic direction was underlined by Tareq Muhmood, chief executive officer of HSBC Brunei, who said, “The government needs to plan a framework to determine the relevant sectors that it wants to see flourish.”



In a sign that business assistance is to go beyond simple target-setting, the ministry for industry and primary resources this week confirmed that starting in the third-quarter of this year, it would be “incubating” companies that have either the capacity to penetrate the export market, or have already done so.



Inside the sultanate, RKN9 will seek to foster technological development. The information and communication technology sector is slated to receive $812m while funding for the establishment of two science colleges and one college of higher education has also been set aside. At the same time, Brunei is working to launch an overhauled national curriculum.



In addition to enhanced education facilities, extensive building works are planned for a new broadcasting complex and ports department headquarters. Therefore, it is not surprising that the larger players in Brunei’s construction sector have long-anticipated the arrival of RKN9. Further down the scale, smaller contractors are set to benefit from the 32% of the plan’s budget destined for social services as the national housing department is expected to receive $1.1bn to complete 9000 new housing units.



Although the plan makes for good reading, questions are certain to arise among economic analysts. In mid-January, the results of the previous national plan showed that 65% of the projects initiated in that plan remain incomplete. Approximately one quarter of the 808 projects are reportedly still in the early planning stages, with only 20% of the allocated funds spent.



There have been complaints by media and industry leaders that the government has been reluctant to use its budget. Sources in the construction industry have raised the Ulu Tutong Dam project, which was part of the previous national plan, as an example of government thrift hindering development. The $71.2m project was awarded to the lowest bidder, but subsequently had to be re-tendered when the contractor refused to complete all of the agreed specifications. Similarly, RKN8 witnessed the construction of just 969 of a promised 9000 new houses. Against these statistics, there will be pressure for the authorities to make good on spending promises.



Concern might also be aroused at the small percentage, 1.7%, of total spending, granted by RKN9 to research and development, a key pillar of Brunei’s stated ambition to become a versatile modern economy. With social services commanding such a substantial slice of the budget, there is room for scepticism regarding compatibility between the size of this investment and pledges for a downsized civil service and expanded private sector. The next five years will show how much of the latest national plan makes it off the drawing board and into material gains.

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Michael Gorriz, Group Chief Information Officer, Standard Chartered

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