|Brunei Update| November 12, 2018
Authors: Kim Yaeger, Artha Sirait and Bryan Yeoh
|THE COUNCIL'S TAKE|
CPTPP Ratification Update; Brunei’s Position
On October 31, Australia became the sixth country to ratify the Comprehensive and Progressive Partnership for Trans-Pacific Partnership (CPTPP), alongside Singapore, Canada, Japan, Mexico and Canada. With the ratification by six members, the treaty will enter into force on December 30. The CPTPP was designed as the successor to the Trans-Pacific Partnership (TPP) after the United States withdrew in January 2017. Brunei continued its participation in negotiations even after the withdrawal of the United States.
CPTPP will eliminate virtually all tariffs and other barriers to goods trading and increase efficiency of shipment clearing by Customs. The first round of tariff cuts will be on December 30 followed by a second round on January 1, 2019. Brunei has yet to ratify CPTPP and has not made its ratification timeline public. A possible reason for Brunei’s hesitation is their concerns over its rights to develop its coal reserves. While the issue was addressed in the negotiations, ongoing internal domestic discussions could delay ratification. Brunei’s excitement could also be lessened with the new deal as growth projections are not as high. The Peterson Institute for International Economics estimates that Brunei’s GDP will grow by over two percent under CPTPP compared to six percent under TPP. While Brunei is expected to gain US$1 billion over the next five to ten years according to the Ministry of Foreign Affairs and Trade, it may be carefully considering its option to maximize their growth potential. Vietnam is expected to ratify soon with Chile and Peru following suit.
In addition to the CPTPP, there is an ongoing Regional Comprehensive Economic Partnership (RCEP) negotiation - both are considered as possible pathways towards a larger deal that could encompass much of the Asia-Pacific region. CPTPP and RCEP differ in objectives and scope, most notably RCEP involves 16 countries including 10 ASEAN countries, Australia, China, India, Japan, New Zealand and South Korea. If concluded, RCEP will become the world’s largest trading bloc covering a third of the world’s GDP of approximately USD49.5 trillion and accounting for 3.4 billion people. The consolidation of trade rules and reduction in tariffs under RCEP could allow Brunei to increase its trade with Asia’s biggest economies and allow greater integration of manufacturing value-chains among RCEP members.
Brunei Rises in the World Bank’s 2019 Ease of Doing Business Ranking
The World Bank’s 2019 Ease of Doing Business report ranks Brunei as the 55th country out of 190 countries. Brunei scored 72.03 percent in the report and improved one spot from number 56 in 2018. Brunei’s ranking among ASEAN countries puts it behind Thailand, Malaysia and Singapore.
The 2019 report identified three main factors for Brunei’s improvement. The first factor was improved access to credit information by starting to provide consumer and commercial credit scores to banks and financial institutions. Autoriti Monetari Brunei Darussalam’s (AMBD) introduced a credit scoring system that allowed banks to evaluate lending more efficiently. As a result, Brunei was ranked first for ease of getting credit with full scores across strength of legal rights and depth of credit information. Brunei’s credit registry also has coverage of 75.2 percent of adult residents compared to 16.9 percent for the East Asia and Pacific region.
In addition, Brunei reduced bureaucratic inefficiencies in the business registration process and thereby making it easier for individuals to start new businesses. Brunei also made reforms to its process for businesses to obtain electricity. Brunei simplified its process to only five procedures with an estimated 35 days wait time. Although Brunei’s score improved, its rankings saw a slight drop as other countries have made larger relative gains in this area. Brunei will need to further intensify its reform efforts in the coming year if it wishes to position itself above its neighboring competitors.
Brunei’s Ease of Doing Business Secretariat stated in a press statement that the Brunei government would strive to improve its business ecosystem as it looks to diversify its economy. Brunei’s progress in achieving reforms to create a business-friendly environment aligns with goals and strategies outlined in the Brunei Vision 2035. Brunei’s policy changes to reduce bureaucratic inefficiencies, improve information sharing and reduce lag time will improve its outlook to investors and encourage development of local small and medium sized enterprises which are central strategies to achieving its goals. Brunei’s focus on improving its business environment has yielded results with continuous improvement in its ease of doing business rankings over the last five years from 105th to 55th. Brunei’s regulatory reforms present an attractive offer for foreign investment as it seeks to continue diversifying its economy to reduce dependence on the energy sector.
|IN THIS UPDATE|
PM Lee affirms Singapore-Brunei ties The Straits Times 1st Nov 2018
Brunei 55th in ease of doing business: World Bank Biz Brunei 4th Nov 2018
BIBD second strongest bank in Southeast Asia | Borneo Bulletin Online Borneo Bulletin Online 3rd Nov 2018
Meet enhances regional cooperation to fight corruption | Borneo Bulletin Online Borneo Bulletin Online 3rd Nov 2018
HM: Engage private sector to serve the public more efficiently The Scoop 31st Oct 2018
Brunei continues to improve maritime situation nationally Borneo Bulletin Online 22nd Oct 2018
Malaysia-Brunei Military Ties in Focus with Joint Exercise The Diplomat 29th Oct 2018
Brunei concludes joint navy exercise with Australia - Xinhua | English.news.cn Xinhua 24th Oct 2018
Brunei on track with sustainable development | Borneo Bulletin Online Borneo Bulletin Online 11th Nov 2018
Encouraging increase in Brunei’s GDP | Borneo Bulletin Online Borneo Bulletin Online 9th Nov 2018
Brunei economy to pick up in 2019 | Borneo Bulletin Online Borneo Bulletin Online 9th Nov 2018
Brunei’s total trade in July 2018 increased by 49.4 per cent Borneo Bulletin Online 31st Oct 2018
Brunei's CPI sees 0.3 pct year-on-year rise in August - Xinhua | English.news.cn Xinhua 31st Oct 2018
Brunei’s unevenly distributed income The ASEAN Post 29th Oct 2018
Brunei’s growth momentum to strengthen over medium term: IMF Borneo Bulletin Online 16th Oct 2018
Rise in domestic investment into oil and gas sector powers Brunei’s growth Borneo Bulletin Online 5th Nov 2018
Brunei takes centre stage at ASEAN Energy Award Borneo Bulletin 1st Nov 2018
Student saves money to install solar panels at SMARTER Brunei Borneo Bulletin 23rd Oct 2018
Brunei Darussalam's growth momentum expected to continue in 2018: IMF Devdis Course 13th Oct 2018
BruPay launches: No transaction or registration fees Biz Brunei 8th Nov 2018
Brunei’s Islamic capital market showing positive growth | Borneo Bulletin Online Borneo Bulletin Online 23rd Oct 2018
‘Made in Brunei’ food to tickle Panzhou taste buds Borneo Bulletin Online 3rd Nov 2018
New paddy variety hoped to boost rice output The Scoop 29th Oct 2018
Brunei to boost rice production with Myanmar help | Borneo Bulletin Online Borneo Bulletin Online 14th Oct 2018
Programme promotes mental health awareness in workplaces Borneo Bulletin 3rd Nov 2018
WHO declares Brunei Darussalam free of rubella | Borneo Bulletin Online Borneo Bulletin Online 2nd Nov 2018
Drug abuse among leading causes of family breakdown in country Borneo Post 29th Oct 2018
Brunei’s mental health stigma: Don’t call us ‘orang gila’ The Scoop 27th Oct 2018
Obesity rates in Brunei highest in region Borneo Bulletin Online 17th Oct 2018
Integrating IT for better public service Borneo Bulletin Online 8th Nov 2018
BruPay – Making life easier for shoppers, merchants Borneo Bulletin Online 8th Nov 2018
Sultan calls for wise use of technology Borneo Bulletin Online 6th Nov 2018
BAG Networks rebrands as Dynamik Technologies Biz Brunei 31st Oct 2018
BIBD ALAF Digital Hub unveiled Borneo Bulletin Online 31st Oct 2018
Brunei's flag carrier to fly to new Beijing airport in 2019 The Scoop 5th Nov 2018
Tourist arrivals from Brunei expected to increase BorneoPost Online 29th Oct 2018
RB launches non-stop service to London; announces Kuching route The Scoop 28th Oct 2018
Cebu Pacific partners with Brunei travel agency | Borneo Bulletin Online The Scoop 27th Oct 2018
WTM 2018: South-east Asia bouncing back TTG 5th Nov 2018