Stiff Competition

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In light of increased competition from economies worldwide, Brunei Darussalam's standing has fallen slightly in the latest comparative report released by the World Bank and the International Finance Corporation (IFC) on the ease of doing business.



"Doing Business 2009," released in mid-September, indicated that the East Asia and Pacific region continues to ease the regulatory burden of doing business. It stated that Singapore and New Zealand were the top two countries that reformed their business regulations, while Hong Kong, Thailand and Malaysia ranked among the top 20 worldwide.



However, the report showed that Brunei had slipped five places in the rankings since last year's evaluation, coming in at 88th overall. The report assessed a total of 181 national economies, studying the current business regulations and their enforcement in 10 separate categories, with the aim of "measuring the regulation and red tape relevant to the life cycle of a domestic small to medium size firm."



One particular area of weakness in Brunei was the ease of starting a business. Brunei ranked last in this category among 24 countries in the region, falling from 111th overall in 2007 to 130th this year. According to the report, an entrepreneur must carry out 18 specific procedures before being able to start a business in Brunei, the whole process taking an average of 116 days. This compares poorly with other countries in the region, where an average of 8.6 steps are required before a business can open, with the duration of the process taking just over 44 days.



Additionally, Brunei underperformed in the categories of registering property, where it ranked 177th overall, and investor protection, where it ranked 113th. In terms of transparency of transactions, Brunei was given a mark of three out of the maximum ten points, while on the extent of director liability index it scored just two points.



Regarding investor protection, however, Brunei did score highly regarding the rights of shareholders to sue officers and directors for misconduct. It received an eight, above the average for the region and for the member states of the Organisation of Economic Co-operation and Development (OECD).



To its credit, Brunei also did exceptionally well in the category of employing staff, where it ranked fifth overall, in keeping with last year's figure. Brunei was found to have one of the most open and flexible staffing systems in the world, a major bonus for companies operating in the Sultanate.



Brunei also scored well both in terms of flexibility of paying taxes and for procedures required for importing and exporting goods, as overall it was ranked 35th and 42nd, respectively. In both cases, the number of required procedures, the total time needed to be spent and, in the case of imports and exports, the costs were all lower than the regional average.



While not necessarily indicating deterioration in the regulatory environment, Brunei's weaker rankings do suggest that the government is not sufficiently proactive in enhancing business activity compared to its neighbours. In order to diversify the economy, attract investment and promote business, Brunei is going to have to make doing business easier.
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