Brunei Darussalam's economy has received somewhat mixed reviews in two internationally recognised reports, having been rated by the World Economic Forum (WEF) as the number one country globally in terms of macroeconomic stability but also well down the rankings when it comes to ease of conducting business.
In the latest WEF Global Competitiveness Index (GCI), released on September 9, Brunei Darussalam's economy climbed seven rungs up the ladder from its position of 39th last year out of the 133 countries assessed, beating regional powerhouses such as India, Thailand and Indonesia.
Brunei Darussalam's unrivalled performance in the area of macroeconomic stability was a result of its large budget surplus cited by the report, which was assessed as being equivalent to one-third of its GDP, the fourth highest in the world; the high level of savings, rated second; and controlled inflation, which at 2.7% was the sixth lowest globally.
Overall, Brunei Darussalam recorded an improved showing in nine out of the 12 categories or pillars assessed by the WEF, while falling back slightly in three, infrastructure, goods market efficiency and technological readiness. Significantly, the study said that the Sultanate was continuing to do relatively well in all the categories that matter the most given its stage of development.
According to Pehin Yahya Bakar, the minister of industry and primary resources, Brunei Darussalam's climb up the rankings was due, in part at least, to the co-operation between government ministries and other relevant stakeholders in the business community towards improving the various pillars of competitiveness in the midst of the many difficulties and challenges that the country is facing.
The WEF too referred to those difficulties, saying that Brunei Darussalam faces enormous challenges in its efforts to diversify its economy away from its dependence on oil and gas as its foundation. In particular, it cited the need to bolster competition in the goods market, higher education, technological readiness, business sophistication, financial markets, and innovation in order to make the economic environment more conducive to doing business.
"Addressing and overcoming these challenges is a condition that must be met to further widen the economic base beyond oil and gas, which together account for half of Brunei Darussalam's GDP," the report said.
This need to further improve the business climate was noted by Dato Paduka Timothy Ong, the acting chairman of the Brunei Economic Development Board (BEDB), who described the report as a useful tool to assess what additional measures had to be taken.
"The overall ranking is good news but we should use it as an opportunity to review areas and scope for improvement," he said in an interview with the Brunei Times on September 10. "This means that the country is in a very strong position to implement the current National Development Plan."
Underscoring the need for a further opening up of the economy and maintaining the pace of reform in order to achieve this objective was the World Bank's latest "Ease of Doing Business" study, which was also released in early September, and saw the Sultanate fall back two places to 96th out of the 183 countries covered by the report.
One area that the report highlighted where reforms were needed was in the time it takes to start a business, with the 18 separate procedures taking a total of 116 days, compared to the regional average of 8.1 steps and 41 days.
According to Fauziah Dato Talib, a member of the APEC business advisory council and managing director of consultancy firm IQ-Quest, Brunei Darussalam should be able to streamline its bureaucratic processes, as has been done in other regional countries.
"If we analyse these areas, we can improve, and these are low-hanging fruits, such as cutting down processes for businesses to better serve the public," said Fauziah told local media on September 10.
However, while Brunei Darussalam may have slipped slightly in the rankings, this is not a sign that it has become harder to conduct business in the Sultanate, rather that other countries have picked up the pace of economic reforms, in part prompted by the global recession. There were a record number of reforms enacted in the past year, a reflection of governments' understanding of the need to facilitate the doing of business in troubled times.
While Brunei Darussalam may have fallen back slightly in the overall rankings, it showed a strong improvement in one important category, implementing reforms to reduce the tax burden on entrepreneurs, including reducing the time devoted to dealing with taxation processing and the number of payments required to be made.
Though further measures need to be taken to strengthen the country's business environment, as well as to broaden the base of the economy, Brunei Darussalam's fiscal and political stability will allow it to build on already well-established foundations.