Strategy for Sustainable Growth

Sustainable growth for Brunei Darussalam as elaborated earlier requires an integrated strategy which:

o        strengthens government finances

o        strengthens the private sector

o        strengthens the foundations for growth

BDEC recommends careful study and detailed expert advice in further  developing  this  strategy.  Nevertheless, implementation should commence within one year although completion of it may need to be phased over several years.

The outline of the tasks involved in creating sustainable growth is as follows:

Strengthening government finances

Strengthening government finances involves the following related challenges:-

·         controlling government expenditure through clear prioritization and eliminate wastage.

·         reducing the size of the public sector through privatization.

·         broadening and strengthening the government's revenue base through broadening the tax base, gradual  removal  of  subsidies  as  well  as corporatization and privatization.

·         developing mechanisms to meet temporary liquidity shortfalls such as the issue of government  bonds and other financial instruments.

Strengthening the private sector

Strengthening the private sector involves the following related challenges:-­

·         expanding the size of the private sector through privatization and foreign investment.

·         encouraging local and foreign investment through reducing and simplifying government policies and procedures which have a bearing on private enterprise.

·         developing local SMEs through easier access to financing.

·         Encouraging investment in Brunei Darussalam by reviewing and revising restrictions on the ownership and development of land and its use as collateral to raise financing.

·         facilitating private sector liquidity through ensuring prompt government payments.

·         expanding and enhancing the competitiveness of the oil and gas industry.

·         promoting economic diversification through the provision of incentives and first class infrastructure.

Establishing the foundations for sustainable growth

Establishing the foundations for sustainable growth involves the following related challenges:

·         modernizing  Brunei  Darussalam's  legal  and regulatory framework.

·         enhancing human resource development and deployment.

·         launching a concerted drive to enhance productivity within the public and private sectors.

·         establishing a first class communications and information technology infrastructure through public and private sector investment.

BDEC recommends the following measures for which implementation should commence within the next twelve (12) months:- Page Index

1.      Streamline government expenditures

2.      Expand and stabilize government revenues

3.      Launch privatization plan

4.      Launch investment promotion drive

5.      Create wider participation in Brunei Darussalam's economy

6.      Expand and improve competitiveness in the oil and gas industry

7.      Enhance the capabilities of local Small and Medium sized Enterprises (SMEs)

8.      Strengthen and modernize institutions

9.      Launch national productivity improvement drive

10.  Enhance human resource development and deployment

11.  Preparation of a Brunei Darussalam's Economic Blue Print

1.     Streamline government expenditures

·         Establish clear priorities in government expenditure and a budgeting system based on national rather than ministerial priorities. BDEC advises against indiscriminate budget cuts to address the budget deficit at the expense of longer term growth prospects.

·         Give priority to infrastructure development especially in the area of communications and information technology and the promotion of local SMEs.

·         Establish a Commission to review government expenditure with a view to streamlining the public sector and reducing wastage. The Commission should review international benchmarks to ensure an appropriate balance between recurrent and development expenditure and an appropriate level of expenditure against national income.

Back to Top

2.     Expand and stabilize the government’s revenue stream

·         Institute a comprehensive review of the tax system in Brunei Darussalam to expand the tax base. Such a review should take into account the need for a tax regime which does not discourage investment.

·         Undertake privatization of select government functions as a means of reducing the government's financial burden and strengthening government revenue.

·         Identify and gradually remove all direct and indirect subsidies.

·         Develop government bonds to improve government liquidity, develop the domestic capital market and expertise.

·         Explore the use of financial instruments to redress temporary shortfalls in revenue and liquidity arising from fluctuations in oil prices.

Back to Top

3.     Launch privatization plan

·         Complete master-plan for corporatization and privatization using expert advice to ensure that the corporatization and privatization process is in line with international best practices.

·         Identify one major candidate for corporatization and/or privatization within 12 months and commence with immediate implementation.

·         Establish regulatory and other safeguards for a transparent process and competitive market driven outcomes.

·         Contract out non-core services within government to the private sector - particularly local SMEs.

Back to Top

4.     Launch investment promotion drive

·         Establish an effective Investment Promotion Board in line with international best practices.

·         Revise the Investment Incentive Act (Cap 75), related regulations and implementation mechanisms.

·         Expand the coverage of bilateral double taxation treaties especially with countries in the region and major economies.

·         Review and where necessary remove restrictive regulations to create a more business friendly environment and build a more business friendly culture within the government.

·         Introduce greater scope for property ownership by corporations to encourage investment in Brunei Darussalam.

Back to Top

5.     Create wider participation in Brunei Darussalam's economy

·         Undertake a comprehensive study on setting up a local stock exchange to allow wider equity ownership of local companies.

·         Set up investment funds for greater participation in economic development projects - including stock ownership plans for privatized and corporatized projects.

·         Create investment opportunities for local and foreign investors through privatization.

·         Introduce greater scope for investment in Brunei Darussalam by reviewing the restrictions on the ownership of property by permanent residents.

·         Devise and implement a comprehensive program for developing local businesses drawing from the successful experience of Brunei Shell Companies in this area.

Back to Top

6.     Expand and improve competitiveness in oil and gas industry

·         Maximize production within the limits permitted by Brunei Darussalam's flexible Oil Conservation Policy.

·         Invest in the expansion of Liquefied Natural Gas (LNG) production.

·         Level the competitive playing field by reviewing access to existing oil and gas infrastructure.

·         Improve efficiency in exploration by improving access to available seismic and exploration data on open and relinquished areas.

·         Improve incentives promote the development of areas straddling different operators/concessions.

·         Establish a national oil company in accordance to strict guidelines in performance standards and corporate governance as a vehicle for oil and gas related ventures.

·         Explore oil and gas related opportunities in Brunei Darussalam and abroad through based on prudent financial assessment and Brunei Darussalam's comparative advantage.

Back to Top

7.     Enhance the capability of local SMEs

·         Expand existing financial assistance programs for SMEs.

·         Strengthen the role and capabilities of the Resource Center at the Ministry of Industry and Primary Resources in providing support for SMEs.

·         Establish a fund to assist SMEs in securing professional support in upgrading their management capabilities e.g. in obtaining ISO accreditation.

·         Improve the structure of government contracts and tenders by packaging them to facilitate SME participation.

·         Expand the efforts by Brunei Shell and others in helping to develop local technical and managerial capabilities.

·         Strengthen the capacity and professionalism of the Chambers of Commerce in representing and providing marketing support to businesses operating in Brunei Darussalam.

Back to Top

8.     Strengthen and modern institutions

·         Complete the review and modernization of Brunei Darussalam's legal and regulatory framework.

·         Accelerate and expand current efforts to improve the transparency of government policies and regulations, including improving public access to information.

·         Create the office of independent ombudsman to provide a channel for effective redress for the public and the private sector in their dealing with the government.

Back to Top

9.     Improve national productivity

·         Establish a National Productivity Board to coordinate the efforts required to raise productivity in Brunei Darussalam.

·         Launch a comprehensive program to promote training within the workforce including public-private sector initiatives in job placements and job training schemes.

·         Build world-class IT and communication infrastructure to keep pace with productivity improvements through technology.

Back to Top

10. Enhance human resource development and deployment

·         Undertake the comprehensive review of Brunei Darussalam's national education policy using world-class education experts in order to bring the education system in Brunei Darussalam in-line with Brunei Darussalam's economic priorities.

·         Encourage and facilitate opportunities for work and training for Bruneians in world-class corporations abroad.

·         Establish job centers as a public-private sector initiative in providing skills training in industry to school-leavers.

·         Strengthen labour market database to facilitate the matching of job seekers with potential employers.

·         Relax the limitations on work and entry requirements by skilled foreign human resources in select growth sectors.

·         Encourage the sharing of expertise and mobility between the public and private sectors.

Back to Top

11. Preparation of a Brunei Darussalam Economic Blue Print

·         Brunei Darussalam Economic Council recommends that the measures outlined earlier should eventually be part of a coherent and detailed Economic Blue Print for Brunei Darussalam.

·        The Economic Blue Print shall contain details, based on detailed expert study, on how the broad strategy outlined by the Brunei Darussalam Economic Council earlier shall be translated into policy. The Economic Blue Print shall be a guide to all policy making on matters related to the economy.

Back to Top