The Report: Brunei Darussalam 2013
As ASEAN chair in 2013, Brunei Darussalam has a regional agenda to push forward alongside its domestic plans for the year. Chief among its local priorities is developing alternative resources streams in its economy, which has long been driven by its oil and natural gas revenues. As reserves run down, further exploration is being undertaken to bulk up resources, while at the same time the state is looking to downstream activities and other industries, including production of halal products and ICT, to broaden its economic base. This diversification should help with Sultanate compete in a more open ASEAN market, set to be launched in 2015, a goal its chairmanship of the bloc will help to advance.
Country Profile
Lodged between the Malaysian states of Sabah and Sarawak, Brunei Darussalam is located on the north-west coast of Borneo, in the South China Sea. The Sultanate has a young population, with around 54% of Bruneians under the age of 30. The country also has one of the highest per capita GDPs in the region, hitting just over $48,000. This ranks Brunei Darussalam second only to Singapore within the 10-nation ASEAN bloc. The main language is Malay, although English is widely spoken and is the principle language of business. Much of the nation’s revenue comes from oil and natural gas, but other resources include timber and aquaculture. Free health care and education are testaments to the government’s dedication to the populace’s wellbeing. However, to sustain this success, the government has realised the need to increase value-added, downstream services within the oil and gas industry while developing industries outside the energy sector. This chapter contains interviews with His Majesty Sultan Haji Hassanal Bolkiah, Sultan and Yang Di-Pertuan of Brunei Darussalam; HRH Prince Mohamed Bolkiah, Minister of Foreign Affairs and Trade; Pehin Dato Lim Jock Seng, Second Minister of Foreign Affairs and Trade; and Kim Sung-Hwan, Korean Minister of Foreign Affairs ad Trade, as well as a viewpoint from Lee Hsien Loong, Prime Minister of Singapore.
Explore chapterEconomy
Buoyed by hydrocarbon revenues, Brunei Darussalam’s economy has continued to grow, enabling a new push to greater diversification and creating job opportunities for locals. The government maintains strong fiscal and current account surpluses and is showing an appetite to direct this toward future growth and diversification. Indeed, with oil and gas making up more than two-thirds of the economy, the government is well aware of the dangers of overdependence on these commodities. As such, the plans are in place to diversify the economy, particularly in downstream industries, and bolster a private sector capable of generating jobs for Bruneians. Moving downstream into value-added segments and creating new industries and local SMEs should help balance the future economy. This chapter contains interviews with Cham Prasidh, Cambodian Senior Minister and Minister of Commerce; Dato Ali Apong, Deputy Minister, Prime Minister’s Office, and Chairman of Brunei Economic Board; and John Baird, Canadian Minister of Foreign Affairs.
Explore chapterEnergy
Dominated by hydrocarbons, the energy sector in Brunei Darussalam has seen production begin to falter in the past five years and, therefore, is now awaiting the results of exploration and development programmes being carried out by international oil companies. There remains a high degree of optimism that these efforts will bear fruit, with the government setting ambitious production targets over the next two decades. In the interim, the government faces the threat of revenue erosion from its biggest source of income. However, despite this pause, there continues to be significant activity in the energy industry. In many respects, the sector remains outward facing; the country leans heavily on hydrocarbons for export revenue. As such, the government is pushing hard to maximise output, a strategy that involves bolstering production from existing fields and ramping up the search for new ones. This chapter contains interviews with Pehin Dato Yasmin Umar, Minister of Energy; Dato Matsatejo Sokiaw, Managing Director and CEO, Brunei National Petroleum Company; and Qui Jianlin, Chairman, Zhejiang Hengyi Group, as well as and a dialogue with Yves Grosjean, General Manager, Total E&P Deep and Offshore Borneo; and Ken Marnoch, Managing Director, Brunei Shell Petroleum.
Explore chapterBanking
The banking sector has performed well historically, with a 70% increase in assets over 12 years. From 2007 to June 2012 total commercial banking assets in the Sultanate grew 30.5% to BN$20.1bn ($15.7bn). The sector is currently facing a period of re-adjustment, absorbing the implications of a more mature regulatory environment and looking at ways to support the government’s development plans. In a moderately sized market with limitations on the opportunities to boost loan growth in place, the challenges for commercial banks remain substantial. Nonetheless, most of the players remain bullish, devising new strategies and products to capture a greater share of the retail and corporate segments of the market. This chapter contains interviews with Dato Haji Mohs Rosli, Managing Director, Autoriti Monetari Brunei Darussalam; and Pierre Imhof, CEO, Baiduri Bank.
Explore chapterIslamic Financial Services
Islamic services have long been a part of the financial mix within Brunei Darussalam. For the past two decades, Islamic banking, takaful (sharia-compliant insurance) and Islamic capital market products have been taking root and growing. These services now compete strongly against their conventional counterparts and continue to capture market share. With the government promoting sharia-compliant products and hoping to position the country as a regional centre for Islamic financial services, it seems that conventional banking and insurance products might find themselves in the minority within the Sultanate in the not too distant future. This chapter contains an interview with Javed Ahmad, Managing Director, Bank Islam Brunei Darussalam.
Explore chapterInsurance
The 2006 Insurance Order and Insurance Regulations began a process of sector consolidation by implementing new requirements, such as a higher paid-up capital of $6.2m, up from $778,800. The government’s concerted efforts to reduce overall levels of personal debt in the Sultanate are expected to help the insurance sector grow and develop. Fronting business makes up a large part of activity in the local insurance segment, especially for the major international oil companies operating in the Sultanate. Although growth within the sector is unlikely to be spectacular in the coming years, with prudent management, insurance firms in the country can expect a healthy profit. This chapter contains an interview with Helen Yeo, Chairperson, General Insurance Association of Brunei Darussalam.
Explore chapterICT
The government has set a goal of raising ICT’s contribution to the economy from 1.6% of GDP in 2010 to 6% by 2015. Brunei Darussalam has certain demographic advantages, including high literacy and relatively strong per capita consumption of electronic goods, which make this a realistic goal. However, the ICT sector is still quite small and additional work is required to provide better access to reliable, high-speed internet connectivity. The country will also need an increase in the number of young professionals armed with the training and experience necessary to boost the private sector. Individual ICT usage is high, reflecting locals’ love for mobile devices, but more innovation will be required to make ICT one of the economy’s foremost sectors. This chapter contains interviews with Haji Sairul Rhymin CA Mohamed, Chief Operations Officer, Telekom Brunei, and a viewpoint from Haji Yahkup, CEO, Authority for the Info-Communications Technology Industry.
Explore chapterTransport
Despite having sufficient capacity at its Muara Port, Brunei Darussalam has carried out several upgrades and built three inland container depots that offer improved Customs processing and better refrigeration. While Brunei Darussalam’s infrastructure is modern, it is comparatively basic. The country’s ambition to serve as a centre for regional trade, however, is now motivating a number of investments and long-term strategic planning. Carefully planned investments can serve to make Brunei Darussalam’s transport sector, if not the catalyst of economic transformation, at least an enabling factor. This chapter contains interviews with Dato Abdullah Bakar, Minister of Communications; Pengiran Zain, Acting Director of Ports; and Dermot Mannion
Explore chapterASEAN
ASEAN is set to declare itself a common market at the end of 2015, in a move that will create new opportunities for investors in a region the boasts not only some of the world’s fastest-growing economies, but also an expanding middle class. Current estimates for the combines GDP of ASEAN nations have been put at around $2.3trn, with this figure set to rise to $10trn by 2030. Economic growth in the region over the past 10 years has progressed at about 7.5% per year. With Brunei Darussalam taking on the ASEAN chair in 2013 at a crucial moment for the 10-member organisation, the country with a population just a fraction of the size of most of the region’s capitals will need to marshal all of its skills in diplomacy and negotiation to ensure that member states advance further down the road to economic integration.
Explore chapterConstruction & Real Estate
Several years of strong investment, mainly driven by government initiatives to improve infrastructure and address a housing shortage, have boosted Brunei Darussalam’s construction industry. Major on-going projects include upgrades to the Brunei International Airport, as well as the construction of the Brunei Cancer Centre, the Prime Minister’s Office and several key roads and bridges. It is also likely that demand for the construction of homes, schools and hospitals that cater to the Sultanate’s growing population will remain strong in the years to come. If the Sultanate’s economic diversification project succeeds in attracting investments to the country, Brunei Darussalam will need modern and efficient policies and regulators oversee the development of its built environment. This chapter contains an interview with Marcelino Ugarte, General Manager, Heidelberg Cement Asia.
Explore chapterIndustry
With ample energy resources, Brunei Darussalam is working to build a stronger industrial base using its access to cheap power and petroleum products. Downstream industries have already seen significant successes, and efforts are also being made in unrelated sectors, specifically in halal products, where the Sultanate has resources and expertise. High-tech industries are also attracting significant attention. Moves to address skills gaps and support innovation are also playing their part in expanding industry. Industrial diversification is now delivering improved economic productivity and the realisation of national growth objectives. While petrochemicals remains the top industrial segment to date, the coming years should see a growth in investment and output from sectors considered nascent today. This chapter contains an interview with Edward Ko, General Manager, Viva Pharmaceutical Brunei.
Explore chapterTourism
With a near-pristine environmental record and more than 70% of its territory covered by tropical rainforest, Brunei Darussalam has strong potential to capture a sizeable share of the growing Asian ecotourism and family holiday market. The country is host to an abundance of natural attractions, from rainforests to beaches, rare wildlife to the legacy of tribal cultures, and a rich vein of Islamic history. Despite these strengths, the industry remains relatively small as a share of the Sultanate’s overall economy. There is recognition by the government and various stakeholders that the current tourism model is unlikely to contribute much towards economic growth, and efforts moving forward will focus in particular on high-end and low-volume tourism with a minimum impact on the Sultanate’s environment and local culture. This chapter contains an interview with Mariani Haji Sabtu, Acting Director, Tourism Development Department.
Explore chapterHealth & Education
Brunei Darussalam’s universal health care system has helped it meet most of the health care targets set out in the UN Millennium Development Goals by the World Health Organisation. The country has the second-highest life expectancy rate among ASEAN countries. Non-communicable diseases like cancer are now the biggest concerns and, as the price of health care rises, the Sultanate is in the process of balancing the rising cost of care provision while maintaining the quality of its services. Moves toward extending its activities to pharmaceuticals production and health tourism in tertiary cardiac care, cancer and rehabilitation facilities bode well for the sector. One of the key objectives of Brunei Darussalam’s vision for development, Wawasan Brunei 2035, is for its people to be educated and highly skilled. The system is designed to meet the challenges of an ever-changing, competitive and knowledge-based global economy, as well as encouraging lifelong learning and achievement in sport and the arts. This chapter contains interviews with David Willetts, UK Minister for Universities and Science; and Pehin Dato Abu Bakar Apong, Minister of Education.
Explore chapterAgriculture
Growing global food insecurity has turned Brunei Darussalam’s attention back toward its farms. The government has set a goal of 60% self-sufficiency by 2015, though it is unlikely this will be achieved in that time. Self-sufficiency in rice, fruits and vegetables stood at 4.4%, 15.4% and 62.8%, respectively, in 2011. The government has planned to expand rice cultivation to some 5000 ha, but will need to attract more foreign firms and foreign direct investment to do so. In land-based activities, restricted capacities and outdated practices have blunted the effectiveness of reform initiatives, and meeting these challenges will continue to define the sector for now. However, the partnerships that have been developed with foreign firms and organisations will deliver the desired re-engineering of sector outputs in the long term. This chapter contains an interview with Richard Chuang, Managing Director, Golden Corporation, and General Manager, Semaun Marine Resources.
Explore chapterLegal Framework
There are two parallel systems of law operating in Brunei Darussalam: English common law and sharia law. This chapter contains information helpful for navigating the Sultanate’s legal climate, particularly in the context of business. It also includes a legal framework viewpoint from Colin Ong, Managing Partner, Dr Colin Ong Legal Services, and President, Arbitration Association of Brunei Darussalam.
Explore chapterTax
This chapter contains updates on the Brunei Darussalam tax system, offering need-to-know information for doing business in the Sultanate. It also contains a tax viewpoint from Pengiran Moksin, President, Brunei Darussalam Institute of Certified Public Accounts, and Partner, Deloitte.
Explore chapterThe Guide
This chapter contains useful information for Brunei Darussalam’s visitors, including hotel listings and contact information for emergency facilities, ministries, missions, banks, airlines, and taxi services, which can assist in making a stay in Brunei Darussalam safe and smooth. The chapter’s Facts for Visitors section offers insight into communications, dress, business culture, language, communications, currency, and obtaining a visa. Finally, the Eye on Conservation offers a nature guide, with particular focus on understanding and protecting the local environment that offers intriguing biodiversity to Brunei Darussalam’s visitors.
Explore chapterTable of Contents
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