One of the most crucial components of Brunei Darussalam’s plan to transform itself into a knowledge-based economy by 2035 is the development of a modern ICT sector, utilising cutting-edge technology and practices to drive domestic growth. The sector has been singled out as a priority in the country’s long-term strategic development plan, Wawasan Brunei 2035, which has set an ambitious target of 5-6% contribution to national GDP by 2015, compared to an estimated 2% in 2013.
As one of the key catalysts for sustainable socioeconomic development, the ICT sector remains a focal point for public and private investment. In the 9th National Development Plan for 2007-12, the transport and communications sector was allocated 11.2% of all expenditures, or BN$1.07bn ($839.63m). The sector was further supplemented by other outlays, including BN$116.52m ($91.43m) for telecoms, or 1.2% of the total, and BN$1.15bn ($902.41m), or 12.1%, for ICT projects. This trend continued in the 2014/15 national budget, under which transport and communications received the third-largest allocation of BN$226.6m ($177.81m), or 19.7% of total planned expenditures.
Although the fledgling industry is starting from a relatively small base with a limited domestic market, Brunei Darussalam does possess a number of attributes that support high-tech business growth. On a macro scale it is economically and politically stable and faces relatively little risk from natural disasters compared to its neighbours situated along the Pacific Ring of Fire. In addition, the country has ample international connectivity via subsea cables, and efforts are well under way to provide nearly universal fibre-optic connectivity across the country, as well as roll out 4G mobile broadband service starting in 2013 (see analysis).
The Sultanate’s telecoms regulatory authority has made strides over the past decade to create a more independent oversight body and enhance competition and consumer protection. A major milestone in this process was the separation of regulatory and service provider responsibilities in 2006, when the Department of Telecommunications split from the Ministry of Communications to take on its current corporate standing as Telekom Brunei (TelBru). With TelBru focused on service provider operations, the responsibility of monitoring, regulating, licensing, managing competition, maintaining the national radio-frequency spectrum and developing the ICT industry as a whole was transferred to the Authority for Info-communications Technology Industry of Brunei Darussalam (AITI).
A key regulatory issue AITI is addressing is that of Brunei Darussalam’s relatively high telecoms tariffs, for which the authority was drawing up a new regulatory framework as of 2014. In conjunction with this, AITI is also looking at ways to ensure competition and open access to the country’s fibre-optic network, which is operated solely by TelBru. Both of these issues are supported by the Consumer Protection (Fair Trading) Order 2011, which came into effect in 2012, and aims to protect consumers against unfair practices by suppliers.
State-owned telecoms firm TelBru is the sole operator of in-the-ground communications infrastructure, offering both internet and telephony services. As in most countries, the rise of the mobile phone industry over the past two decades has had a substantial dampening effect on fixed-line telephone use, and Brunei Darussalam is no different in that regard. Since achieving a high of 80,176 subscribers, representing a 22% penetration rate in 2006, fixed-line usage has declined every year since, according to AITI data. This trend has become especially pronounced over the past three years as the number of users dropped by nearly a third from 79,839 in 2011 to 56,715 by 2013. As a result, the national fixed-line penetration rate fell from 20.3% to 14.18% over the same time period.
Driven by strong government support and growing demand from a young and increasingly affluent population, fixed-line internet service has proven more resilient. With mobile broadband only introduced in the country in 2008, fixed-line access was initially the only option for internet users and registered strong growth up to 2010, when it reached an all-time high of 26,714 subscribers (also marking the last time fixed internet connections outnumbered mobile broadband). Broadband connections accounted for the lion’s share of these at 21,699, more than double the 10,461 registered in 2006, while dial-up connections tailed off from 8643 in 2006 to 5015 by 2010.
Although dial-up connections continue to dwindle, registering just 1644 in 2013, broadband connections witnessed a dramatic resurgence starting in 2013, with the number of subscribers jumping to 23,841, up from 17,768 in 2012. Much of this recent surge is attributed to the roll-out of TelBru’s fibre-to-the-home programme, which was initiated in late 2013 and will continue through to 2017 (see analysis).
Coverage is also fairly widespread in the Sultanate, even outside major population centres. Of the country’s 177 kampongs, or villages, 175 are covered by hardwired telephony services and 169 have access to the fixed broadband network. The two areas that are not covered by fixed-line telephony are the sparsely populated islands of Pulau Sibungur and Kg Pulau Baru-Baru.
Of equal importance in the countrywide expansion of fibre optics are the Sultanate’s international connections with the rest of the world via undersea cables managed by Brunei International Gateway (BIG). The country is currently served via two older connections along with the new high-speed South-east Asia-Japan Cable (SJC), which was inaugurated in June of 2013.
The $400m SJC cable system consists of six fibre pairs utilising 40G SLTE and optical add-drop multiplex branching technologies, with an initial design capacity of 28 Tbps, the fastest speed undersea cabling can currently handle. Landing stations for the 8900-km SJC system – which could further extend to 9700 km with the inclusion of a Thailand spur – connect Telisiai, Brunei Darussalam with Chikura in Japan, Shantou in China, Chung Hom Kok in Hong Kong, Nasugbu in the Philippines and Tuas in Singapore.
This new project dwarfs the capability of existing links, the most recent of which was commissioned in 2009 in the form of the 20,000-km, high-bandwidth Asian-America Gateway connecting it to Malaysia, Singapore, Thailand, Vietnam, Hong Kong, Guam and the US, with a capacity of 1.92 Tbps. The third and original cable, the SEA-ME-WE 3, connecting the Sultanate with other networks at 39 international landing points in South-east Asia, Africa, the Middle East and Western Europe, is of a more antiquated design and tops out at a speed of 655 Mbps across its 39,000 km. Excess capacity is leased out by BIG to other regional telecoms operators, providing another revenue stream with which to recoup costs for infrastructure upgrades.
In addition to the new SJC cable, the Sultanate’s regional interconnectivity could be further bolstered by the proposed Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA) submarine fibre-optic cable. The $150m BIMP-EAGA Rink project would add further capacity and redundancy of connectivity to the telecoms sector as outlined in the BIMP-EAGA Implementation Blueprint 2012-16. A feasibility study for the project was completed in 2013.
Brunei Darussalam’s mobile market consists of two service operators: DST, which has dominated the market since its inception in 1995, and Progresif Cellular, which acquired TelBru offshoot B-Mobile in July 2014. While DST is well placed with a market share estimated at between 75% and 85% and offered the country’s first 4G service in 2013, Progresif Cellular is looking to reinvent itself after purchasing the B-Mobile brand. The company’s low market share and recent history of service interruptions created a substantial cash flow problem for B-Mobile over the years, leading in turn to conflict between the mobile operator and its parent company, TelBru, which culminated in a case heard by the Supreme Court when TelBru filed a petition to shut down its loss-making subsidiary in 2013. In the end B-Mobile continued operations even through its sale to Progresif Cellular (a wholly owned subsidiary of Darussalam Assets), the latter of which has yet to make any major announcements regarding its future ambitions apart from naming a new CEO in July 2014. Overall the country has a well-established mobile market with a penetration rate of 115.41% as of 2013, with a total of 468,814 subscribers (369,694 prepaid and 72,120 post-paid), according to AITI data. This reflects strong growth in the market in recent years, as well as an expansion in the number of mobile users of more than one-third since 2006, when subscribers totalled 301,322 and the penetration rate was 82.67%.
Although the government has done an impressive job of laying down modern infrastructure and providing incentives for IT start-ups, one of the primary hurdles that remains is attracting and retaining enough qualified workers in the private sector. One of the ways this problem is being addressed is through subsidised ICT training courses administered by the AITI. In operation since 2010, the ICT Competency programme offers IC3 courses – a globally recognised certificate of basic computer proficiency – to train local citizens in relevant ICT skills and knowledge with the objective of ensuring that all job seekers have basic IT literacy, as well as upgrading the qualifications of employees of small and medium-sized enterprises (SMEs) with professional ICT certifications.
In the long run the government is seeking to introduce modern technology and skills to students at an early age, as well as instil important values such as innovation and leadership through a complete overhaul of the school system. Under the e-Hijrah and National Education System for the 21st Century (SPN21) programmes being rolled out in schools across the country, students and teachers will have access to digitised classrooms, monitoring systems, centralised data, customised electronic content and advanced teaching methods all designed to supply graduates with the technical skills necessary to compete in an increasingly high-tech global market (see Education chapter).
Cultivating Local Talent
With a robust communications infrastructure and revamped education system now in place, the government is turning its focus towards nurturing private IT start-ups through a mixture of business incubators, education and training programmes, and funding incentives. Although the majority of the country’s few hundred registered ICT companies are hardware suppliers and installers, the number of content providers, application builders and website designers is on the rise. “ICT products developed by Bruneians should ideally be implemented and endorsed in the home market to a greater extent before we begin to push these local entrepreneurs to export their products abroad,” Louis CT Lim, the managing director of local technology firm ITIS Wescot, told OBG.
Much of the recent interest in the sector is due to the three-phased development Anggerek Desa Technology Park (ADTP). Carried out by the Brunei Economic Development Board (BEDB), the project’s first phase was to construct the country’s first incubation facility, known as the iCentre, launched in 2008. The iCentre is managed by KR Consulting, a business unit of the National University of Singapore, and is equipped with fully wired plug-and-play incubation spaces, which can accommodate 16 full-time and five virtual companies at once, as well as facilities such as meeting rooms, conference rooms, an auditorium, a prayer room and cafeteria. In addition to providing a place to set up shop, the iCentre also offers access to professional mentorship and facilitates contact between potential partners and clients both locally and internationally.
Two years after the launch of the iCentre, the adjacent phase two, the Knowledge Hub, was completed in 2010. The seven-storey building was engineered and built using green technology and operates as a technology-based research and development (R&D) centre. The various projects housed in the Knowledge Hub include TelBru’s ICT Leadership and Management Academy, the Microsoft Experience Centre operated by Tech One Global and Microsoft, the Climate Modelling Research Centre run by Universiti Brunei Darussalam and IBM, and the Ministry of Defence’s National Modelling and Simulation Centre.
Phase three of the technology park focuses on the monetisation of the ICT sector for local SMEs and foreign businesses, particularly in the areas of creative and multimedia companies and other high-tech, high-growth clusters. Like the Knowledge Hub, the new building will serve as a centre for the facilitation and promotion of R&D and other knowledge-based activities, with an emphasis on climate, simulation and defence modelling, animation and visual effects, health care, food security and material science. Construction of the new eight-story building, which also employed energy-efficient green technology, began across the street from the iCentre and Knowledge Hub in June 2013 and is expected to be completed by the end of 2014.
In addition to the ADTP, the government has also been active in facilitating access to funding for new start-ups in the form of grants or venture capital – as banks have so far been reticent to lend to new tech companies in the Sultanate. Some of these financing avenues include: the Local Enterprise Applications and Products Programme, which awards qualified SMEs, students and researchers grants of up to BN$150,000 ($117,705) to develop concepts or pilot projects; investment from the Singapore-based Accel-X Venture Capital Fund in which the BEDB invested BN$5bn ($2.42bn) in 2009 in order to support the development and expansion of promising local high-tech companies beyond the country; and the online business facilitation and marketing portal Buy Brunei Portal. The AITI is also directly involved through its grant scheme, established in 2010, which provides funding of up to BN$250,000 ($196,175) to local production houses that turn out creative content such as animation, e-learning and other digital media.
As of early 2014 more than 30 companies had graduated from the iCentre, ranging in scope from creators of mobile phone content to barcode and radio-frequency identification applications for software and public portal development.
With the rise in mobile phone usage and the roll-out of 4G high-speed mobile connections, smartphone application developers have also experienced success in local markets. Some of the most popular homegrown apps include Best of Halal and Discovering Brunei, both created by local start-up MeSixty, and anonymous chat platform Chrends. Infindo Technology is another local success story, having created dozens of mobile apps over the years, including its flagship Polygon App, and in 2014 it announced plans to move into the Chinese market. Another current iCentre incubatee, Crescent, has also developed a successful interactive online education programme that specialises in Islamic business and banking courses endorsed by the Institute of Financial Accountants in London.
Looking to the future, the sizeable investment by the government in modernising its health and education systems could also lead to more profitable spin-off ventures. One potential candidate for commercialisation could be the Media In-Service Centre (MiSC), which is overseen by the Ministry of Education (MoE). Created in 2013, the MiSC works in conjunction with both the government and international private companies to foster an environment of innovation while also providing MoE officers with training in designing effective digital materials and carrying out digital learning design, development and management technology.
Strong investment in Brunei Darussalam’s mobile and fixed telecoms infrastructure is providing a durable, capable and efficient backbone that will serve as a solid foundation to build upon for future public and private ICT growth opportunities. Apart from entertainment applications, much of the current demand for ICT services in the country is driven by the state through its ambitious e-government initiatives and the development of more efficient fixed infrastructure. Private sector participation should pick up in the ensuing years as the technology becomes more widely accepted and utilised, and the expansion of homegrown ICT start-ups should provide an additional push through the creation of more locally relevant content. These trends will likely further accelerate as the next generation of Bruneian students is educated within the SPN21 systems and thus exposed to new technology and advanced teaching methods at an earlier age.
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