The key to the future development of Brunei's economy is small- and medium-sized enterprises (SMEs), according to the sultan. In his birthday speech on July 15, the Sultan and Yang Di-Pertuan of Brunei Darussalam, called for all government agencies to recognise and appreciate the important contribution SMEs can make to the local economy and encourage these businesses to seek opportunities overseas.
"In our collective efforts to promote the economy, co-operation and service are two of the most fundamental factors. All parties must appreciate the contributions of SMEs and work together to tackle problems they face," said the sultan.
SMEs currently account for 98% of all active business enterprises in Brunei and have contributed approximately 92% of the private sector employment. They also contribute a little over two thirds of the non-oil and gas GDP.
The importance of the public services and the private sector are considered by the government as paramount to the diversification of the economy and the development of the country.
The sultan said, "I am confident that with the proper outlook, supported by organised planning, we can certainly produce entrepreneurs who can be trained to explore export-oriented industries. The government has already provided several areas for the use of the entrepreneurs and the general public. These are provided as incentives to attract more locals to participate in the business sector."
In the budget expenditure for 2007-2008, around BN$138m has been allocated to agencies involved in the development of entrepreneurship programmes in the country. These have been designed by various agencies and ministries to widen the private sector base, increase local and regional competitiveness and enhance the provision of business plans, financial planning and strategies.
The ministry of industry and primary resources (MIPR) is driving the growth of SMEs and has been a point of contact for their development in Brunei. Its main projects have included the Entrepreneurial Development Centre and the Business Incubator Centre. Both are equipped to nurture the needs of SMEs and help their businesses to be successful by offering modern facilities and a hands-on approach to business development through seminars and workshops.
More recently, MIPR formed a committee to aid SMEs in developing and promoting local products. Senior officers from various government bodies and representatives from established local business and organisations will assist the committee. The committee is intended to facilitate effective co-ordination and communications between the private and public sector to ensure projects are planned and implemented efficiently. MIPR has also installed financial schemes to help entrepreneurs seek loans. In 2006, 406 entrepreneurs received approval for government loans totalling a little over $15m.
Second Minister of Finance Pehin Abdul Rahman said, "Entrepreneurs must assume a high level of personal integrity and adopt a strong capacity towards business management, especially financial discipline since a true understanding and strict demonstration of financial discipline would always underpin a successful business."
In addition, the Brunei Economic Development Board (BEDB) has identified SME growth as one of its core projects in an effort to help diversify the economy. As well as promoting Brunei overseas and securing foreign direct investment, the BEDB will launch its SME innovation centre in August, which will be able to house 16 budding businesses.
Timothy Ong, acting chairman of the BEDB, told OBG that foreign direct investment would help SMEs because "SMEs will benefit from every major foreign investment into the country. Through the co-operation agreement with the BEDB, foreign investors will give priority in their employment requirements and purchase of basic supplies such as for cleaning and security services to local SMEs. Each investment will therefore be a real boost to local business."
With Brunei's large public service sector, it is hoped that the growth of the private sector will increase efficiency and reduce the size of the public sector in the long term. The ministry of communications recognised the benefits of increasing the capacity of the private sector by privatising their telecoms department last year. Minister of Communications Pehin Abu Bakar told OBG, "The objective behind the move was to reduce government expenditure, the public sector, and administrative and management burdens. Being in the private sector, you have to tailor your workforce to your budget."
The sultan has called on all government agencies to adopt a supportive approach in creating the most conducive environment for SMEs in order to create a more attractive location for both local and foreign investment.