Brunei Update: March 12, 2019

Brunei Update | March 12, 2019
Authors: Kim Yaeger, Artha Sirait and Stephanie Purwanto
 
THE COUNCIL'S TAKE
 
 

Brunei Government Proposes B$5.86 Billion Budget to Legislative Council

At Brunei's 15th Legislative Council session, the government proposed a 2019/2020 budget of B$5.86 billion, stressing the urgent need for more investment into Brunei. During the session Minister of Finance and Economy II, YB Dato Dr Hj Mohd Amin Liew noted that Brunei’s GDP posted just 0.1 percent growth in 2018 due to a contraction in the oil and gas sector. However, the non-oil and gas sectors saw positive growth of 0.5 percent, supported by the agriculture industry, livestock, wholesale and retail sector. Dato Amin also highlighted that Brunei needs to intensify its diversification efforts in the following sector: downstream oil and gas; food manufacturing; tourism; services and ICT – in which the government spending will be aligned with.

The Legislative Council which is Brunei’s annual parliamentary session was chaired by Speaker YB Pehin Orang Kaya Seri Laila Dato Seri Setia Hj Abdul Rahman Dato Setia Hj Mohamed Taib and comprised of 36 members including Sultan Hassanal Bolkiah, Senior Minister at the Prime Minister’s Office Crown Prince Al-Muhtadee Billah, the 14 cabinet ministers and 20 appointed members which include state dignitaries, grassroot leaders and representatives from various professional, social and religious groups. The Legislative Council is still ongoing with an approved budget predicted to be announced by the end of next week. 

Brunei Established ICT-focused Body Under Ministry of Transport and Info-Communications

Brunei recently established its Digital Economic Consult under the purview of the Ministry of Transport and Info-communications to lead and drive Information and Communication Technologies (ICT) development in the sultanate. Minister of Transport and Info-communications, Abdul Mutalib stated that it is important for Brunei to provide necessary telecommunications infrastructure and a stable telecommunications service to keep up with the fourth industry revolution. In February, Brunei announced that it will consolidate network infrastructure of all existing telecommunication operators in the country under a newly formed company to spur the development of the ICT sector in the country. ICT is identified as one of the non-oil and gas sectors that Brunei is seeking to develop in an effort to diversify its economy.

Strengthened Relations Between Brunei and Malaysia

On March 5, Malaysia’s Prime Minister Mahathir Mohamad and Brunei’s Sultan Hassanal Bolkiah met at the Annual Malaysia-Brunei Leaders’ Consultation framework in Kuala Lumpur. The two leaders discussed an array of bilateral issues, as well as regional and global concerns of interest to Malaysia and Brunei. Both leaders agreed on the importance of economic cooperation to promote industries such as transportation, info-communications, energy, tourism, and agriculture. Last year, the meeting took place in September where the two leaders met in Bandar Seri Begawan to discuss the Pan-Borneo highway and the issue of a joint-commercial development of offshore oil blocks in South China Sea. In comparison this year, the two leaders discussed a broader range of issues.

Malaysia will put forth a Memorandum of Understanding (MoU) related to fisheries cooperation and transportation. This is expected to strengthen Brunei’s fishing and transportation industries. When the Council met with Dato Amin Liew bin Abdullah (Minister at the Prime Minister’s Office, Minister of Finance and Economy II, and Chairman of Brunei Economic Development Board) in January, he stressed that fisheries and aquaculture are sectors that Brunei is interested to develop further. Brunei aims to export as well as it helps to create job opportunities for local Bruneians. As an effort to support this initiative, government-linked companies are actively assisting SMEs so that they are exposed to broader spectrum in the sector.

The two leaders also discussed a potential Commercial Arrangement Areas Agreement to strengthen both nations’ oil and energy sectors through a partnership between Petronas and PetroleumBrunei.

His Majesty and the Prime Minister also expressed satisfaction in the strengthened relationship between Brunei and Malaysia in the past few years, and both agreed to maintain the relationships. This continued collaboration will further bolster Brunei’s crucial industries and showcases Brunei’s willingness to welcome foreign investments and partnerships. On international trade agreements, during USABC’s Business Mission to Brunei in January, Brunei’s Minister of Foreign Affairs II, Dato Erywan stated that Brunei is in the process of making sure that its local laws are aligned with the Comprehensive and Progressive Partnership for Trans-Pacific Partnership to ensure that once ratified, Brunei can be compliant.

Brunei to Increase Business Competitiveness

His Majesty Sultan Hassanal Bolkiah laid out his vision to make businesses more competitive in the sultanate. Brunei’s Department of Economic Planning and Development (DEPD) maintains that the oil and gas sector currently account for 57.3% of the nation’s economy but that Brunei is eager to continue its diversification efforts.

Brunei’s improvements in the World Bank’s Ease of Doing Business (EODB) rankings over the past four years reflect the serious commitment of Brunei towards creating a pro-business environment that would enable further diversification of the Brunei’s economy. The 2019 EODB Report records Brunei Darussalam to rank 55 out of 190 economies worldwide – which marks the fourth consecutive year Brunei has improved its ranking. Five years ago, Brunei was ranked 105th, before making the annual ranking’s largest jumps in 2017 and 2018 by moving up 41 places cumulatively. Within ASEAN, only Brunei Darussalam and Malaysia recorded improvements in EODB ranking, and Brunei maintained its fourth position behind Singapore (2), Malaysia (15) and Thailand (27). Brunei also moved up two places to 62 out of 140 economies in the recent World Economic Forum’s Global Competitiveness Report 2018 which features a new methodology that takes stock of the fourth industrial revolution.

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. As the Council previously reported that Brunei has identified the following sectors which the sultanate is looking to further develop:

  • Downstream oil and gas: Brunei is targeting an economic output of US$3.68 billion by 2035, therefore welcoming FDI in downstream sector and utilizing opportunities from other sectors to manufacture more petrochemical plants. Brunei continues to work with Hengyi industries oil refinery and petrochemical plant valued at US$3.4 billion, currently expected to become operational by the end of 2019, and expected to contribute US$1.33 billion to Brunei’s GDP within the first year. In addition to being highly valued, the refinery is also expected to create jobs for Bruneians.
  • Digital Economy: In 2018, the Monetary Authority of Brunei Darussalam published a roadmap for Brunei to become a digital payment nation by 2019-2025 as part of its strategic initiatives to drive digital transformation in Brunei’s payments industry.
  • Halal industry: The halal industry is a vital component in transitioning Brunei towards industry 4.0. The Ministry of Religious Affairs (MoRA) recognized the ongoing mutual recognition arrangement amongst the religious councils of Brunei, Indonesia, Malaysia, and Singapore in a meeting discussing the halal industry recently as Brunei looks to consider developing its own thalal standards.
  • Tourism: Some of the most remote districts in Brunei are currently anticipating unification, which will help boost the tourism industry along with ensuring shorter travel time once the Temburong (eastern district in Brunei) bridge is completed. The 30-km bridge will help unite the three districts and is expected to hold the title of longest bridge in Southeast Asia upon completion. Temburong residents have indicated that the bridge will be the next notable landmark not only in Brunei but also in ASEAN.
 
IN THIS UPDATE
 
 
Multilateral Trade Agreements
Brunei, Korea sign three agreements vowing deeper cooperation

Regional Affairs
What’s in the New Brunei-New Zealand Defense Dialogue?

National Affairs
Youth key to Brunei’s development
Brunei to continue attracting foreign direct investments: minister
Industry 4.0 initiatives to help develop Brunei Digital Economy
Government, private sector need to intervene in Brunei’s unemployment issue

Market Development
Brunei establishes new organization for "smart nation" development

Customs
BRUFA pays courtesy call on Royal Customs and Excise Dept 

Defense & Security
Singapore-Brunei Defense Ties in Focus with Army Exercise
Malaysia-Brunei Military Relations in the Headlines With Air Force Chief Visit

Energy
Malaysia, Brunei express satisfaction over oil and gas collaboration
Slew of cooperation on the cards between Malaysia and Brunei

Food & Agriculture
Youth urged to look at agriculture as important career option
Brunei Sultan calls for more measures to raise rice production - Xinhua | English.news.cn
Temburong visit bolsters students’ skills in agricultural entrepreneurship
 
ARTICLE CLIPS
 
 
Multilateral Trade Agreements

Brunei, Korea sign three agreements vowing deeper cooperation The Scoop 12th Mar 2019
The leaders of Brunei and South Korea on Monday vowed to deepen cooperation, signing three memoranda of understanding (MoU) to enhance cooperation in investment, science and technology and intellectual property.

Regional Affairs

What’s in the New Brunei-New Zealand Defense Dialogue? The Diplomat 12th Mar 2019
Last week, Brunei and New Zealand held what was officially characterized as their inaugural formal bilateral defense talks. The new development put the focus on the Brunei-New Zealand defense relationship as well as the broader state of bilateral ties more generally.

National Affairs

Youth key to Brunei’s development The ASEAN Post 12th Mar 2019
As Brunei celebrates its 35th National Day today, the country’s residents can be heartened by their progress in the last three and a half decades. A British protectorate since 1888, Brunei gained independence in 1984 and is an active member of the international and regional community – joining ASEAN the same year.  

Brunei to continue attracting foreign direct investments: minister Xinhua 10th Mar 2019
Brunei will continue its efforts to attract more foreign direct investments to strengthen local economy, Brunei's Minister at the Prime Minister's Office and Second Minister of Finance and Economy Hj Mohd Amin Liew has said.

Industry 4.0 initiatives to help develop Brunei Digital Economy Borneo Bulletin Online 10th Mar 2019
Availability of better job opportunities, quality of life, institutions and infrastructure have turned urbanisation into a global phenomenon. According to United Nations data, cities contribute to 50 per cent of global population and is expected to reach 57 per cent by 2025. 

Government, private sector need to intervene in Brunei’s unemployment issue The Scoop 9th Mar 2019
Unemployment was among the top issues discussed on the second day of the 15th Legislative Council meeting as parliamentarians called on government and private sector to intervene and tackle Brunei’s increasing rate of unemployment.

Market Development

Brunei establishes new organization for "smart nation" development Xinhua 12th Mar 2019
Brunei has established a new organization to aid in the sultanate's transformation into a "smart nation," a senior government official said on Tuesday.

Customs

BRUFA pays courtesy call on Royal Customs and Excise Dept Borneo Bulletin 4th Feb 2019
MEMBERS of the Brunei Freight Forwarders Association (BRUFA) recently made a courtesy call on the Royal Customs and Excise Department (RCED) and held its first dialogue, at the RCED headquarters. 

Defense & Security

Singapore-Brunei Defense Ties in Focus with Army Exercise The Diplomat 14th Feb 2019
The latest iteration of the exercise highlighted some of the ongoing activity in the defense relationship in 2019. Last week, Singapore and Brunei concluded the latest iteration of their army exercise. 

Malaysia-Brunei Military Relations in the Headlines With Air Force Chief Visit The Diplomat 12th Feb 2019
Last week, Malaysia’s air force chief was in Brunei for a scheduled visit. 

Energy

Malaysia, Brunei express satisfaction over oil and gas collaboration Star Online 5th Mar 2019
Prime Minister Tun Dr Mahathir Mohamad and Brunei's Sultan Hassanal Bolkiah have expressed satisfaction at the continued collaboration between Petronas and PetroleumBrunei during the Malaysia-Brunei Annual Leaders' Consultation framework in Putrajaya. 

Slew of cooperation on the cards between Malaysia and Brunei New Straits Times 5th Mar 2019
Malaysia and Brunei have agreed not to undertake any activities in areas where joint demarcation and survey involving their mutual border have yet to be completed. Prime Minister Tun Dr Mahathir Mohamd and Sultan of Brunei Sultan Hassanal Bolkiah in conveying this today, said they welcomed the positive progress made by the joint technical committee on the demarcation and survey of the land boundary between Malaysia and Brunei. 

Food & Agriculture

Youth urged to look at agriculture as important career option Borneo Bulletin 19th Feb 2019
AMIDST the present challenging era, the country’s youth need to look at agriculture as a field where there is an opportunity to forge careers as important as those in other sectors. 

Brunei Sultan calls for more measures to raise rice production - Xinhua | English.news.cn Xinhua 13th Feb 2019
Brunei's monarch has called for more aggressive measures to increase the sultanate's rice production. 

Temburong visit bolsters students’ skills in agricultural entrepreneurship Borneo Bulletin 10th Feb 2019
THE Core Knowledge Centre of Religious Teachers University College of Seri Begawan (KUPU SB) held an agricultural visit project under the Self-Potential Development in Co-Curriculum Programme which included a two-day visit to the Temburong District recently.