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Diversification of Brunei Darussalam’s Economy: The Challenges and Opportunities

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  1. Diversification of Brunei Darussalam’s Economy:The Challenges and Opportunities Prepared by: Awang Haji Nairul Anawar bin Haji Abu Lahai Awang Haji Zakaria bin Haji Ahmad Pg. Abd Haris bin Pg. Haji Shabudin Lt. Col(U) Mohd. Sallehin bin Haji Mohd. Taib

  2. Why Need Economic Diversification? • To reduce dependency on oil and gas • To create more and more jobs • To create more resources of revenue

  3. Brunei began to adopt policy on economic diversification since early 1970 • Implementation of the Investment Incentive Act 1975 • Formation of the Ministry of Industry and Primary Resources 1st January 1989 • Formation of Brunei Darussalam Economic Council (BDEC)and the Formation of Brunei Darussalam Economic Development Board (BEDB) November 2001 • Government Linked Companies

  4. BEHAVIOUR OF GDP, OIL & NON OIL SECTORS (MILLIONS B$) AT CURRENT PRICE *Provisional

  5. CONTRIBUTION & GROWTH OF PRIVATE SECTOR AND FOREIGN LABOUR FORCE

  6. Achievement and performance of economic diversification • is not very encouraging so far. • According to the latest official figures, the oil and gas • industries accounts for 90% of the total exports, 88% of • government revenue and 40% of GDP. • Unemployment rate is increasing, currently 8,600 were • unemployed (10.98%). The rate was only 3.6% in 1981 • and 7% in 1992. • Current population 340,800 and more than 101,900 is • under 14. • Current estimates are that oil will last around 15 years at • current production level and gas a further 30.

  7. Our group had looked into the performance of the • various sectors : • fishing industry • tourism industry • the industry under Brunei Industrial • Development Authority (BINA) • Direction towards privatization

  8. Fishing Industry • There are three important areas in fishing industry. • Marine • Aquaculture • Food processing • Brunei fisheries potentials are estimated to be worth • at least B$200 million a year since the last few years. • However, every year the industry has not generated • even 50% of the estimated value.

  9. ECONOMIC ACTIVITY BY SECTORS (MILLIONS B$) AT CURRENT PRICE *Provisional

  10. There are several hindrances that cause to the failure in meeting the production target. A. Delayed of fishery development programmes which were caused by the following:- I. Prioritizing conflicts on the development programmes with other government agencies as for location is concerned. II. Rigid rules in using the budget allocated and not responding well to the current requirement and development. III.Conflicts in prioritizing the development programmes by the developer such as the Public Work Department.

  11. B. Lack of ability and commitment of private sectors in improving the production because of the following:- I. Lack of expertise in terms of technical, management, financial of the local entrepreneurs to implement the projects within the time frames. II. Lacking experience and expertise in marketing the fish products.

  12. C. Investment and participation in the industry is very low. It’s arises because of:- I. The negative view towards fishing industry with the perception of high risks. Therefore, less interest and investment of local financial institute. II. Lack of participation and coordination given by other government agencies such as the licensing, permit and so forth.

  13. D. Highly competitive from new and emerging economies such as China, which produces a huge amount of fish and prawn. Obviously it gives stiff competitiveness:- I. In terms of prices. II. In terms of markets.

  14. ARRIVALS BY PURPOSE OF ENTRY TO BRUNEI FROM 1988-2000 Source : Immigration and National Registration Department, Ministry of Home Affairs Note : (1) Including intending resident

  15. ECONOMIC ACTIVITY BY SECTORS (MILLIONS B$) AT CURRENT PRICE *Provisional

  16. Tourism Industry The problem frequently encountered in development of tourism industry are : I. Uncoordinated effort in the implementation of tourism and hospitality. II. Lack of places of interest including public facilities. III. Ineffective promotion. IV. Lack of activities for tourists in the country, and V. Stiff competition from the neighboring countries.

  17. NUMBER OF NEW COMPANIES ALLOCATED AT THE INDUSTRIAL SITES IN BRUNEI FROM 1989-2004

  18. STATUS OF PROJECTS ALLOCATION AT THE INDUSTRIAL SITES IN BRUNEI BY 2004

  19. EMPLOYMENT OPPORTUNITIES (INTENDED) AT THE INDUSTRIAL SITES IN BRUNEI FROM 1989-2004

  20. TOTAL EXPORTS OF BRUNEI’S GARMENTS INDUSTRY FROM 1989-2003

  21. The Industry under BINA • The problem encountered in developing the industry • under BINA. • Small local market • Lack capability of entrepreneurs to be competitive in the • international markets. • High operation cost • Unattractive policy (e.g: Land policy)

  22. The Direction towards Privatization • The problem encountered to privatization: • slowness in decision making • slowness in implementing projects

  23. In general to speed up the economic diversification the • Government has to play a vital role as follows: • I. Provide the necessary physical infrastructure • II. Formulate a policy to facilitate and create a conducive • business such as tax, land policy and so forth. • III. Change the mindsets, attitudes, perception, knowledge • and skills of the individual stakeholders either the • public sectors, private sectors and the community on the • importance and urgency of economic diversification. • Such for example in the administrative efficiency viz • faster in decision making, faster in implementation of • infrastructural projects and so forth.

  24. IV. All the ministries and department should coordinate the activities to ensure more efficient and effective implementation of the economic diversification policy. V. Focus and align any viable sector which Brunei got the competitive advantage. VI. Brunei has got to be proactive and react very fast to the international changes. VII. Able to compete regionally and internationally.

  25. BEDB to develop Pulau Muara Besar into • a Global Mega Port and Sungai Liang • Industrial Park. • This is in line with the objective of BEDB • to create 6,000 new permanent jobs and • attract US$4.5 billion in investments by • 2008.

  26. What is our opportunities? • What will happen to us if Brunei cannot • diversify its economy ‘successfully’ the • next 15 years?