Tourism operators in the Sultanate have experienced an eventful few years. A government reshuffle in late 2015 seemed aimed at increasing the focus on the tourism sector, lending hope to many private sector operators that the government would begin supporting growth and expansion of the industry in earnest.
The appreciation of the Sultanate’s dollar, which is pegged to the Singapore dollar, has seen many potential visitors taking their business to Malaysia instead of Brunei Darussalam. Still, bright spots remain for the Sultanate’s tourism operators. As low oil prices continue to weigh on the government’s budget and reserves, many eyes are looking to the tourism sector to add vibrancy to the non-oil economy.
Taking A Higher Profile
In October 2015 His Majesty Sultan Haji Hassanal Bolkiah announced a cabinet reshuffle and several new appointments to the Council of Cabinet Ministers. Part of the transition included the elevation of tourism from the remit of the Ministry of Industry and Primary Resources (MIPR) to the newly created Ministry of Primary Resources and Tourism (MPRT).
The sector’s elevation to ministerial status within the MPRT was widely seen as a reflection of the government’s intent to focus on tourism as a priority sector in the country’s long-term economic development plan, Wawasan Brunei 2035 (Brunei Vision 2035).
Growing Economic Contribution
Based on the annual report from the Department of Tourism Development, around 250,000 tourists visited the Sultanate in 2015, contributing about BN$316m ($224.8m) to the country’s GDP, an increase of 5% over 2014. Furthermore, the World Travel & Tourism Council (WTTC) forecast this contribution will rise by around 2.5% in 2016 and increase by an average of 7.5% per annum through to 2026 to reach around BN$710m ($505.2m), or 2.3% of GDP. The total contribution to GDP of the tourism industry was BN$1.62bn ($1.2bn), or 7.4% of GDP, in 2015.This is forecast to rise by 6.3% per year to BN$3.06bn ($2.2bn) by 2026, accounting for 10% of GDP.
According to the WTTC’s calculations, tourism in Brunei Darussalam supported 4500 jobs directly and 16,000 jobs indirectly in 2015, making up 8.2% of the country’s total employment. By 2026, the industry is expected to directly contribute 7000 jobs, equivalent to an increase of 4% per year over the period.
In 2015 visitor exports in the Sultanate – defined as in-country spending by international tourists for both business and leisure trips – totalled BN$677.5m ($482m), or 6.9% of total exports.
When compared to both global and Asia-Pacific averages, Brunei Darussalam is ranked relatively low by the WTTC for most measurements. In terms of tourism’s direct contribution to GDP, Brunei Darussalam ($200m) ranked lower than Laos ($600m), Myanmar ($1.7bn) and Cambodia ($2.4bn) in 2015, with a similar standing for total contribution to GDP, contribution to employment and visitor exports. However, it ranked marginally higher than these countries on one measurement – capital investment.
Performance
According to figures from the Tourist Development Department (TDD) and the Immigration Department, between 2007 and 2014 total international arrivals – by air, land and sea – to Brunei Darussalam achieved a compound annual growth rate of 8.6%. The highest percentage of arrivals (9.17%) crossed the border over land. Arrivals by cruise liner comprised the second-largest group, while 7.18% of arrivals came by sea. At 1.49%, the smallest group of international visitors arrived by air.
In 2014 Pehin Dato Haji Yahya Bakar, then-minister of tourism, told local media that Brunei Darussalam’s major source markets were ASEAN countries, which accounted for 54% of total arrivals. China, South Korea and Japan followed with 19% of arrivals, while Europeans made up 10% of arrivals, and Australia and New Zealand comprised 7% of arrivals. “Even though the performance has been quite decent in terms of the total number of arrivals and tourism growth, what we want to aim at is increased spending and tourist receipts that can have a substantive impact on the overall economy of the country,” the minister said.
Indeed, compared to other ASEAN countries, Brunei Darussalam experienced the lowest growth of tourist arrivals in 2013, ranking 72nd out of 140 economies in the tourism competitiveness index, according to statistics compiled by the ASEAN-Korea Centre.
Air Arrivals Spike
However, more recent figures show the number of visitors has risen, at least when it comes to arrivals by air. According to figures released by the TDD in February 2016, Brunei Darussalam recorded 218,213 foreign arrivals by air in 2015, an increase of 8.6% over the 200,989 seen in 2014.
The TDD found that five ASEAN countries accounted for 67% of international arrivals by air, equivalent to 146,202 visitors. At 26.6% of the total, arrivals from neighbouring Malaysia comprised Brunei Darussalam’s largest source of international arrivals by air in 2015, albeit down slightly from 27.3% in 2014. Arrivals from China placed second at 16.9% of the total, up from 13.3% in 2014.
It is worth noting, however, that the spike in arrivals from China – seen as a positive harbinger for Brunei Darussalam’s tourism sector – may have been associated with a boycott on travel to Sabah by Chinese tourists displeased by the Malaysian government’s response to the disappearance of Malaysian Airlines Flight 370. As such, analysts will be watching to see if this trend continues in the coming years.
The Philippines, meanwhile, made up 8.2% of international arrivals by air in 2015, down from 9.2% in 2014. Indonesia accounted for 7.9%, a marginal decrease from the 7.7% recorded in 2014, while Singapore comprised 7.4%, down from 8.2% in 2014.
With respect to the major source markets, the TDD found that the ASEAN market maintained its place as largest contributor, with 54% of arrivals by air, down on 56% in 2014. The Far East market followed at 21.8% – again, significantly higher than 17.9% in 2014.
Air arrivals from long-haul markets saw some year-on-year declines, with visitors from Europe and the Middle East accounting for 12.4% of the total, down from 13.4% in 2014. Arrivals by air from Australia and New Zealand, meanwhile, accounted for 5.3% of the 2015 total, down from 5.8% in 2014.
In terms of travellers’ purpose for visiting Brunei Darussalam, leisure and holiday accounted for 40.7% of arrivals by air in 2015, up from 39% in 2014. The meetings, incentives, conventions and exhibitions (MICE) segment made up 19.6% of air arrivals, down from 22.4% in 2014, while visits to friends and relatives accounted for 12.1%. Transiting travellers comprised 11% of air arrivals and government-related travel made up 3% of the total.
Accommodation & Occupancy
While the Sultanate’s stock of hotel rooms is not large, it is growing apace. In 2015, 74 tourist accommodation establishments operated in Brunei Darussalam, up from 69 in 2014, according to TDD figures. Brunei Darussalam’s 46 hotels ranged in quality from luxury resorts such as the Empire Hotel & Country Club to international chain hotels like Radisson, as well as business, budget and apart-hotels. The remaining 28 establishments opened in 2015 were guesthouses and homestays.
Occupancy rates in the country’s stock of hotel rooms have declined after reaching a peak of 60-70% in 2013, likely due to the ASEAN Summit being held in Bandar Seri Begawan that year. In 2014 hotels in the Sultanate experienced approximately 45% occupancy before dipping further to 35-40% in 2015, where it remained as of early 2016.
This lack of demand means hoteliers are wary about investing in adding more rooms or upgrading the ones they have. The TDD counted a total of 5297 hotel beds and 3680 guest rooms available in 2015 – a slight increase from 5107 beds and 3678 rooms in 2014. It reported an average occupancy rate of 37.9% in 2015, which was based on information from 33 accommodations, compared to a rate of 40.3% in 2014, with 13 accommodations reporting.
Plans & Sites
Although a relatively small territory, Brunei Darussalam has a wide and varied array of tourism products to offer. These include adventure tourism, golfing, ecotourism, historic Islamic sites, mosques and rural villages that maintain their unique cultural heritage to this day.
With some effort and promotion, the sector could also expand further into in the areas of MICE, health tourism, diving and bird-watching. The government is planning to leverage as many of these products as it can in its drive to diversify the economy.
“The tourism industry in Brunei Darussalam, although still new and in its early stage of development, has the potential to contribute to the diversification of the country’s economy,” Dato Ali Apong, minister of primary resources and tourism, told OBG. “At present, the estimated direct contribution of the tourism industry to the country’s total GDP, based on the tourism satellite account calculation, is only about 2%. This is quite a low contribution if we compare it to, for example, countries like Singapore and Malaysia, where the tourism contribution is about 11% and 16% of GDP, respectively.”
Focus Areas
To aid the economic diversification drive, the MPRT is in the process of prioritising the tourism products it intends to develop. “We will be focusing more on creating tourism-related activities, industries and businesses which can help generate income for the country and contribute to the growth of the country’s economy,” Dato Ali said.
The ministry’s main target will be to increase tourism receipts from the country’s international in-bound tourists via higher spending on hotels, travel agencies, airlines, transportation, tour operators, foods and any other activities related to tourism. “If we can capitalise on this, the tourism sector can be a significant contributor to the growth of the country’s economy,” Dato Ali told OBG.
Related to the effort to diversify the country’s economy through increased tourism receipts, the TDD Strategic Plan 2012-17 has identified two main focus areas: culture, heritage and Islamic tourism; and nature (see analysis). Within these focus areas, the key guiding principles for development are to have an economic impact, to be sustainable, to ‘fit with’ Brunei Darussalam, to have differentiated offerings and to be attractive to domestic tourists.
The scope for these principles includes taking into consideration the competitive nature of the industry, leveraging the best tourism packages and practices, identifying the issues and constraints hindering tourism development, aligning the strategic direction of the industry and coordinating the various programmes implemented, thereby making it possible to prioritise and choose which tourism-related opportunities to pursue on a national level.
Key Places Of Interest
“Our focus will primarily be on tourism product development and the efforts to upgrade and improve existing tourism packages currently being offered to tourists. In this regard, we have identified two categories of tourism products, namely the ‘primary’ and ‘emerging’ tourism products,” Dato Ali told OBG. “We have several places of interest in the country, which are ready and could be offered to tourists as primary tourism destinations or products. These include places of interests around the Bandar Seri Begawan and Kampong Ayer areas, showcasing the uniqueness of our rich culture and heritage; and Ulu Temburong, offering an unforgettable experience of the beauty, richness and diversity of our nature and environment – the pristine tropical rainforests and its natural habitats.”
According to the TDD’s strategic plan, more than half – or around 51% – of all tourists visited the Royal Regalia Museum in Bandar Seri Begawan in 2014. The museum houses the many offerings that have been made to Sultan Bolkiah by visiting heads of state. On display are gold, jewels, photos of the royal family and a hologram of Sultan Bolkiah.
The country’s second-most visited site, the Brunei Museum, drew 20% of visitors in 2014. Other leading attractions in the country include the Malay Technology Museum, the Kampong Ayer Cultural Tourism Gallery, the Oil and Gas Discovery Centre, and Ulu Temburong National Park.
Another popular destination was Brunei Darussalam’s largest lake, Tasek Merimbun, which is located in the Tutong District. The lake is surrounded by the 7800-ha park, which was designated as the 11th ASEAN Heritage Park in 1984.
In addition to the primary tourism products, according to Dato Ali, there are other emerging tourist attractions available around the country that need to be further reviewed before they can be upgraded to primary tourism products.
“These include tourism destinations that are currently being developed and promoted by the respective districts under the “One Village, One Product” (OVOP) initiative, such as the tourism products/ destinations in the Tutong and Belait Districts, as well as attractions offered by the beauty of our beaches, forest recreation parks and lakes in the country,” he said.
The Ministry of Home Affairs is conducting a pilot project to introduce tourism packages that will promote the OVOP initiative by packaging the products collectively with the aim of improving OVOP entrepreneurs’ productivity and profits. An example of this could be combining the marketing of a village’s food and handicraft products with the services offered by another village within that district. Such combining of products would also assist OVOP entrepreneurs in maintaining a steady income.
It is essential for such initiatives to be quality-checked to ensure that these tourism destinations and products meet customers’ expectation and satisfaction, and are therefore able to entice new and repeat visitors. The ministry intends to continually monitor, enhance and improve the attractiveness of these primary tourism attractions, paying attention to their cleanliness, accessibility, safety, security and consistency in both the quality and delivery of service.
Forging Partnerships
In his comments to OBG, Dato Ali also noted that the ministry plans to engage the full spectrum of the Sultanate’s tourism stakeholders, taking on board the views of tour operators, travel agents, tourism site providers/operators and relevant agencies, both in government and the private sector, to support and carry out the ministry’s initiatives. The ministry also intends to leverage ICT to promote the Sultanate’s tourism products. If carried out, these could prove to be significant moves.
Local tourism industry leaders are eager to be included in the government’s development schemes and plans for growth. According to local tourism sector operators, there is a need for greater transparency and coordination between the country’s private sector tourism stakeholders and the government institutions involved directly or indirectly in the industry – such as immigration, transportation and, of course, tourism – particularly in the marketing of Brunei Darussalam’s tourism products overseas.
Attracting foreign direct investment (FDI) to the sector is also on the cards. “We will also invite new investments, local and FDI, to be our partner in implementing the upgrading and improvement works of these places of interest, including investments in new accommodations and other tourism-related facilities and activities,” Dato Ali told OBG.
“The ministry is actively promoting Brunei Darussalam as a destination of choice for foreign investors by improving the business and investment environment, and recognising that FDI plays an important role in advancing the country’s socio-economic development by offering a range of incentives and advice to investors for potential areas in the development of tourism-related activities.”
Infrastructure
The BN$150m ($106.7m) modernisation of the Brunei International Airport Terminal, under way in 2015, could also contribute to tourism growth. The project aims to double passenger-handling capacity to 3m per year.
The renovations include a new concourse, departure satellite lounge, and arrival and departure hall, all with centralised security. A new Customs clearance area and baggage reclaim hall opened in February 2015, able to handle up to 1330 bags per hour, up 50% over the previous capacity.
Upon completion, the airport will have 40 check-in counters, up from 27 previously, as well as eight boarding gates, automatic luggage tracking and an expanded immigration area, local media reported.
The project, which is being managed by the Brunei Economic Development Board, aims to transform the terminal into a passenger and cargo gateway to Brunei Darussalam, and should be an asset for national carrier Royal Brunei Airlines, particularly as the ASEAN open skies policy is implemented.
In addition to the upgraded air terminal, the ongoing Temburong Bridge construction project is expected to facilitate access to the Sultanate’s Temburong District, which is separated from the rest of the Sultanate by the territory of Limbang in the Malaysian state of Sarawak. In his January 1 New Year’s Eve titah (royal speech), Sultan Bolkiah said the 30-km bridge project, which will connect the Brunei-Muara District to Temburong District, would provide greater convenience and potential for tourism upon completion.
Yet the transportation infrastructure and options tourists face once they leave the airport terminal is lacking. Brunei Darussalam’s capital, Bandar Seri Begawan, offers limited public transportation options, comprising a small city bus system and some water taxis. Regular taxis are both hard to come by and relatively expensive, and while many hotels operate shuttle buses to bridge the gap in transportation options, for independent tourists who want to explore the country’s more remote areas and rural villages, these are fairly limited. For most other types of travellers, joining a tour is one of the only other options to visit sites outside the capital.
The Two-Step Approach
As a result, local tour operators and travel agents are some of the busiest tourism professionals in the Sultanate. Sensing an opportunity to cater to growing demand, they have begun creating packages with a two-pronged approach to attract visitors, in which visits to Brunei Darussalam are added on to trips to Kota Kinabalu in neighbouring Sabah and Bali in nearby Indonesia.
This approach seems to be effective, according to local tourism operators, although some potential visitors – especially much-sought-after tourists from Chinese – have encountered visa processing problems and other delays when trying to obtain official permission to visit the Sultanate.
Outlook
The move to elevate the tourism sector to ministerial status, as well as increased visitors from China and the imminent opening up of the Temburong District should give tourism sector operators cause to celebrate. However, the absence of an effective voice for the private sector, a strong local currency, uneasiness about the effects of the expansion of sharia, a paucity of public transportation options and a tendency toward slow movement by the government in making changes are major challenges to be addressed if the industry is to grow further and realise its full potential.
Nonetheless, Brunei Darussalam has some distinct competitive advantages over other countries in the region in terms of tourism. The Sultanate’s Islamic heritage and indigenous culture – as well as its unspoiled natural attractions, safety and political stability – combine to make the country a desirable destination for certain segments of tourists. If the private sector and the government can join forces to focus on attracting these kinds of travellers, tourism in Brunei Darussalam could reach a level of GDP contribution that facilitates economic diversification.
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